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Thanks Fed, for Shorter, Poorer Lives

Gold Market Discussion

Thanks, Fed!

2018-12-11

Researchers at the Federal Reserve know what they have done to the Millennial Generation, and it isn’t pretty. 

But don’t expect them to stop.

Ryan McMaken at the sound money, free market Mises Institute has examined a new Fed report on how the Millennial Generation is doing at this stage of their lives compared to prior demographic groups, the Gen X’ers and the Baby Boomers. 

Ryan McMaken
Ryan McMaken, Mises Institute

The Fed report concludes that, “Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth.”

Here’s one quick fact from the Fed’s researchers that provides a general idea of the overall findings.  “Average real labor earnings for young male household heads working full time [were] 18 percent and 27 percent higher for Generation X and baby boomers, respectively, than for millennials.

McMaken’s article, available here, dismisses the usual explanations:

“A common response in the media has been to blame Millennials for buying ‘too much avocado toast,’ or for having too many other luxury tastes that render them incapable of building wealth. That may be true of the minority of Millennials who spend much of their lives on Instagram, but the Fed report itself concludes that the consumption patterns of Millennials are not significantly different from those of other groups when incomes and other factors are taken into account.

“In other words, Millennials are not any more profligate than the Baby Boomers or Gen X’ers who came before them.”

“Millennials are less well off than members of earlier generations when they were young, with lower earnings, fewer assets, and less wealth.”

– Ryan McMaken, Mises Institute

So what is behind the diminished circumstances of our fellow Americans?  How about contrived interest rates that have made savings a losing proposition?  Capital formation, the engine of growth, just doesn’t make sense in a funny money regime of bailout bills, stimulus spending, Quantitative Easing, “injection of liquidity into the banking system.”  It makes less sense with each unbalanced budget, record deficit, and debt ceiling increase.

The gradual impoverishment of the people is inevitable when the monetary system is governed by bureaucrats and the self-interest of those they serve, instead of by the reliable impartiality of gold.

McMaken writes,

“All of this, of course, happened on the Fed’s watch, and was just the latest example of how the myth of Fed-engineered economic stability has always been a myth.

“So, we have a group of workers who start out their careers in a bad labor market, brought on by more than 20 years of money-pumping by Volcker (later in his term), Greenspan, and Bernanke.

“But once those Millennials were able to get jobs, they then were faced with a world that was particularly hostile to saving, home purchases, and investment for lower-income workers.

“Our current situation is marked by endless monetary activism marked of near-zero interest rates and asset inflation which rewards those who already own assets, and have the means to access higher-risk investment instruments that offer higher yields.

“Meanwhile, banking regulations have been re-jiggered by federal politicians and regulators to favor established firms and the already-wealthy.”

Fed chairmen brag about their “powerful tools,” but those tools have given us slow growth and reduced earnings.

LIfe Expectancy Drops for Third Year in a Row

Meanwhile, it looks like 2018 will be the third straight year that American life spans have decreased.  No surprise there.  Prosperous people live longer than impoverished people.  Ever notice how neatly the shorter life span trend overlays with the bureaucracies’ massive intrusion into the health care field?  In other words, Washington is doing to our life spans just what it has done to our money.

Life Expectancy Chart 2016
Chart shows beginning of life expectancy drop in 2015 that has continued to decline for three (3) consecutive years since

What can you do?  The government is not likely to return to an honest money standard, one that lubricates commerce and enables savings and capital formation.  One that allows people to “live long and prosper.”

But you can begin to insulate yourself from some of the effects of the Fed’s malperformance, including the slow grinding impoverishment of the people that lowers their life spans, by owning gold

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bear markets

Gold as a Safe Haven in a Bear Stock Market: It’s Déjà Vu All Over Again

Déjà Vu (noun):
1) a feeling that one has seen or heard something before.

2) something overly or unpleasantly familiar.

The headline of The Drudge Report December 4, 2018 screamed
DOW DIVE.  FEAR, SLOWING ECONOMY.  BANK STOCKS FLASHING.”


The thing is, we had already seen a lot of these gut-check plunges in 2018:  October 9, off 678 points; October 24, down 608 points; November 12, a loss of 602 points; November 20, down 551 points; December 1, down 679 points.

And the December 4 selloff of almost 800 points.  That’s a single day loss of more than 3 percent, the fourth largest single day point loss in stock market history. Two trading days later it was down another 558 points.

It is simply oxymoronic to describe a market with this volatility as a stable and welcoming investment environment for the American peoples’ savings and future prosperity. 

A Bloomberg’s headline said, “It’s the Worst Time to Make Money in Markets Since 1972.”  It summed up its story with these words: “There’s nowhere to run.”

Of course, there is somewhere.  But we don’t expect the mainstream news media and the financial press, mesmerized as they are by the shiny ties and the titles of Washington bureaucrats and Federal Reserve officials, to have anything but antipathy for gold, its thousands of years of being the world’s most reliable standard of value notwithstanding. 

Their attitude is easy enough to explain.  Politicized money feeds the dreams of the political ambitious, while gold leaves power-hungry operators powerless. That is because gold cannot be manipulated like interest rates and monetary conditions, to the benefit of their influential contributors, Wall Street “banksters”, and other cronies of the State. 

So, they will not tell you to turn to gold when the economy shudders and shakes and the stock market has become a thrill ride of unexpected plunges. 

But we will. 

To do so, we have selected three dramatic stock market collapses in the modern era that resemble today in many ways.  You will learn that gold soared while the stock market was a chamber of horrific losses.


The 1970’s: The Stagflation Decade

Richard Nixon, 37th President of the united States
Richard Nixon, 37th President of the united States

One young man who had started to learn about markets before Uncle Sam sent him to Vietnam, came home and wondered if every stock in America had had a stock split.  That’s because during 1973 and 1974, while he was otherwise occupied, the stock market had fallen in half.

What happened?  First, Nixon had repudiated the dollar’s convertibility to gold.  Since OPEC producers discovered that they were to be paid in dollars that could be printed endlessly without restraint, oil prices began to rise.  Domestically, businesses were staggering under Nixon’s wage and price micromanagement.  And the Federal Reserve changed interest rates like a madman.  It engineered more than 20 interest changes some years.  The official inflation rate hit 12.2 percent in 1974.

Of course, the stock market fell in half.  Of course, gold was the place to go.

The DOW from 1971-1974
DOW (DJIA) from 1971-1974

Incidentally, while the stock market fell in half in 1973 and 74, the pain wasn’t over then.  Although it struggled to recover, it fell again.  In the year and a half between September 1976 and March 1978, the S&P500 fell 19.4 percent.  During the same brief period gold rose 54 percent.

The 1970s became known as the Stagflation Decade:  a combination of stagnate economic growth and inflation.  You could have seen it coming as early as 1971 in the overreaching intervention of Nixon’s economic policies, and in the collapsing of the stock market, evident in 1973.

Incidentally, like today, the presidency was in turmoil.  President Nixon was forced to resign in August 1974.

The ownership of monetary gold only become legal for Americans in 1974.  With the excitement of that development, which resulted in an initial frenzy much like a hot stock initial public offering, gold settled down to just over $100 an ounce in 1976.  But as a safe haven alternative to the battered stock market and the economic turmoil all about, gold started running up from there.  And it just kept running, up to $850 by January 1980. 

Gold from 1976-1980

Suppose you had decided to just “ride it out,” and you stayed in the market during the whole brutal period?  From its 1974 low, it took eight years for stocks to return to the high they had hit in 1972.  But because the intervening period had been characterized by high inflation, in real terms, or in terms of purchasing power, it would have taken more than 20 years to restore your wealth.    


Early 2000’s and the DotCom Bubble

old search engine

In the late 90s, you couldn’t walk into a Starbucks without hearing people talk about the money they were making in stocks with names better off forgotten… Pets.com…  InfoSpace…   eToys.com…. WorldCom…   Drugstore.com…     DrKoop.com….  Some of the companies were not much more than business plans scrawled on a cocktail napkin.  Others with no revenue somehow became hot IPOs.  Internet companies were being valued for their “eyeballs,” or how many people would supposedly visit their web pages. 

Those of us that objected to companies with no profits being valued higher than companies that actually made a lot of money selling real products and services, were told that it didn’t matter because this time “it was different.”

But it’s never different.  The fundamental laws of economics still applied then.  Just as they apply today. 

The dot com rage was just one of Federal Reserve Chairman Alan Greenspan’s bubbles.  When it popped it cost American investors $5 trillion.

The Nasdaq composite index peaked in March 2000 at just over 5,100 points. It fell to 1,300 in less than two years.  It took 4,800 internet companies down with it.    The broader market measured by the S&P 500 fell 49 percent.

It was a bloodbath. 

NASDAQ 2000-2002
NASDAQ 20002002

The attacks of 9/11/2001 gave fuel to the gold market; the gold price immediately jumped, as it does in a crisis.  But there was more to it.  First, Greenspan gunned the money supply.  Then, on March 16, 2002, Vice President Cheney paid a visit to Saudi Arabia.  His message was clear.  The United States was going use 9/11 to roll-out a larger war in the Mideast.  The empire was going to go for broke.  And the financiers of the world now knew it. 

Congress, having heard Cheney’s explanation that “deficits don’t matter,” raised the national debt ceiling time after time.

But it came to pass that deficits do matter.  Ignited by the stock market crash and fueled by Greenspan’s money printing and wild deficit spending, a new gold bull market roared ahead.    

The S&P 500 from 2000-2002
The S&P 500 from 2000-2002

Gold had seen a low of $253 in the summer of 1999.  Some people date the beginning of the gold bull market to the year 2001 with gold around $260 an ounce.  Either way, by December 2005 it had more than doubled to $520.  By March of 2008 it was over $1000 an ounce.

gold from 2002-2008

What about those that decided to ride out the Nasdaq crash?  For them, it was a long fifteen years waiting for the market to return to its old highs.

What if instead they had moved prudently out of stocks in 1999 or 2000 before the market plummeted, but when it was clear that, like today, stocks were in an unsustainable bubble?  And what if they had then moved their gains into gold before the prices took off?

And if you didn’t do it then, what if you had another chance to do it now?


 

2008:  The Great Recession

2008 great recession

Since deficits didn’t matter, when George W. Bush came into office the national debt was  less than $6 trillion.  When he left, it had climbed to $11.35 trillion.  Bush had presided over seven increases in the national debt ceiling in eight years.

When he left, the country had just entered the worst economic downturn since the storied Great Depression.  Greenspan had been at it again.  To compensate for the popping of the prior bubble, the dot com bubble, the so-called “Maestro” cut interest rates 13 consecutive times between the beginning of 2001 and the middle of 2003, driving the Fed funds rate to 1 percent, and leaving it there, below the inflation rate. 

He had created the housing bubble! 

The S&P 500 from 2007-2009
The S&P 500 from 2007-2009

With trillions of dollars of unsupportable real estate loans being made with a that cost free money, it was what someone described as a bubble in search of a pin! 

Now, here is the part that today’s investors need to know.  The Fed began raising interest rates.  Sound familiar?  The pin had been found!

After a year at one percent, the Fed raised rates 17 times, to 5.25 percent by June 2006. 

DOW from 2007-2009
The DOW from 2007-2009

The Great Recession began knocking at the door.  Mortgage delinquencies climbed and Wall Street powerhouses – like Bear Stearns and Lehman Bros. with their subprime mortgage hedge funds – began to crumble.  The Panic of 2008 ensued.

Here’s what happened to the stock market.  From its high in October 2007, the S&P 500 fell for 17 months.  It lost 56.4 percent of its value.  The Dow Industrials fell from 14,198 in October 2007 to 6,443 in March 2009, a loss of more than 54%.

Gold, on the other hand, soared. From its low of $713 in the fall of 2008, it raced to $1900 an ounce three years later.  (Silver, incidentally, did even better.  From a low of $8.80 that fall, it raced almost $50 an ounce in April 2011.)

gold from 2008-2011

Today

Trump vs. the Fed


We have chosen these three stock market crashes to illustrate where we are today and the future that is being signaled to us by today’s extreme market volatility. 

Each of these crashes was preceded by a monetary policy binge: the reckless delinking of the dollar from gold in the 1970s, the joyride of the dot com bubble, and mortgage the bubble. 

Just as the Fed responded to the popping of the dot com bubble with the creation of another bubble that ended badly, today’s stock market has been frothed to its present high levels by another money creation mania, Quantitative Easing, a madcap policy to offset the damage from the popping the mortgage bubble. 

You should note that the carnage will be worse this time.  Much worse.  That is because the Quantitative Easing bubble is so much bigger that anything before.  The Fed today owns $1.7 trillion of toxic mortgage securities it bought to take off the books of its crony banksters.  It owns another $2.3 trillion of federal government debt, purchased to make Washington’s deficit spending easier.  Each of these trillions of purchases was paid for by creating “money” out of nothing more that digital bookkeeping entries.

This money creation represents the biggest bubble in the history of the world.  At the same unfortunate time, the United States is the biggest debtor in the world. 

Just as it triggered the collapse of the housing bubble and brought the stock market to its knees with its higher interest rate regime, today the Fed is raising rates again.  And once again the stock market is gyrating wildly.  It is virtually shouting that there is no safe space to be found in stocks.

As of writing, USA Today has just published a piece headlined, “Stocks are plunging.  Here’s what you can do.”  Speaking as the establishment voice that it is, the newspaper says nothing about gold’s exemplary profit performance in these episodes.  But it does advise you to “control your emotions,” as though the fault is somehow with you instead of with the boom and bust makers in Washington.  And it tells you to think long-term. 

We advise you to think long-term as well.  Over the long-term of this survey, the market has crashed, crashed, and crashed again.  Each time the monetary authorities create a new bubble to cushion the pain of the prior one.  Each new bubble pops in succession.  This, the biggest-of-all bubbles, will end like the rest. 

As we have been telling you since last Fall just before these monster sell-off sessions got underway (-678 points, – 608 points, -602 points, -551 points, -679 points, -799 points,  -558 points), the system is blinking red.

As with each of the prior crashes, there is only the safe haven of gold.


“I know of no way of judging of the future but by the past.” – Patrick Henry

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watch the Strait of Hormuz

Watch This One Carefully…

Gold Market Discussion

Watch This One Carefully…

Sometimes the things that move the markets the most violently – gold, silver, and other markets as well – are things that aren’t on most people’s radar screens.

Hassan Rouhan
Iranian President Hassan Rouhan

Front and center in the attention of economic and financial news observers is the on-again, off-again trade war with China.  I do not dispute in the least its significance.  It is very important for many reasons, not least is the US dependency on foreign creditors like China to fund it exploding debt needs.

No less significant is a remark made by a Chinese official the other day, that trade wars can readily become shooting wars.  It is an oft-repeated adage, but one to remember.

While all eyes were on the G-20 summit in Argentina, and the high drama of the US-China decision to apparently kick the next escalation of their trade war down the road, I want to turn your attention to something else.

Strait of Hormuz
Strait of Hormuz

The prospect for a military confrontation with Iran continues to mount.  The aim of the US sanctions regime against Iran is to stop all Iranian foreign oil sales.   It won’t work, of course, even though National Security Advisor John Bolton insists that US sanctions on Iran will be “aggressive and unwavering.”

In a televised address this week, Iranian President Hassan Rouhani said, “If one day they (the US) want to prevent the export of Iran’s oil, then no oil will be exported from the Persian Gulf.”

It is not the first time in the current environment that Rouhani has made that threat, a clear reference to Iran’s willingness to close the Strait of Hormuz. 

A third of the world’s sea-borne oil moves through that chokepoint. US officials like to talk knowingly about how they can keep the Strait open.  They are fooling themselves in overestimating their own capacity and underestimating their opponents.  This seems to be a congenital defect among US strategists, the geniuses who thought the Iraq war of 2003 would be over in days. 

In any event, if things get hot over the Strait of Hormuz, it will realign the major powers of the world, creating explicit new alliances and sorely test America’s geopolitical dominance.  It will change the dollar’s role in international trade and send energy prices to crippling highs.

It will send gold prices soaring.

A hot showdown over the Strait of Hormuz is beginning to look like a certainty.  Buy gold and watch this one closely.

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Indian Wedding Tradition

The January Gold Spike

Gold Market Discussion

Gold in Indian Tradition  

With the turn of the calendar page to December, the holiday season is underway. Here and throughout the Western world it means a jump in consumer spending for Christmas presents. 

But the approach of the New Year means something else in other parts of the world. It  often means a big, cyclical jump in precious metals prices. 

The gift giving cycles in Asia are behind this pattern. Gold is a traditional and prized wedding gift in India and elsewhere in Asia, so manufacturers, jewelers, and the people themselves often start buying at the beginning of the year for spring weddings. 

The Indian government, like many governments, has often been at war with the people’s traditional desire to own gold. It prefers people to hold only government printing press money that can be devalued at will, to the benefit of the state and at the expense of the people. 

But the people will not be denied and the precious metals tradition wins out each time. The calamity of India’s paper money call-in and exchange two years ago further discredited the state and its monetary authorities. The attempt to demonetize the common currency was so disastrous that it will linger in the memories of the Indian people for a long time…and add fuel to their appetite for gold.

Year after year we see a surge in gold prices at the beginning of the year. For that reason, we recommend that you take action now on your planned precious metals acquisitions.

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Fed Treasury

Their Own Man Says So!

Gold Market Discussion

Their Own Man Says So!  

I have been warning about the overvalued stock market for some time.  Because we are clearly moving into a very troubling economic period, I have suggested you take profits you have in stocks and move them to the safety of gold.

The problems that I have described are so apparent that even the Federal Reserve itself is now warning about them.  So today, I will borrow from a story on CNBC describing a new report by the Fed.  The headline reads:

“Fed warns that a ‘particularly large’ plunge

in market prices is possible if risks materialize”

Here is a Federal Reserve chart showing price movement of the Dow Industrial Average over the last couple of year.  Note the double-top it has put in at around 27,000. 

Fred Graph 11-2018

Now I urge you to carefully read the story:

The Federal Reserve issued a cautionary note Wednesday about risks to financial stability, saying trade tensions, geopolitical uncertainty and a buildup in corporate debt among firms with weak balance sheets pose strong threats.

In a lengthy first-time report on the banking system and corporate and business debt, the Fed warned of “generally elevated” asset prices that “appear high relative to their historical ranges.”

In addition, the central bank said ongoing trade tensions, which are running high between the U.S. and China, coupled with an uncertain geopolitical environment could combine with the high asset prices to provide a notable shock.

“An escalation in trade tensions, geopolitical uncertainty, or other adverse shocks could lead to a decline in investor appetite for risks in general,” the report said. “The resulting drop in asset prices might be particularly large, given that valuations appear elevated relative to historical levels.”…

The report further noted that the Fed’s own rate hikes could pose a threat. A market and economy used to low rates could face issues as the Fed continues to normalize policy through rate hikes and a reduction in its balance sheet, or portfolio of bonds it purchased to stimulate the economy.

Sometimes, when it becomes virtually undeniable, an economic calamity announces itself in advance.   It is as though there are warning signs, in bold, red letters, screaming about the stock market so loudly that even the Fed can no longer whistle past the graveyard.

Please speak with your RME GOLD broker today!

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monetary lab experiments

Monetary Lab Experiments

Gold Market Discussion

The failure of a currency is not a pleasant thing. 

It is usually accompanied by widespread social unrest, crime, impoverishment, and ruin.

Venezuela is like a laboratory experiment in currency failure – something going on before out very eyes.  Of course, a lab experiment is useful only if something is learned from it. 

Yet there is no evidence that our monetary and fiscal authorities are learning anything at all from Venezuela’s monetary fiasco, running an annual inflation rate now of about 46,400 percent.

Of course, Venezuela didn’t have to ruin its economy and impoverish its people with its own laboratory experiment in bad-faith money.  It could have learned from other modern inflations, such as in Hungary in 1945-46 in which prices doubled every 15 hours!  Even the famous frenzied Zimbabwe inflation was only about half that rate. 

bolivarThe Venezuela tragedy continues to play out year after year, without a course correction, a return to honest money.  Accounts of the suffering of its people would fill countless book and endless documentaries.  Here are a few observations from a recent USA Today report on Venezuela.

“You would need a stack of money to even pay for a tomato,” says one 19-year-old mother who finally fled across the border into Columbia with her 1-year-old daughter in her arms.  “You would need a big stack of money,”

Three million other Venezuelans like her have fled the country, a million to Columbia, half a million to Peru, and the rest to other South American countries.  “Without shelter and without jobs, throngs of immigrants sleep on the streets and beg for money and food,” USA Today reports.

“At sunset each night, young Venezuelan women gather in Bolivar Plaza or by churches, looking to sell their bodies for sex.”

What is the fundamental difference between any failed currency and the US dollar?  Except for degree, not much.  Like other currencies that have in time returned to their ultimate commodity value (what is the value of little rectangular pieces of paper, especially those that have already been printed on?) the US dollar in unbacked and issued without restraint. 

If you think that is an exaggeration, let me point you to the trillions of dollars the Fed created out of thin air to buy government bonds and toxic mortgage securities from the money center banks in the years between 2008 and 2015.  That’s money printing on a Venezuelan scale!

Incidentally, that money still hasn’t been assimilated into the general economy and reflected in consumer prices. 

But it will be.

Meanwhile, Reuters is reporting on a trend we have discussed:  foreign investors, both sovereign and private, are turning up their noses at US Treasury offerings.  Reuters reports the weakest foreign participation in US auctions in a decade.

Just when the US needs to borrow the most.

If they aren’t buying US debt, what are they buying? 

Gold, of course. 

So is anyone who has learned from monetary laboratories like Venezuela.

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Jim Rogers

The Next Bear Market According to Jim Rogers

Gold Market Discussion

When a Legendary Investor Speaks, We Should Listen.

Jim Rogers deserves his reputation as a legendary investor.   

Right now, Rogers says the next bear market in stocks will be “the worst of my lifetime.”

Rogers knows something about stock bear markets.   The bear market of the 1970s was brutal for stocks, but during that period when Wall Street was suffering, the Quantum Fund, which Rogers co-founded, turned in a performance that was simply astonishing.  1970 to 1980 the Quantum Fund climbed an eye-popping 4,200%. During the same ten-year period the S&P 500 managed to rise only 47%. “Nobody we know has ever been right about every turn in multiple markets, but we often look to Jim Rogers for his enviable record at foreseeing the broad, sweeping turns of the markets, including the Mortgage Meltdown and the Panic of 2008.”

So why does Rogers think the next bear market will be so rough?  Here are some of his thoughts from a recent interview with Portfolio Wealth Global:

“The federal government, for better or worse, has been gigantically deficit spending.  The Federal Reserve, the central bank, has had a lot of loose money around.  So all of this money is going somewhere and it is going into the American stock market.”

“When the problems come, and they will come, I assure you, everybody is going to be looking to blame somebody.  They’ll blame foreigners, they’ll blame banks, they’ll blame rich people, they’ll blame someone.”

“The situation now is America, the United States, is the largest debtor nation in the history of the world.  Whenever that has happened historically, whenever someone gets massive amounts of debt, excesses set in and then you have a problem.  Every country in history that has gotten itself in this kind of debt situation, has had a crisis eventually or a semi-crisis.”

“So, yes, it’s coming.”   

“First of all, I should remind you we have always had financial setbacks, economic problems every five or ten years throughout history, so there’s nothing unusual about it.” 

“It’s coming again.  The next time its going to be really, really bad because the debt is so much higher now.”

“We had a crisis in 2008 because of too much debt.  Since then the debt has gone very, very high everywhere in the world.  So, the next economic problem is going to be the worst in my lifetime.”

Rogers understands the role of gold in an honest and stable monetary system and has been a great advocate for everybody owning gold.   Speak to your RME broker about a sensible plan to protect your wealth from the next crisis.

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tech stocks down

Something’s in the Air – 11/19

Gold Market Discussion

Something’s in the Air- 11/19

Another Stock Market Sell-Off.

The Drudge Report headline Thursday morning read, “STOCKS ERASE GAINS FOR YEAR; TRILLION WIPED OFF TECH; GOLDMAN: BOOST CASH.

Another wave of selling in the stock market was no surprise to our readers.

It’s been a rout in Nasdaq stocks.  We have already pointed out the good times are over for the popular FANG stocks — Facebook, Amazon, Netflix, and Google.

Meanwhile Goldman Sachs has dialed down its forecast for the stock market to merely “a modest single-digit absolute return” in 2019.

Forecasting a single-digit return may be optimistic for the likely performance of the stock market. 

Morgan Stanley recommends trading the stock market “like it’s a bear market rather than a bull.”

Our recommendation is to not trade it at all.  We recommend safety first.  When destructive market forces have been unleashed, we prefer the shelter of gold to playing dodge ball in the stock market.

And make no mistake.  Destructive forces have been set loose, including the Fed’s new interest rate regime.

Bigger still is the growing trade war.  When Goldman Sachs says to prefer cash, it is apparently stuck in the old paradigm definition of cash, the post-war Bretton Woods agreement.  King Dollar.  The Reserve Currency of the World.  All that.

But all that is history.  Much of the world is dissatisfied with the dollar reserve standard.  Much of the world is moving slowly away from it with bi-lateral and multi-lateral trade deals and settlement option.  Many nations are stockpiling gold reserves.

That movement has been low-grade, mostly unnoticed so far.  But in a trade war it can erupt into a megatrend overnight.

And with that in mind, our view of cash is something more enduring than pieces of paper with government printing.

Our preference is gold.

Meanwhile, both the Dow Industrials and the S&P500 are trading below their key 50-day and 200-day moving averages.

Gold, on the other hand, is above its 50-day moving average.  It is approaching it 200-day moving average.

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household debt

Debt, Debt, and More Debt

Gold Market Discussion

Debt, Debt, and More Debt

Here’s the headline:  US Household Debt Hits Record $13.5 Trillion As Delinquencies Hit 6 Year High. 

A New York Fed report says that “that total household debt rose by $219 billion to reach $13.51 trillion in the third quarter of 2018—an increase of 1.6 percent, up from a rise of 0.6 percent in the second quarter. Balances climbed 1.6 percent on mortgages, 2.2 percent on auto loans, 1.8 percent on credit cards, and 2.6 percent on student loans this past quarter.”

“It was the 17th consecutive quarter with an increase and the total is now $837 billion higher than the previous peak of $12.68 trillion in the third quarter of 2008. Furthermore, overall household debt is now 21.2% above the post-financial-crisis trough reached during the second quarter of 2013.”

Okay.  Let me cut through all this.  Total world debt is now approaching $250 trillion dollars.  Government debt.  Corporate debt.  Consumer debt.

That a quarter quadrillion dollars!

And debt is climbing faster than productivity.

It’s one thing if debt is productive.  Say someone borrows money to buy some equipment or capital goods that allow him to become still more productive.  A farmer buys a tractor and cultivates more land.  A shoemaker in the third world borrows for a machine that enables him to make more shoes than he could stitching them by hand. 

But its something else again if the money is not used productively.  Then the debt increases while the ability to service that debt does not.

That’s what happens when consumers borrow for consumption goods or fancy vacations.  It’s what happens when governments borrow to buy votes with giveaway programs.

And that’s the situation today.  Global debt is growing faster than productivity, faster than GDP.

As economist say, the marginal utility of debt is down.   A dollar of debt is not producing a dollar of GDP.

Got gold?

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dragging gold down

Dragging Gold Down

Gold Market Discussion

Dragging Gold Down

It’s been a pretty bloody few weeks in the oil trading pits.  From the high at the beginning of October of almost $77 per barrel, the benchmark price of West Texas Crude fell to around $55 this week. 

A sell-off of that magnitude in any market is a big deal. 

It’s a crash.

It’s important to us because for a few days earlier this month it looked like oil was dragging gold and silver down with it.

That sort of thing can happen when commodity futures traders see one commodity selling off, and dump their position in others “just in case”.  Traders in markets with perfectly sound economic fundamental can sometimes liquidate their positions to meet margin calls in collapsing markets.

But as the week unfolded oil showed its first higher closes following twelve days of successive loses dating back to October 29.

Having shown their resilience in the face of the 28 percent bloodshed in oil, gold and silver showed gains as well by midweek.

The petroleum story revolves around both Russia and the Saudi ramping up production in anticipation of additional sanctions choking off more Iranian production.  When the sanctions didn’t materialize as expected, the petroleum market was staring at oversupply.

For those interested in a little historical perspective, oil ran up to $145 a barrel in July of 2008 just before the economic meltdown that year.  Five months later, as the crisis picked up steam, it broke below $31.

In October 2008, as the extent of the 2008 Great Recession was becoming clear, gold saw a low of $713.  Savvy investors started moving in.  Those prices have never been seen again.

 

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stop digging

Stop Digging

Gold Market Discussion

Stop Digging

When you find yourself deep in a hole, the best advice is to stop digging.

Governments that find themselves in a fiscally unsustainable situation must either stop digging or destroy their currencies.  When the hole is too deep to climb out, you can be sure that a crisis looms ahead. 

Of course, it goes without saying that gold is the prime alternative to a currency headed for destruction.

Today I’m going to cherry-pick a few numbers from a piece this week in the Wall Street Journal that will give you an idea just how deep the government’s fiscal hole is.  It’s titled “U.S. on a Course to Spend More on Debt Than Defense:  Rising interest costs could crowd out other government spending priorities and rattle markets.”

  • In the past decade, U.S. debt held by the public has risen to $15.9 trillion from $5.1 trillion, but financing all of that debt hasn’t been a problem. Low inflation and strong global demand for safe U.S. Treasury bonds held the government’s interest costs down.

That’s in the process of changing.

  • In 2017, interest costs on federal debt of $263 billion accounted for 6.6% of all government spending…. The Congressional Budget Office estimates interest spending will rise to $915 billion by 2028, or 13% of all outlays…
  • It will spend more on interest than it spends on Medicaid in 2020; more in 2023 than it spends on national defense; and more in 2025 than it spends on all nondefense discretionary programs combined, from funding for national parks to scientific research, to health care and education, to the court system and infrastructure, according to the CBO.
  • Debt as a share of gross domestic product is projected to climb over the next decade, from 78% at the end of this year—the highest it has been since the end of World War II—to 96.2% in 2028, according to CBO projections. As the overall size of our debt load grows, so too do the size of interest payments.

 

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Jeff Sessions

Three Items of Note

Gold Market Discussion

Matthew Whitaker
Matthew Whitaker

1. WELL, NOW.  THIS IS DIFFERENT!

With President Trump’s firing of Jeff Sessions, the new acting Attorney General is Matt Whittaker.  Whatever else he may believe and ultimately do in his new position, we have learned that Whittaker has a more sensible view of the nature of money, the Fed, and gold than 99.9 percent of the Washington bureaucracy.   

Here are a couple of tweets from Whittaker in 2012 while he was in private law practice in Iowa.

On February 7, 2012 Whittaker tweeted:

“We need to begin to move to a gold/commodity standard.  The Federal Reserve’s explicit goal:  Devalue the dollar 33%.”

A few weeks later, on February 23, he tweeted:

“… the dollar is… fiat currency.  There is no inherent limit as to how far the price of gold in dollars can rise.” 

The next month, on March 23, Whittaker tweeted about gold again, this time making note of the Chairman of the Federal Reserve:

“Ben Bernanke’s shocking Gold Standard Ignorance.”

At least for now, Whitaker will directly supervise Robert Mueller’s Special Counsel investigation.  Whittaker is likely to be a central figure in the Washington for the rest of Trump’s presidency.

 

2. WHAT THE ESTABLISHMENT SEES

I want to share with you the outlook of the head of BlackRock, the largest asset manager in the world.  Blackrock was once called “the most powerful company that no one has ever heard of”.    

Larry Fink is the CEO.  His firm manages $6.4 trillion in assets. 

At a conference in Singapore last week, Fink spoke about the $1.3 trillion dollar deficit looming in Fiscal Year 2019.

“If indeed we do have that $1.3 trillion deficit, and the economy isn’t growing at three percent, we’re going to have a far bigger crisis in the coming years.  And then the fear of the ending of this (stock) bull market is probably going to be a reality.”

Fink says that forty percent of the US deficit is funded by “external factors.”  And yet the US is fighting with its creditors worldwide.  “Generally, when you fight with your banker, it’s not a good outcome.”

3. DOOMSDAY MACHINE!

David Stockman, US Budget Director under President Reagan, now says “the nation’s Fiscal Doomsday Machine is now unstoppable.”

Essential to Stockman’s argument are these points:

  1. The Federal government’s current fiscal year budget already has a projected deficit of, says Stockman, $1.2 trillion. 
  2. The Federal Reserve will be dumping $600 billion in bonds as it tries to unwind some of its QE swollen portfolio. 
  3. Currency speculators can be expected to dump hundreds of billions more in Treasury instruments.

By our calculation, that amounts to some $2 trillion of US Treasury bonds that the market will have to absorb in the current fiscal year.  That’s a pretty big task.

As careful watchers of the precious metals markets for a very long time, we have learned that when the government finds itself between a rock and a hard place, it does imprudent things and gold’s luster grows brighter

 

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voting booths

No Change

Gold Market Discussion

You may be cheered or dejected by the results of this week’s election. Certainly, there is something for everybody on the political spectrum to find either encouraging or discouraging in the outcome of Tuesday’s voting.

But our beat is money:  the dollar, spending, debt, the Fed, and the monetary system.  In short, all the things that impact precious metals and your financial future.  And with that focus, we see nothing about Tuesday’s election that changes our trajectory in the least.

  • The dethroning of the dollar as the world’s reserve currency will continue apace.  The implications for the value of the dollar and the American standard of living are enormous.
  • The trajectory for wars around the world is unchanged by the election.  Almost nothing was said about the general thrust of foreign policy by candidates of either party.  The outbreak of hostilities in the Persian Gulf, the South China Sea, or anywhere along Russia’s frontiers would be unquestionably bullish for gold.
  • As conspicuous in its absence as any real national debate about the Establishment’s foreign policy is the absence of any show of concern among the contenders about America’s trillion-dollar deficits and the national debt that is now closing in on $22 trillion.
  • America’s socialist drift has continued year after year, under both Republican and Democratic majorities.  If anything, the crony capitalism best captured in the bankster bailouts beginning ten years ago – and supported by R’s and D’s alike – has left a sense of betrayal and disgust among the middle class in its wake that has been diligently exploited by the growing socialist movement.  It should go without saying that socialism destroys prosperity, and that it usually begins that task by destroying the value of the currency.

There are other important items we could cite in evidence that the election changes none of the economic fundamentals:  sky-high corporate debt, unpayable student debt, and a precarious stock market propped up by Fed interest rate machinations and stock buybacks.

Those of us who hope for more substance in our politics and more wisdom from the voters will cynically remember the old line, that if elections really changed anything, they’d make them illegal.

We take some comfort, however, in also remembering that gold and silver are the best protection from the financial and monetary folly of governments.

 

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It’s Still Money– and They Know It!

Gold Market Discussion

Ben Bernake
Former Fed Chairman Ben Bernanke

One day, not so many years ago, in the middle of testimony before the House Banking Committee, Federal Reserve Chairman Ben Bernanke was asked a question by committee member Congressman Ron Paul.

“If gold is not money,” asked Paul, “why does the Federal Reserve insist on owning it?”

It is an important question, one that gets right to heart of the contradictions in our monetary system.  But Bernanke was quick on his feet.  The Fed owns gold, he explained, because “it’s a tradition.”

Was the Chairman saying that the Fed feels obligated to abide by all kinds of monetary traditions, or simply monetary traditions having to do with gold?  Or only the tradition that required the Fed to hold title to gold of the people of the United States?

Of course, Bernanke’s answer was simply balderdash.

The Fed insists on owning gold because it is the world’s premiere form of money, prized everywhere around the globe by both people and governments alike, and in both good times and bad.

Consider this.  When the US government made it a felony for American citizens to own monetary gold under presidential executive order and the Gold Reserve Act of 1934, it wasn’t simply trying to demonetize gold, to force it out of the monetary system.  It certainly wanted to eliminate gold as a competitor to its new paper money scheme, one that allowed it to print dollars without backing or limitation and to devalue that money when it suited the State.   

It was serious enough about that objective. 

But the government also wanted all the people’s gold for itself.  So, the law threatened the people with fines of $10,000 and ten years imprisonment for its violation. 

Rather severe threats for something that has no more significance than some old-time tradition, wouldn’t you say?

In reality, central bankers like Bernanke pretend that gold isn’t money, but in the real world, even among central banks, it remains money nonetheless.

When countries invade one another, the don’t rush to grab digital bookkeeping entries in which phony money is created out of nothing.  Nor do the grab Christmas trees or maypoles or other symbols of traditions.

They rush to grab the gold.

Just recently Venezuela attempted to repatriate 14 metric tons of gold held by the British central bank, the Bank of England.  It is gold that the South American socialist state has been using for “swap” operations.  In other words, when it has borrowed from foreign institutions and central banks, they have insisted that Venezuela’s gold serve as the collateral for those loans.  Because they are all really still on the gold standard.

Venezuela is finding getting its gold back to be very difficult indeed, thanks to US sanctions.  That is because in their international operations nations and central banks are still on the gold standard.

The monetary authorities’ and central bankers’ manipulation of credit conditions and interest rates, their ability to boom and bust economies at will, is utterly reliant on people being persuaded that gold is not money.

But they know better themselves.

We hope you know better, too.

 

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The Kremlin

Something in the Air!

Gold Market Discussion

What War Means to Gold and Silver

Putin

Through centuries of invasions and wars, conquests and collapses, occupations and upheavals, there is one constant:

In such a crisis, the go-to money is some form of gold or silver: coins and bars, jewelry, art, watches, and even silverware and tea sets. 

While wars are one of the worst things in the human experience, they are very good indeed for the price of gold and silver.

With that in mind, one should always be clear-eyed about the prospects for war and realistic about the approach of military confrontations.

Many Americans would be shocked to learn just how close the leaders of both China and Russia believe we are to war.  Both countries are preparing for it.  And both countries, long antagonists, have linked arms with military exercises and other planning for a seeming inevitable war with the United States.

Speaking in response to the recent withdrawal of the US from the Intermediate-Range Nuclear Forces Treaty, the agreement forged by Reagan and Gorbachev in 1987, Russian foreign ministry official Andrei Belousov said, “Yes, Russia is preparing for war.”

“We are preparing to defend our homeland, our territorial integrity, our principles, our values, our people – we are preparing for such a war,” he said.

It is a common view in the Kremlin.  Right now, the largest NATO exercises since the end the Cold War are underway in Scandinavia.  Trident Juncture involves forces from all the NATO countries:  some 50,000 soldiers, 10,000 vehicles, and hundreds of aircraft and navy vessels.

Not only are the military preparations growing, the rhetoric has escalated sharply.  Here, for example, is a recent apocalyptic remark from Russia’s Putin:  “If any nation decides to attack Russia with nuclear weapons, it may end life on Earth.”

China is equally candid about its war preparations.  Says President Xi, “It’s necessary to strengthen the mission … and concentrate preparations for fighting a war.”

While Americans are mostly oblivious to the risks of warfare, US military personnel are not.  According to a poll by Military Times, 46 percent of our active-duty troops believe the US will be drawn into a new war within the year. 

In a future post I will detail something of the ways that trade wars tend to morph into hot wars.  But for now, I will only stress that war between mighty powers causes havoc in their currencies., While gold becomes the go-to money of all nations. 

And now you know one more reason why the world’s central banks are scrambling to grow their gold reserves!

Are you doing the same?

 

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Rising costs of food and goods

Paper Money’s Last Hurrah? Trump fears the “Crazy” Fed

Gold Market Discussion

Consumer Goods Prices are on the Rise

Trump Crazy FedPresident Trump says the Federal Reserve is “the biggest threat” to his presidency.

He is afraid the Fed will create a new recession. “I think the Fed has gone crazy,” he said last week. 

The stock market is noticeably nervous about the Fed as well.

But the Fed may be do more than hurt one presidency, affect one election, or usher in just another garden-variety recession.

Congressman Ron Paul thinks that the next recession, which will come sooner than later, could be the major catastrophe that leads to the end of fiat currency.

Dr. Paul agrees with Trump’s use of the word “crazy” to describe the Fed. “When not forced to use a government-created currency, individuals have historically chosen to use a precious metal such as gold or silver as money. The reasons include that precious metals are durable, and their value tends to remain relatively stable over time. A stable currency ensures that prices accurately convey the true value of goods and services.”

Meanwhile an era of crippling inflation is beginning to raise its ugly head.  More on that last week from the Financial Times :

“The world’s big makers of consumer goods are starting to raise prices on everything from soap to soup as rising costs of raw materials spread through supply chains to supermarket shelves.

“Companies including Procter & Gamble in the US and Unilever in Europe recently put shoppers on notice to expect higher charges at the checkout, and several other leading groups including L’Oréal, Reckitt Benckiser and Kellogg could add to this trend with their earnings reports next week.

“It is a marked change from earlier in the year…”

WHAT THIS MEANS FOR INVESTORS:

Rising prices are the equivalent of a decline in the value of your savings. In inflationary periods gold tends to anticipate price increases to come and is thus your best hedge against inflation.

Owning gold and silver is a good idea in inflationary periods. But it is an absolutely crucial financial survival tool for the period that Dr. Paul foresees, one in which the “crazy” Fed’s tired fiat money system stops working.

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Stocks Tumble

What Does It Tell You When the Stock Market is Breaking Down and Gold is Running Up?

Gold Market Discussion

It was a rough week for the stock market. 

Commentators and headline writers are calling it everything from a rout to a bloodbath.

The Dow Industrial average is down 8.4 percent from its recent record high.  The Nasdaq market is 13 percent lower, while the S&P500 is off about 10 percent. The fun of the last few years looks to have ended for the popular FANG stocks — Facebook, Amazon, Netflix, and Google.  They  are off 33, 19.75, 28.8, and 16.4 percent respectively. In aggregate value, the companies on the S&P 500 have lost about $1.7 trillion in just a few weeks. Globally, equity market losses are nearing $9 trillion.

That’s big money.

The dollar headed down on Friday as well. Now, is all this action simply because the Fed is raising interest rates?  Not at all.  The story is bigger than that. 

As we have been shouting, the central banks of the world don’t want to be fleeced by the American money printing presses.  They no longer have faith in the dollar as the world’s reserve currency. Market analyst David Rosenberg tweeted as much this week: “Go ahead, blame Powell.  Don’t tell anyone that foreign buying of Treasury debt has been cut in half this year and keep it a secret that the dollar share of world FX reserves has shrunk to a 5-year low of 62.5%. The USD role as the reserve currency is on its last legs.” Gold, on the other hand, has moved higher, just as you would expect for a haven from the stock market carnage and loss of faith in the dollar.

What does it tell you when the stock market is breaking down and gold is running up?

Remember that stock markets are generally thought of as leading economic indicators:  signaling broader economic conditions to come.  Now they are experiencing their worst October since 2008.  You probably remember what happened in 2008.  It wasn’t pleasant. Market commentator Michael Shedlock says the question is whether we will experience a sharp economic crash or a slow bleed.

In either case, you will want to protect yourself and your family by owning gold.

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stock market warning signs

Warning Signs Still Flashing!

Gold Market Discussion

October 24, 2018:

 Investors hit by another DOW tumble as another 608 points are lost.

The stock market has given up all of its 2018 gains. 

The Dow Industrials have already lost 7.1 percent of their value just this month. 

The NASDAQ is currently having its worst month since November of 2008. (Yes, that infamous 2008).

We hate to see anyone lose money, but it is good to hear from those of you who have been taking to heart our warnings and special alerts about the precarious stock market.

More than six weeks ago we headlined a post “Warning Signs Flashing Red.” They indeed were flashing red!  They they still are. 

This is why we have been recommending taking those profits from the stock market and moving into the world’s premier monetary sanctuaries – gold and silver!

Since the day we wrote about the warning signs, the Dow has dropped about 9%.

Gold is up more than 4%.

And we’re just getting started.

Sometimes, in the face of a stock market sell-off, powerful forces will be put to work trying to stem the tide:  central bank operations, guidance about future policies, plunge protection team money shuffling.

Remember that all such interventions only make the ultimate problem worse.  With each new manipulation, the money we use becomes less resilient, and less reliable.  And in fact, nothing can stop economic reality from eventually asserting itself.

If you haven’t acted to lock in any profits you have made in stocks, there is still time to do so.  Big economic events have been set in motion. 

As a Gold Market Discussion subscriber or a Republic Monetary Exchange client, you likely bought gold in the past and were protected during the 2008 crisis because of the gold you owned. 

Don’t wait until the last minute to move back to the safety of precious metals.

Talk to your broker about your options to take advantage now while we are still in the $1200’s!

Take advantage of the current Gold-to-Silver Ratio! 83-1!!

This favors shifting your precious metals investments out of gold and into silver.  At some future date, when the ratio move lower, the strategy will involve trading that silver back in to gold WITH A NET INCREASE IN THE TOTAL NUMBER OF OUNCES OF GOLD  YOU OWN! 

Trading the Gold-Silver Ratio is a preferred strategy.  It is one I have used myself for many years.  Your RME broker well explain to process in easy to understand terms. 

Please take a minute to review the September 30 post here on the Gold Market Discussion about the Gold-Silver Ratio.

THERE ARE MANY OPPORTUNITIES IN THE PRECIOUS METALS MARKET RIGHT NOW.

Call us at 602-955-6500 or 877-354-4040 to find out more. 


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Save a Millennial

Help a Millennial Today!

Gold Market Discussion

Help a Millennial Today!

As the stock market sell-off continued this week, I saw a headline that asked if Millennials are about to get slaughtered.

Could be.

Millennials, generally agreed to be those born between 1981 to 1996, are about a quarter of the US population.  They are almost 30 percent of the voting age population.  And in a few years, they will surpass in sheer numbers what’s left of the outsized Baby Boom generation.

Now comes news that the more well-off of the Millennials, having lived through the Great Recession, expect another such financial calamity in their future.

Left to Right: Former Fed Bosses Alan Greenspan, Paul Volcker, Ben Bernanke

Paul Volker, the former Fed chairman who helped break the back of the double-digit inflation at the beginning of the Reagan presidency, agrees.  Volker says that we’re “in a hell of a mess in every direction.”

USA Today recently reported on a marketing firm study finding that more than three out of four Millennials with $50,000 of investable assets or $100,000 in family income, believe that “it is just a matter of time before the bad behavior of the financial industry leads us into another financial crisis.”

They are right.  Volker is right.  It is just a matter of time. 

Now the Millennials desperately need to learn what to do about it.

Otherwise, they are set up to be financially slaughtered.

Each week we detail the kinds of financial behavior that will necessarily bear bad fruit.  Things having to do with deficits and debts, spending and promises, Fed-driven market bubbles, monetary malfeasance, and more. 

In fact the things we spell out for our clients here on the RME Gold blog and the developments our brokers follow day in and day out can serve as a “crash” course in economic reality — especially suitable for those Millennials who sense that  “bad behavior” will lead to another crisis.

The people who prepare for monetary crises by investing in precious metals are the people who come out on top on the other side of the calamity.  We’d like to recommend that you refer the Millennials you know – family members, friends, work colleagues – to this blog.  You may also feel free to forward any of our posts and analysis to them.  You will empower them to prepare wisely for what they already sense is coming. 

MillennialsIn doing so, you not only help them as individuals, you help our country.  History demonstrates that the more people who own gold and silver, the more quickly an economy can recover from the tragic implosion of its paper money.  Because of their numbers, Millennials will be essential to this hoped-for recovery.

In fact, if they have any questions about the things they read here, or any of the economic and monetary issues on the horizon, they are always welcome to call one of our brokers.  You are, too.  There is no obligation.


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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hungary buying gold

In a Nutshell

Gold Market Discussion

In a Nutshell: Hungary is Buying Gold

Here’s a little noticed item that tells the whole story.

The central bank of Hungary has just announced a 1,000 percent increase in its gold holdings. 

That’s right.  It increased its gold reserves 10-fold!  And it did it all in the first two weeks of October!

Hungarian Parliament in Budapest

Here’s what’s going on:  The central banks of the world don’t mind fleecing their own citizens with their unbacked paper money.  They just don’t want to be fleeced by ours.

They see the handwriting on the wall.  So they are moving their reserves out of dollars. 

The Hungarian National Bank succinctly explained its move in an official statement. 

It is well worth reading, especially the passages I have emphasized:

Following the substantial increase in the Bank’s gold reserves in physical form, its repatriation has already taken place. The possession of precious metal within the country is in line with international trends, supports financial stability and strengthens market confidence in Hungary.

In keeping with the historical role of gold, gold remains one of the safest instruments in the world, and, even under normal market conditions, provides a stability and confidence-building function….

The role of gold reserves in the nation and in the nation’s economy strategy is becoming more and more appreciated while both the possession and the increase of nations’ precious metals holdings appears to be decisive international trends….

Gold is not only for extreme market environments, structural changes in the international financial system, and deeper geopolitical crises. Gold also has a confidence-building effect in normal times, that is, gold can play a role in stabilizing and defending. 

Gold is still considered to be one of the world’s safest assets, whose characteristics can be attributed to gold’s unique properties such as finite supply of physical gold, and lack of credit and counterparty risk given that gold is not a claim against a specific partner or country.

That’s the gold story in a nutshell.   And while the case it makes for owning gold needs no elaboration, note, too, that Hungary has taken physical possession of the gold it owns.

It is not buying gold ETFs, GDX or gold stocks, gold options, or futures contracts.  It wants to move out of paper and into real gold.

There was a time the foreign central banks were willing to leave their gold in storage with the US Federal Reserve.  No longer.  Germany, the Netherlands, Venezuela, Russia, China, Turkey, and Austria are all among the countries that have repatriated gold. 

Now Hungary is both aggressively acquiring gold and taking delivery of it. 

In a nutshell, we strongly suggest you do the same.


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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government accounting

What We’re Up Against: Government Accounting

Gold Market Discussion

What We’re Up Against: Government Accounting

There are a lot of things fishy about the way the government operates.  But nothing is fishier than government accounting. That’s a problem for us all, because government accounting helps determine the prospects for the US dollar. The financial news outlets this week are filled with stories about the Fiscal Year 2018 US budget deficit. They report the deficit for the accounting year that ended September 30 was $779 billion.  That’s nothing to sneeze at, but it’s way short of reality. There’s nothing fishier than government accounting.

When the fiscal year ended a couple of weeks ago, I wrote that the deficit was $1.27 trillion.

government accounting racketThere’s a big difference between $779 billion the news media report, and $1.27 trillion I reported.  The difference is almost a half-trillion dollars.

What gives?

Who’s right?  If the picture of the nation’s finances the government provides is correct, you should go your merry way. But if the picture I provide is correct, you will want to make sure you are substantially protected with precious metals. Let me show you how to find out for yourself who is telling you the truth.  The US Treasury maintains a site that reports the federal debt “to the penny” each business day.  Here is the link. Call up the national debt at the end of September this year, FY2018.  It was $21.516 trillion.  Now look up the national debt one year earlier, at the end of September 2017.  You will see that FY2017 finished with a national debt of $20.244 trillion.

The difference is the increase in the national debt in a year.  It represents a deficit, a gap between what the government took in and what it spent. 

It is not $779 billion.  It is $1.27 trillion.

Government accounting!  What a racket!

Still the financial news sites – CNBC, CNN Business, MarketWatch, Bloomberg – all report the lower number.  It is an example of news coverage by merely running government press releases. 

But we prefer our clients to know the real story.

Even the $21.516 trillion national debt figure – as mind-boggling as it is – is another product of government accounting.  An honest measure of its indebtedness should include promises the government has made to pay for things.  That’s how we reckon debts in the real world. Among the promises the government has made that people rely upon are things like Social Security and Medicare.  These unfunded liabilities are debts of the country, no less than any other government promises to pay. Accordingly, the real national debt should be measured in the hundreds of trillions of dollars! Government accounting is also what has allowed the Federal Reserve to destroy 97 percent of the dollar’s purchasing power, even at it is charged with maintaining price stability. If private businesses operated with the flim-flammery of government accounting, people would be locked up in jail.

There is really only one broad-spectrum protection against government accounting and the destructive practices in enables. 

It is 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!”

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Global Financial Weapons

Weapons of Global Financial Warfare

Gold Market Discussion

Weapons of Global Financial Warfare

The establishment financial press denies it.  Experts laugh at the idea.  Few people think about it.

But…There are a lot of weapons aimed like arrows at the heart of the American economy. 

For example, the conventional wisdom is that the Saudi’s will never use their oil as a weapon against the West or the United States.  Never mind that they did just that in the 1973 oil embargo.

financial weaponsOn the heels of some tough talk in Washington about consequences for the mysterious disappearance and apparent murder of Saudi dissident and Washington Post columnist Jamal Khashoggi, the head of the Saudi government’s Al Arabiya new network responded with tough talk of his own.  “If the price of oil reaching $80 angered President Trump, no one should rule out the price jumping to $100, or $200, or even double that figure.”

Such an event would give rise to a dollar crisis, as did the oil price shocks in the 1970s.  The event contributed an explosion in gold prices.

The same head-in-the-sand posture applies to conventional thinking about China using its substantial dollar reserves as a weapon in the trade war.  China would never do such a thing, we have been assured for years by presidents, treasury officials, and the New York Times alike.

But dollar disinvestment by China is a real threat.  For years China has advocated the replacement of the dollar world currency reserve system. 

And it has been aggressively acquiring gold through both visible and obscure channels.

Dollar dumping by China would be a global-scale event with consequences for the dollar that would rattle the world’s financial markets. But trade wars often give rise to such mega-reactions.

It is events like these – an oil crisis or a dollar crisis – that we advise our clients to prepare for.  We think world events are becoming less stable, that financial turmoil is becoming more certain.

If you agree, you will want to protect yourself and your family with gold.  Please speak to your RME broker at once.

Do not delay.


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

Ford layoffs

The Outlook for Businesses is the Outlook for Stocks

Gold Market Discussion

Ford Says Trade War has Already Cost $1 Billon and Could Layoff 24,000 Workers

Gold ended the week higher.  Stocks ended the week lower.  

Now that the dust has settled, I’d like to ask you to look at the prospects for the stock market in this economic environment.

Ford Trade WarA trade war is tax on the businesses and the economy.  Import prices are higher.  Agricultural exports are fetching less.  Ford motor Company is announcing layoffs, as many as 24,000 jobs.  It has reportedly lost a billion dollars so far in the new trade war.

Higher interest rates are a tax on the businesses and the economy.  Businesses that borrow for inventory and other reasons face increased costs.

Increased government spending is a tax on the businesses and the economy.   The eye-popping deficit of $1.27 trillion for fiscal year 2018 that I wrote about recently should remind everyone of the common-sense observations of Milton Friedman, who said that the level of taxation is equal to the level of government spending.  

It cannot be otherwise.  If the US spends more this year than last – and it does no matter what politicians tell you about cutting your taxes – then the economy is being taxed more.  To describe it otherwise is a shell game:  the real level of taxation is always equal to the level of government spending.

So, with the wake-up call of the past week’s stock market sell-off and bounce in mind, ask yourself how the businesses that make up the stock market will do in an economy burdened by increasing tax loads:  the tax of the trade war; the tax of higher interest rates; the tax of government growth.

Let me close with the recommendation I made a week ago, before the stock market shock.  It is more important than ever:

“Those of our clients that have enjoyed the stock market run over the last ten years are strongly encouraged to move profits into gold now.”

 


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

low tide

The Good News About the Stock Market Sell-Off

Gold Market Discussion

Gold is up.  Stocks are down. 

At RME Gold, we’re in the business of helping people protect their wealth and prosper, so we don’t like to see anyone lose money.

But some good can come out of this week’s treacherous stock market:  Ithousing and real estate bubble is proving to be a wakeup call for a lot of people who are now beginning to realize just how badly exposed they are. 

A sell-off like this calls attention to the stock market bubble.  It is a bubble created by the Fed and its manipulation of rates.  It is a bubble inflated by unsustainable practices such as corporations borrowing money to buy back their own stock.

Borrowing at artificially low interest rates to buy back stock is little different than the home buying frenzy a decade ago.  It, too, was driven by interest rate manipulation.  Just as homebuyers found themselves in deep trouble as their adjustable rates began to climb, corporations will have to face the pain of higher rates on the money they borrowed to play the stock market. 

It reminds me of Warren Buffett’s remark that when the tide goes out, you see who has been swimming naked.

Well, the tide is going out.

Fed manipulation of the real market conditions of money and credit ALWAYS creates malinvestment.

A volatile stock market can be a wakeup call.  It should create urgency to move to the safety of gold.

As you can tell by gold’s strong response to stock market weakness, some have already gotten the message. 

We hope you have, too.


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

Ron Paul Stock Market Bubble

Ron Paul: Stock Market Trouble Ahead

Gold Market Discussion

Ron Paul with Jim Clark
Jim Clark with Dr. Ron Paul at the RME booth, NYC monetary conference, 2013

What does Ron Paul have to say about the stock market bubble?

Former congressman Dr. Ron Paul says we are in the midst of “the biggest bubble in the history of mankind” and a correction in inevitable.  In fact, Paul has said that a 50 percent stock market sell-off should not be a surprise.

“If you run up debt, print money, and distort interest rates you get distortions and distortions have to be corrected.”

“You can’t do that forever.  That is what the housing bubble was all about.”

Those of us concerned about debts and deficits, about honest money and Fed money printing know to listen when Ron Paul speaks.  His remarks in Congress about the housing bubble in its building stages proved to be like a play-by-play description of the tragic events that eventually played out. 

Now Dr. Paul is warning us again about the stock market bubble.  “We have the biggest bubble in the history of mankind.  The bubble is bigger than ever before. There’s no avoidance of a correction. The only thing that makes a difference is how to handle it.”

“Republicans and Democrats are alike, they don’t concern themselves about deficits. The only thing that they can do is print money and spend money and teach everybody to ignore the deficits,” he said.

“Because it’s the biggest bubble ever, I think its going to be very bad.”

“We’re getting awfully close. I’d be surprised if you don’t have everybody agreeing with what I’m saying next year some time,” said Paul.

Dr Paul is also warning of a likely surge in oil prices to over $100 a barrel. 

Oil has been climbing more or less continuously since early in 2016.  Prices have almost tripled since then.  Remember that spiking oil prices in 2008 were a prelude to the stock market calamity that unfolded later that year.  Like higher interest rates, rising oil prices are like a tax, a depressant on the economy, on corporate profits, and on stock prices.

What can informed people do to protect themselves from a brutal stock market correction?  We recommend our clients buy gold. 

Dr. Paul agrees.  Earlier this year Dr. Paul told a CNBC interviewer, “”I personally would be better off if I did buy a little bit more 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

Is the Fed About to Tank the Stock Market?

Gold Market Discussion
Fed BuildingSometimes I like to share the views of others, views that deserve serious consideration.  One of those views is that the Federal Reserve is about ready to tank the stock market.

Although there are some, not all of those who believe this think the Fed is about to drive a stake through the heart of the bull market in stocks on purpose.  Others think the Fed will do so as a part of its typical blundering.

105 years of Fed calamities and dollar destruction convince us that both views are possible.  Let me sketch some of the evidence.

Interest rates are flirting with levels that haven’t been seen in seven and a half years.  The benchmark 10-year Treasury bond traded this week with yield of almost 3.23 percent, the highest since May 2011. 

Behind that climb lies three increases in the Fed funds rate already this year.

Meanwhile, the chairman of the Fed, Jerome Powell, has virtually promised more rate hikes in the not-too distant future.  Stock market investors have already lost $1.5 trillion this year following speeches from Powell.  That calculation comes from JPMorgan Chase & Co. analysts.

Today’s sky-high stock prices are the result of years of massive interest rate manipulation by the Fed on the downside.  If lowering rates drove the markets to these levels, what will a regime of higher interest rates do?

Bond expert Jeffrey Gundlach of Doubleline Capital said this week that bond market action, with the 30-year Treasury having closed twice over 3.25 percent, foretells significantly higher rates.  “The last man standing was the 30-year, and it has definitively broken above a multiyear base that should over time carry us to significantly higher yields,” he said.

stock market tumble

 

Let’s sample some other opinions:

“We look for 10-year Treasury yields to hit 3.5% at some point – later this year, early next year – and I think that’s going to be a real problem for stock markets.” – Bob Baur, Principal Global Investors

“Although some say the neutral rate is difficult to observe, stocks see the barrier quite clearly. A ‘maximum tolerable peak’ for the fed funds above the neutral rate has been associated with bear markets since the late-90s global-debt boom.” Stifel analyst Barry Bannister.

“The Powell Fed is playing with fire.” – Bretton Woods Research

Let me be blunt:  Higher rates are not good for stocks or bonds.

Those of our clients that have enjoyed the stock market run over the last ten years are strongly encouraged to move profits into gold now.


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

Crisis Investing

Gold Market Discussion

CRISIS INVESTING

Gold is the currency of choice in times of crisis.  Whether it is called a “flight to quality” or a “flight to safety,” gold is the world’s money of choice in times of trouble.  That’s because of its superior qualities as money, qualities that have outlasted every conceivable type of government and countless paper money schemes, and survived world wars and global depressions.

Gold is a sensitive barometer of trouble.  Sometimes the price of gold jumps and only later do we get the news of a military incident or confrontation somewhere in the world that triggered the move.

With that in mind today I’d like to remind you of a few global trouble spots, dry geopolitical tinder that can burst into flames with little warning and spread into global wildfires.

flag of Iran

IRAN:  Economic wars and trade sanctions are often preludes to hot wars.  The kind of rhetoric bouncing back and forth between the US and Iran is now so fever-pitched that the only surprise will be if things don’t boil over. 

The Strait of Hormuz is the world’s most vital oil artery, a waterway transited by hundreds of tankers each month, and by 17 million barrels of oil per day.  Iran doesn’t have much leverage in a confrontation with the US, but it has made clear that it will target shipping through Hormuz in a crisis.

Often debated is how long Iran could keep the chokepoint closed. But more important is how a confrontation there is likely to spread.  In any event, I am not even willing to guess just how high gold will go if the US and Iran reach a tipping point in the Persian Gulf. 

But the move will be dramatic.

flag of Russia

RUSSIA:  This week U.S. ambassador to NATO Kay Bailey Hutchison threatened to “take out” new Russian missiles in development.  Others have already pointed out the obvious, that when you “take out” a country’s weapons, war ensues (cf. when the US “took out” Iraq’s non-existent WMDs).  Russia, said the ambassador, is “on notice.”

Over at the UN, ambassador Nikki Haley is “seething,” “threatening,” and “warning” Russia on an almost daily basis.  (For fun, I did a Google search on “Nikki Haley warns Russia” and got 2,330,000 hits!)  How any of this fits in with President Trump’s campaign position on seeking peace with Russia is not the subject of this post.  Instead, we will point out that, like it or not, Putin is correct that the promiscuous use of economic sanctions hurts the dollar in the long run.

flag of China

SOUTH CHINA SEA:  There was a close encounter between the US and China this week when a Chinese ship came within 150 feet of a US destroyer in the South China Sea. 

China warned the US to leave the area, while Vice President Pence charged China with “reckless harassment.”

While that incident has been widely reported, less noted is that the US Navy has drawn up classified plans to stage a global show of force in the region in November.

The world can be a very dangerous place.  It only takes one spark to ignite a conflagration.

And to light the fuse on a runaway gold market.


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

wall street

Two Thoughts on the Market Action

Gold Market Discussion

The gold price spiked after a close, but brief, encounter with reality on Tuesday.  From a low of $1192, gold surged to a high of $1212, before coming to a close at $1207.

The price of silver popped, too, knocking on the door of $15 an ounce before closing at $14.69.

As always, the question is “what happened?”  It was something we had forewarned you about a couple of weeks ago.  The federal government’s accounting year, Fiscal Year 2018, ended on Sunday, September 30. 

national debt clock
The yesteryear debt of 9.2 trillion on the famous National Debt Clock in New York City doesn’t look so bad compared to today!

On Monday the truth was told:

The deficit for the year was over a trillion dollars, as we had warned.  Originally the FY2018 deficit was projected to total $526 billion.  We knew at the time that it would probably be twice that high… and even that fell short of the irresponsible spending reality.

The exact number for the year was an eye-popping $1,271,158,167,126.72.  The government had spent $1.27 trillion more money than it had taken in. 

In 12 months!

Let me put that in perspective. The entire federal debt did not reach $1 trillion until 1982.  I don’t mean the one-year spending deficit. I mean that the entire debt of the US government didn’t reach $1 trillion until 1982. 

The US fought for and gained its independence; it fought the British again; it completed the Louisiana Purchase, fought the Civil War, opened the West and expanded to the Pacific coast;  it fought War One, World War Two, the Korean War and the Vietnam War, and put a man on the moon.  And through all of that, the cumulative federal debt didn’t reach a trillion dollars. 

Until 1982.

But in the year just ended, the deficit was $1.27 trillion! 

For one year!

Maybe you see where this is going.

The total federal debt for the fiscal year skyrocketed to $21.5 trillion.  To be exact, $21,516,058,183,180.23. 

One of the news services figured out that the debt was equal to approximately $138,330 for every person in this country who works.

No wonder the gold market jumped!

But it didn’t take long for on Wall Street and in Washington to say, “If the people aren’t concerned with the debt we’re loading on them, why should we be?  If they don’t realize we’re going to print money and inflate away their earnings and savings, then let’s just keep the party going.” 

So, gold returned to its trading range around $1200. 

We have two thoughts about the turn of events.

First, we’re glad we still have some time to help our farsighted clients invest in gold before the price runs away.  We don’t know how long we have, but events are accelerating.  Please don’t wait until it is too late.

Watching Washington, a second thought occurs. It’s from Shakespeare:

“Lord, what fools these mortals be!”

We don’t know the dates and the times that these events will unfold, but they are underway now and they will accelerate as at first a few countries and then more diversify out of dollars and into gold.

We recommend you beat them to the punch by acquiring gold now, before the inevitable stampede.


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

Abandoning the Dollar Standard

Gold Market Discussion

World Reserve Currency Breakdown:  Abandoning the Dollar Standard

Dollar Devaluation Ahead
Increased spending, tax cuts, and more debt will mean massive inflation and a blow to the American dollar’s purchasing power.

Today I’d like to alert you to what is happening to the dollar’s role on the world stage.

But first, the backstory:

In more sensible times, back before trillion-dollar deficits and a national debt that runs to fourteen places (think about that!), the US was on a gold standard.

Now the US and, for all practical purposes, the world is on a dollar standard.  It is a monetary scheme that evolved after World War II under which the nations of the world and their central banks were persuaded to hold their currency reserves in dollars instead of gold.

It is an arrangement that has made the dollar more valuable than it otherwise would be.  It has also subsidized the US government’s debt. As it comes apart the value, the purchasing power of the dollar, will suffer. 

This post-War system was sold largely as a convenience.  “Don’t worry,” the world was told.  “You can take trust these dollars since you will be able to exchange them for the underlying gold anytime at all.”

That promise was broken long before many of our clients were even born!  The particulars of this structure, with the dollar as the world’s reserve currency, have changed over the years, but it has been given enough international duct tape and secret money rigging for the whole rickety system to have survived.

Until now.

Now the system is beginning to fly apart.  Two examples that you should understand are very threatening to the dollar and its value.

First, the central banks of the world have substantial holdings of dollar.  We have warned you even recently about our vulnerability to China’s official holdings of dollar bonds.  What is little known is that, until recently, even Russia was a major creditor of the US.  But with all the US sanctions targeted at it, Russia decided at the end of last year to unwind its dollar holding.

It sold aggressively through the spring, unloading $90 billion in Treasury bonds altogether over the period.  The bond sell-off spiked 10-year Treasury interest rates over 3 percent for the first time in years. 

What has Russia been doing with the proceeds of its US Treasury bond sales?

Buying gold, of course.

Russia is not the only country beginning to view the dollar more as a cudgel to enforce US foreign policies, than as a neutral and reliable store of value. 

Our second example, reported earlier this week, involves a decision by the three major European powers, Britain, Germany, and France, to join in an agreement with Russia and China to circumvent US sanctions and continue to buy Iranian oil.  The parties announced a new vehicle that allows them to bypass the US controlled and dollar standard international payment system.

Such defiance of the US would have been unthinkable in the past.  Unthinkable.

WHAT THIS MEANS FOR INVESTORS:  What I have described for you are crucial developments that aren’t covered and explained on the evening news.  But they will have more impact on your standard of living than most of the stories you see.  Both of these developments foretell the crack-up of the dollar’s privileged role in the world.  They foretell the end of the post-War system that has artificially subsidized the dollar, giving it – and you – more purchasing power than you would otherwise have.

As the countries of the world look for a time-tested currency reserve that is not subject to political manipulation, they will find only gold. 

We don’t know the dates and the times that these events will unfold, but they are underway now and they will accelerate as at first a few countries and then more diversify out of dollars and into gold.

We recommend you beat them to the punch by acquiring gold now, before the inevitable stampede.

 

 


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

The Gold-Silver Ratio is Making a Strong Case for Silver

The Gold-Silver Ratio is Over 80:1- Time to Act on Silver

silver bars

Suppose you had 10 ounces of gold and you agreed to trade it for 800 ounces of silver.   Then, sometime down the road as prices change, suppose you could trade that 800 0unces of silver back into gold, but that you got 16 ounces of gold instead of the ten you started with.

You didn’t invest any more money, but the amount of gold you own just increased by a sixty percent! 

Pretty smart move, right? 

You bet it is.  This example, using the spot prices of gold and silver, is for purposes of illustration only, because of transaction costs and since different coins and bars have their own premiums relative to the spot prices.  But many of our clients and I, myself, have used this powerful strategy for years to substantially increase our precious metals holdings.

I would like to recommend it to you now.  Because this is the time to trade gold for silver. 

Let me explain.

The gold-silver ratio, which is the price of gold divided by the price of silver (essentially how many ounces of silver does it take to buy one ounce of gold), is now around 83 to one, the highest level in about 25 years. For more information, read our gold-silver ratio article here.

We recommend trading gold for silver with the ratio this high.  Because gold and silver each have their own supply-demand fundamentals, their prices don’t move in lockstep. Down the road as prices change the ratio between the two metals will change.  The gold-silver ratio can be expected to rise in a falling market, which provides us today’s opportunity to use this strategy.  Similarly, in a rising market the ratio will move lower.  For example, in April 2011, with silver at $50 an ounce and gold at $1,500 an ounce the ratio hit 30 to one. 

Our intent will be to target trading back into gold when the ratio is 50 to one.  But your broker will be able to give you specific recommendations depending on market conditions at the time. 

The gold-silver ratio doesn’t tell you where the price of either metal will be next month or next year.  But at 83 to 1, it is very persuasive evidence that the price of silver is low relative to the gold price. 

I urge to speak with your broker about this strategy.  They will be happy to explain this powerful strategy in more detail and answer your questions.  We especially like it for growing your gold and silver holdings because you are always invested in precious metals, moving  into the precious metal that is relatively undervalued and therefor has the greatest relative price appreciation.

One day people will be more interested in the total number of ounces of gold and silver they have rather than the dollar value of their gold and silver.  When that happens, you will be very happy indeed that you took advantage of the gold-silver ratio strategy.

The ranges of the gold-silver ratio

 

Is Student Debt the Next Bubble

Student Debt: The Next Bubble?

Gold Market Discussion

Is Student Debt the Next Bubble?

Student Loan DefaultsAn article by New York Post contributor John Aidan Byrne the other day made a couple of points worth repeating regarding student debt.   

Bryne wondered if the student debt crisis will be the trigger for the next financial meltdown.  It’s a good candidate.  Today more than 30 percent of student loans are either in default, delinquent, or simply going unpaid. 

The student loan debt totals $1.5 trillion today.  That exceeds the value of subprime mortgages that lead to the Crash and Great Recession.  Byrne notes that “in March 2007, in the lead-up to the financial crisis, the value of subprime mortgages was estimated at $1.3 trillion.”

At its current pace, today’s $1.5 trillion student loan total is “careening to $2 trillion within the next three years,” he says.

The student debt burden is having a depressive impact on the economy that will only get worse.  It has millennials struggling to move out of their parents’ homes, buy their own homes, form capital to start businesses, and save for the future.

At least in the subprime crisis, loans were secured to some degree by the underlying real estate. 

But what secures student loans? 

Nothing.

Humorist P.J. O’Rourke put the question of collateral for student loans in perspective.  “How about an English thesis on Henry James?” he asks.

Yeah.  Take that to the bank.

There are many other things that can trigger the next financial crisis.  Trade wars.  Rising interest rates.  Metastasizing government debt.  A stock market crash.  Money printing.

Student debt is just one of many candidates. 

Like so many other things in the government’s financial house of cards, it reminds us of J.P. Morgan’s testimony to Congress more than 100 years ago. 

“Money is gold, nothing else.”

 


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 Buying Gold

Central Banks, China Add Gold

Gold Market Discussion

Central Banks and China Are Adding Gold… Again.

China adding goldThe numbers are in on central bank gold buying for the first half of 2018.  For the six months central banks increased their gold buying by 8 percent over the year before. Altogether central banks accounted for 10 percent of global gold demand

The officially reported numbers for China’s gold reserves have remained unchanged 1842.56 metric tons.  But China has gone for extended periods in the past without reporting any changes in its gold holdings, and then suddenly reports huge new total reserves.

What also goes unaccounted for in these numbers is the flow of the world’s gold from the West to private hands in China.  This is an almost subterranean flow reported by bullion banks and refineries that has huge economic significance and yet has been grossly undernoted in official circles.

While the West’s governments print paper money, their countries are being decapitalized of real, enduring money. 

At the same time, China is also the world’s largest gold producer. It has more than twice the annual gold production of the US.

Much of China’s move into gold remains shrouded in mystery, which is probably what its government prefers. Why let the world know you are aggressively acquiring gold?  Better to operate quietly and buy what you can while prices are still low. Even so, a recent Bloomberg story cites a Hong Kong consultant who observes that with strained relationships with the US over trade, China now has fresh motivation to add to its gold holdings. 

China is the largest holder of US Treasury debt instruments (US government bonds)

That means that China loans money to the US government, enabling Washington to continue to spend more money than it takes in. The US is so debt-addicted that it is dependent on foreign creditors like China.    

While this is a vulnerability of the US, it also means that China is highly vulnerable to the US government’s favorite tool for conducting its foreign policy: embargos, restrictions, and sanctions. 

What this means for investors: Long ago there was an expression in the gold business that asked, “Are you as smart as a French peasant?” It referred to the people’s insistence on owning gold, since they had been fleeced by paper money so many times in their history.

Today we would suggest that our clients be as wise as China, which is quietly acquiring as much gold as it can while prices are low.


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 Chooses the Printing Press

Trump Chooses the Printing Press

Gold Market Discussion

A Word to the Wise:  Trump Chooses the Printing Press

Last week I promised to share with you some revealing information that makes clear that money printing will be the government’s preferred policy option in the days to come. I said, It is a story that may disappoint some of you. But it is another warning that you will want to take seriously.”

The story comes to us from veteran Washington reporter Bob Woodward’s new book, Fear: Trump in the White House. As you might expect of a book filled with insider sniping at the President, it quickly shot to the top of the bestsellers lists.

Along the way some officials quoted in the book have disputed Woodward’s account of their words. They are doing to, says Woodward, to protect their jobs. And he threatened to release tapes of some of his interviews.

At RME, our beat is gold, money, and the economy. We are interested in commenting on Washington’s endless squabbles only to the extent it helps our clients protect themselves and profit from events to come.

From that standpoint, one of the most revealing quotes in the book comes from Gary Cohn, who was Trump’s top economic advisor.  Cohn isn’t among officials trying to protect his job since he left the White House back in April.  His only comment about the quotes attributed to him has been a sort of on non-denial denial. 

But the relevant passage of the book comes as the President and Cohn were discussing the national debt.  Cohn was trying to persuade Trump that the government can’t go on just running up debt and borrowing money. After all, as a candidate Trump said he would eliminate the national debt in eight years.

Trump’s solution?

“Just run the presses—print money,” said the President.

Now, we are not surprised that governments are quick to resort to printing money. The government’s desire to print money is behind the present dollar standard and Federal Reserve system to begin with.

But printing money is only effective if people are willing to be fleeced by the policy. The government’s newly printed dollars take on value or purchasing power to the degree that the existing dollars people already have lose value or purchasing power.

What I am saying is that if everyone knew the government was intent on debauching the dollar by printing more of them, they would make sure that they are not victimized by the practice.

They would protect themselves by owning gold.

In effect, Woodward’s account of Trump’s money printing policy preference let’s the cat out of the bag. 

It should be a word to the wise.


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

2008 Crisis

10 Years Ago

Gold Market Discussion

TEN YEARS AGO: The Financial Crisis of 2008

As the week began, gold continued to trade in the $1200 range; silver’s trading neighborhood so far in September remains just over $14.00.

Ten years ago this week the Panic of 2008 was picking up steam.  It turned out to be the biggest financial calamity since the Great Depression. 

That summer police in California were needed to maintain order as people desperate to get their money out lined up outside an IndyMac Bank.  The bank was taken over days later by the FDIC. 

The government soon had to take over Freddie Mac and Fannie Mae at a cost to taxpayers of hundreds of billions of dollars.

Bank of America was called upon to take over Countrywide Mortgage; Bear Stearns failed and was taken over by JPMorgan with the help of $29 billion from the Fed. 

On and on it went.  After a run on the bank, Washington Mutual, the nation’s largest S&L, failed.  It was followed by Wachovia Bank.  Lehman Brothers, which was founded in the 1840s, filed for bankruptcy.  It had survived the Civil War, two World Wars, and the great depression.  But it was undone in the Great Recession, and resulted in the largest bankruptcy in US history.  Taxpayer money and freshly “printed” Federal Reserve dollars were bailing out one institution after another:  The insurance giant AIG; Citigroup; Merrill Lynch. 

The carnage in the markets was simply unbelievable. 

The Dow Industrials crashed from 14,000 to 6,600.  All together $50 trillion disappeared from the world’s stock, bond, and currency markets.  By one estimate, the American people lost a quarter of their total net worth.

Perhaps the best indicator of the severity of the crisis is this number:  9.3 million American homeowners lost their homes to foreclosure or in distress sales.

Without comment, let me compare the essential metrics of where we were ten years ago and where we are today.

At the beginning of September 2008, total Federal debt was $9.6 trillion.  Today it is $21.4 trillion.

(The scope of the debt problem is global.  Total global indebtedness has skyrocketed over the last 20 years from $40 trillion to $250 trillion.)

The Federal Reserve’s Monetary Base, the amount of money it has “printed” to buy things like troubled mortgage and government securities, has quadrupled since the meltdown.


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 we warned you about

This is What We Have Been Warning You About!

Gold Market Discussion

We are now only weeks away from the end of the US governments 2018 Fiscal Year.  And it will be one for the record books. But not in a good way. In fact, the year-end numbers are very bad, the worst since the last financial crisis.Time to Cut Costs

Originally, the FY 2018 deficit was projected to total “only” $526 billion. 

Wrong. By May, officials had upped that estimate to somewhere just under $800 billion. 

Wrong again.  Nothing is more common that the government having to increase its deficit guesstimates several times as the year goes along. But now, through August, with eleven months of the fiscal year on the books, the deficit has already climbed to $898 billion. 

There are two specific takeaways from this:

  1. This deficit is almost 40 percent higher than the eleven-month total in the prior year.
  1. We are closing in on a trillion-dollar annual deficit for the accounting year that ends on September 30.

We last experienced trillion-dollar deficits during the worst years of the mortgage meltdown and the financial crisis, 2009 – 2012.

fork in the fiscal roadBut this time is different. This time we are operating a scandalously irresponsible deficit – not in the depths of a crisis – but in a period of some growth and higher employment.

No one should be surprised that the deficit is moving back into its old crisis neighborhood. Afterall, the government has both cut taxes and increased spending.

What this means for investors:  At RME we have been warning about this return of skyrocketing deficits. The government has to get the money to cover its deficit spending somewhere.  It can borrow the money, or it can print the money.  Borrowing the money becomes more problematic when interest rates are rising (rising rates threaten to compound the already unsustainable debt), and when the government is on the verge of a trade war with major creditors like China.

That means it must print the money. Next week I will share with you a shocking story that will make it clear that when we say the government will print the money, we are not simply guessing.

It is a story that may disappoint some of you.  But it is another warning that you will want to take seriously.


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

Currency Deaths

Gold Market Discussion
Currency Deaths Remind Us Why We Own Gold and Silver

Wednesday, 9/12/2018

There is only one answer to the question “how many paper currencies have failed?” All of them. 

Or stated differently, thousands of them have already failed, while those that haven’t quite given up the ghost yet, the newer ones including the paper Federal Reserve dollar, are in the process of failing.

The death of a paper currency may seem to happen slowly, although to anyone watching closely everyday, as we do at RME, it starts slow and then accelerates very quickly. The general public only notices it when the tragedy of a socialist failure like Venezuela makes the network news. However, there are many world currencies in a death spiral right now besides Venezuela’s Bolivar.

Using the dollar as a benchmark, (we’ll come back to that in a moment) here is how much value a half-dozen of the world’s currencies have lost just this year according to the firm Pension Partners:

  • Venezuelan Bolivar – 99.99%

  • Sudanese Pound – 61.10%

  • Argentine Peso – 50.50%

  • Turkish Lira – 44.00%

  • Angolan Kwanza – 38.80%

  • Brazilian Real – 20.70%

A dozen other currencies have also suffered double digit losses so far this year.  Those who have been victimized by them all wish they had put their trust in gold, not paper.

Venezuela Bolivar Hyperinflation
What hyperinflation in Venezuela looks like.

 

Empty Food Shelves in Venezuela
An empty food market in January 2018- Caracas, Venezuela

 

Zimbabwe
The aftermath of currency hyperinflation: Here is actual currency from Zimbabwe. Yes, you read it correctly.

What this means for investors:  Some of the US dollar’s apparent strength is due to those (usually the financial institutions affected, and not the common people) moving out of the most troubled currencies and into dollars.

But remember, the real value of paper money is how much you can buy with it.  And on that measure, no matter how many market commentators tell you the dollar is up or the dollar is down, they are only comparing it to other currencies that are also losing value.  In the real world – the one that matters – the dollar is losing value.  Like the others, the pace of that loss will accelerate.

To protect yourself against the sorry fate of all paper money, you need to own gold.


As always, I encourage you to speak with your broker at RME for more market updates. Experts are available Monday-Friday from 9 AM- 5 PM. Call today-  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

Flashing Red!

Warning Signs Flashing Red!

Gold Market Discussion

Tuesday September 11, 2018

“Warning Signs Flashing Red!”
Gold started off the week little changed, continuing to consolidate around $1200.  This leaves us a moment to loop back around and underscore an important item we have already shared with you. 

But we think it is one that demands repeating.

CIA Director George Tenet
CIA Director George Tenet

Goldman Sachs’ bear market indicator for stocks is now at levels which have historically preceded a bear market.”  The firm’s Bull /Bear Market Risk Indicator is higher now than before the deadly 2000 and the 2007 stock market crashes.  In fact, it’s at the highest level in a half century. 

As we noted over the weekend, the indicator is based on five factors: unemployment, the yield curve, inflation, valuation, and growth momentum.  While each of these indicators for determining the outlook for the stock market is important in its own right, Goldman Sachs has consolidated them, and having back-tested the relative importance of each as a forecasting tool since 1948, has weighted the importance of each in its risk indicator.

What this means for investors:
Goldman Sachs says that it Bull
/Bear market indicator “is flashing red.” for stocks. Those words are hauntingly familiar, especially this week as we mark another anniversary of the 9/11 attacks on America.   After that tragedy, CIA Director George Tenet testified that in the weeks before the attacks, “the system was blinking red.” Warnings that go unheeded do no one any good. This is already the longest bull market in stocks in history.  Can it go on forever?  No.  As economist Herb Stein noted, “”If something cannot go on forever, it will stop.” And when it does, there will be carnage in the stock markets and gold will be the beneficiary as investors scramble for safety.


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

Shortage as US Mint Is Running Out of Silver Eagles for 2018

Gold Market Discussion

US Mint Is Running Out of Silver Eagles

US Mint

Right now everyone is looking for 2018 silver eagles, and few can find them. In fact, the US Mint is running out of silver eagles for this year. They have temporarily sold out of them, but expect more before the end of the year. Last year the 2017 eagles weren’t always readily available either, but it never reached a level where the Mint was sold out.

What this means for investors:Silver eagle sales by the mint were up 33% in August from the previous month. This likely contributed to the Mint’s depletion of silver eagles, however, buyers were also taking advantage of the cheap prices we have been seeing in metals over the summer to stock up. The demand for gold eagles did not increase significantly though. Buyers are also taking advantage of the high gold to silver ratio and buying silver right now to optimize their precious metals portfolio.

Gold Prices Firmer This Week on News of Softer Dollar

dollar and gold correlationGold prices were generally firmer this week and maintained levels from last week. Price were trading in a narrow range around $1,200. They were up most of the week as the dollar index softened. On Friday gold slipped slightly after the U.S. jobs report showed robust data.

What this means for investors: Global stocks were down as well as the dollar as investors were getting jittery over trade war concerns this week. There was talk of even further escalation in the tariff battle between the U.S. and China.


Goldman Bear Market Predictor

Goldman SachsWe (and others) have been talking about recession predictors for sometime now. Some of these are the inverted yield curve and the so called “Warren Buffet” indicator. Now Goldman’s bear market indicator is over 70%…up 10% from last year. This indicator is based on five factors: unemployment, the yield curve, inflation, valuation, and growth momentum. It’s higher now than it was before the last two market crashes and is essentially “flashing red” on forth coming downturn.

What this means for investors: The bear market indicator was at 67% last year and some analysts were warning of recession. Yet the markets (overvalued as they are) have still been showing resilience. The Dow is still going strong and the Nasdaq has hit a new record recently. This is the longest bull market in history, due in part to  extended business optimism for Trump’s pro-business growth tax policies. When it bursts though, there will be far less wiggle room for for effective fiscal and monetary policy to aid recovery. Interest rates, despite rising, are still relatively low, and rates in Europe and Japan are near zero. Debt level and budget deficits are rapidly expanding. So whether the next crash is long and slow or abrupt, the recovery process will be much tougher.

The Debt Clock

The national debt is still one of the stories few want to talk about. With the increasing rate of spending coupled with tax cuts, the U.S. debt is on pace to be twice the size of the economy in 30 years. The deficit has increased by 20% in just the last year alone. Foreign governments hold $6.2 trillion of U.S. debt, and that number is quickly growing. It is costing over $260 billion a year just to pay the interest on the national debt. By 2024 the U.S. could very well be spending more on paying interest on its debt than on defense.

What this means for investors: It’s absurd to think the debt burden will ever be alleviated smoothly. Either the country will have to eventually default or wipe the balance sheet or continue printing money until the system collapses spectacularly. Whichever way it happens, it will be the downfall of the dollar. Countries like Russia and China are already maneuvering to steer away from the dollar as the world reserve currency. When fiat currencies come to a head like this, gold is the answer.

 


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 ingots

Trade Talk and Dollar Weakness Supported Gold This Week

Gold Market Discussion

Dollar Weakness Supported Gold

weaker dollarPrecious metals headed higher this week with gold hovering around $1,200. Dollar weakness supported gold prices, but gold stayed fairly quiet. Silver hovered around $14.50.

Trade talk once again was a mover for both gold and the dollar. President Trump announced the possibility of new tariffs for China in the ever-escalating trade war between the U.S. and China. Since the start of the talk of tariffs and trade war, the dollar index has been going up, which has been gold’s biggest headwind. However, weakness in the Chinese yuan is going to be exerting stronger influence on gold prices as well.

The dollar had dipped mid-week on news of a potential trade resolution between the U.S. and Mexico outside the scope of NAFTA. Investors moved out of some safe haven dollar positions seeing it as an indication that trade conflict with China and the EU might be resolved soon as well.

September Reversal for Gold?

Gold Eagles- BullionGold looks to be headed for a reversal. For the month of August, gold is down. However, this is fairly typical for metals to decline in the summer before reversing going into September. September is the most lucrative month historically for gold with average gains of 2%.

What this means for investors: The dollar is still the biggest obstacle for gold right now. Volatility in an overvalued stock market is likely to be a factor going into the fall though. Many investors are becoming wary of overvalued tech stocks in particular. As always when considering gold buying for a long term safe haven buy, think about price dips as buying opportunities.

The Fed’s Next Move

Federal Reserve Building EagleThe Federal Reserve just had its annual Jackson Hole, Wyoming summit. At it, they outlined potential future direction for monetary policy. Fed Chairman Jerome Powell made the case for a further, gradual increase in interest rates. President Trump recently expressed frustration at the rising rates, and Powell further indicated that the Fed would not cave to political pressure. Powell also downplayed the risk of overheating the economy with rate increases, which has been a source of concern for some. He also noted changing economic structures that are making monetary policy more difficult to navigate.

What this means for investors: Investors have been anticipating a September quarter point rate increase already. Despite remaining on track with rate rises for now, Powell seems to be moving cautiously for now as economic factors and inflation projections are seeming more uncertain. After the last few rate rises, gold has had a boost.

Currency Crisis in Emerging Economies

Argentina PesoArgentina’s economy is rapidly deteriorating. The Argentine peso is down 52% this year against the dollar. This week alone it slid 20% over two days. Argentina now has the highest benchmark rate in the world with rates at 60%. The Central Bank’s five interest rate hikes this year have been ditch efforts to soothe the economic turmoil. A resurgent dollar, spike in energy prices, and a decline in agricultural exports all contributed to the situation. Argentina was forced to ask the IMF for a loan, but investors are worried that the government will default on its debt.

What this means for investors: Argentina, along with countries like Turkey, Brazil, and South Africa, are feeling the squeeze on their currency value that a tight Federal Reserve monetary policy is pursuing. The strong U.S. dollar is making it tough for these currencies to regain traction right now, but there were problems to begin with. The battle against the dollar is merely exacerbating those issues. Many in Argentina blame the mismanagement of its 2001 crisis (its worst) as a source of continued problems.

One of the lessons from currency crises like these are that fiat currencies are unreliable. As they move through crash or collapse, gold is the safety net that protects wealth. For an extreme example of this, just look at Venezuela.


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

Gold Regained Traction as Trump Found Fault with Fed Policy

Gold Market Discussion

Gold Regained Traction and Climbed to $1,200 Again

Gold BarsGold had its first weekly gain in over a month this week. By Friday with gold prices up $20, gold regained traction enough to remain firmly over the $1,200 mark. It had been wavering back and forth over $1,200 earlier in the week though. Metals had been under a great deal of pressure lately from the dollar. Silver was up 30 cents Friday and moved in tandem with gold against the dollar.

What this means for investors: Investors are seeing an upside to gold. Buyers seem to think gold had hit a bottom and is going to keep climbing now. Dollar weakness was a major factor in gold prices being up this week.

Weaker Dollar and Uncertainty as Trump Finds Fault with Fed

Trump TarriffsThe dollar lately has been in high global demand as the safe haven by choice in the ongoing trade war and tariff retaliation between the world’s largest economies. This week though, the dollar pulled back after some comments that the President was “not thrilled” with current Fed direction on interest rates. In a Reuters interview, Trump admonished Fed chairman Jerome Powell for not doing enough to boost the economy. The Fed had its annual summit in Jackson Hole to discuss rate increases and the economic outlook. The decision was reached to delay with a rate hike and rather put off the hike until September. In the same interview, Trump also criticized China and Europe of manipulating their currencies to the detriment of the U.S.

What this means for investors: It isn’t the first time that the President has criticized the Fed. The President and the Fed are going opposite ways in fiscal vs monetary policy. Some analysts see this as the President trying to protect himself in the event of an economic recession. The perfect storm of tariffs, trade war, and rising rates happened before in 1930 and exacerbated the Great Depression.

Sanctions and Gold

moscow catheral

This week, new sanctions against Russia are taking effect. As sanctions ramp up, Russia’s accumulation of gold and discarding of U.S. debt ramps up as well. Russia isn’t the only country dumping U.S. debt either. Turkey is as well as its currency sharply declines and they turn to gold as a refuge. Gold continues to prove it’s the ultimate safe haven refuge when planning for downturn.

What this means for investors: China and the U.S. also slapped new tariffs on each other this week. Since the trade tensions between China and the U.S. kicked off, there has been far less uncertainty and safe haven trading in gold happening than one might expect. With indications lately that the trade war is ramping up rather than abating any time soon, the gold trade will catch up.

Gold Output to Slow

gold miners slowing outputAnalysts expect gold output to hit generational lows in the next few years. Mines in Australia and Peru in particular are approaching peak gold, and will struggle in the coming years. Over the next year or so, output is going to peak, and then reverse. In fact, miners forecast that output will sink 15% by 2022. In Australia, it will be a record 33% sink in 3 years.

What this means for investors: Lower supply means higher prices – especially as production costs go up. This is just one factor that could have an impact on gold within a few years. With prices already low now and factors like the dollar and a record stock market (now the longest bull market) putting pressure on metals’ prices, it’s something to factor in when looking at long term gold investment.

 


VOTE FOR DR. KELLI WARD THIS TUESDAY

Dr. Kelli Ward and Jim Clark

To our Arizona clients and subscribers- The Primary Vote is this coming Tuesday. I supported Kelli when she ran against John McCain and I support her now as she runs for the seat vacated by Jeff Flake. Let’s take the first step to getting Dr. Ward in the U.S Senate this Tuesday!

https://www.kelliward.com


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

Global gold prices

Gold Prices are Rising Elsewhere Despite Sinking This Week in the US

Gold Market Discussion

Gold Prices are Rising Elsewhere than in the U.S. – Why?

global gold pricingThis week gold dipped under $1,200. Silver took a hit this week too. It dropped under $15, keeping the gold-silver ratio high. It was able to clamber back some gains by Friday and close up $10, but many investors are favoring treasuries as a safe haven right now. However as metals prices are meeting resistance here, overseas gold prices are still holding value. For example, in Turkey as the lira threatens collapse, gold is trading up 30%. Turkish president Erdogan as recently as last year was even suggesting his people buy gold. Now Turkey is looking at it as a possible lifeline. (As a side note, it the ancient kingdom of Lydia, now modern day Turkey, where gold coinage first originated). A few months ago as well in Europe, gold posted higher gains in the euro over political uncertainty in Italy, Spain, and Germany. Additionally, the central banks of Russia and China continue to be the world’s biggest buyers.

What this means for investors: The dollar is remaining resilient for now, which is hammering gold. In fact it’s so strong right now that safe haven gold buying is not happening despite global uncertainty. Currencies like the lira and other emerging market currencies are plunging though, keeping the uncertainty trade in gold in those places robust. Silver’s pull back offered an attractive buying opportunity as it has been throwing indicators that it is undervalued.

Is Gold Ever Going to Fight Back Against the Dollar?

The Dollar vs GoldWith gold at an 18 month low and the dollar at a 13 month high, it doesn’t seem like gold can catch a break anymore. The U.S. economy is certainly the bulwark holding up the global economy right now, so investors are comfortable keeping the dollar as a safety net. Analysts – and even the President – have been cautioning that the dollar is getting too strong. However the pressure has yet to be released.

What this means for investors: Debt is still a huge factor to weigh in for the dollar down the line. U.S. debt has tripled since 2007 and is projected to hit $1 trillion by 2020. President Trump’s tax cuts are not being offset by decreased government spending. Rather, spending is increasing (as it has for years), meaning the debt will balloon even faster. The debt level is already unsustainable. When it comes to ahead, you can bet the dollar is going to break.

Case for Gold

There are still indicators making a case for gold, despite the pull back of recent weeks. Even internet entrepreneur Kim Dot Com (best known for his file sharing websites) has started advocating for buying gold before the dollar crashes. Gold, after all, is ultimately insurance against downturn and uncertainty.

Turkish Uncertainty

Tariffs on Turkish goods and a rapidly plunging lira could have a ripple effect on European banks. The increasingly hostile rhetoric between Turkey and the U.S. will ramp up uncertainty as well. Gold prices in Turkey rose 30% as the currency started collapsing.

Production Cost

Gold is selling for under production cost right now. This is partly due to lack of discovery of new gold deposits in the ground. The global supply is depleting. Once the production costs begin to catch up though while gold prices remain low, it won’t be worthwhile to produce as much. As production falls, prices will start to go up.

Gold to Bottom Out Soon

Once gold bottoms, it has nowhere to go but up. Analysts at ABN Amro think it is close to the bottom now. Metals prices have been falling for sometime now, but Q3 looks like it could be the bottom. ABN Amro has positioned for gold to reach $1,400 by 2019.

 


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

The Gold to Silver Ratio Is Near 80 – Is Silver Undervalued?

Gold Market Discussion

Gold to Silver Ratio Is Near 80, Signaling Time to Buy Silver

gold-silver ratioRight now the gold to silver ratio is near 80 (hovering in the high 70s). Essentially, about 80 ounces of silver are equal in value to 1 ounce of gold. This is an unusually high ratio, and historically, it signals a buying opportunity for silver. It’s no secret right now that metals prices – both gold and silver – have been facing some headwinds against a strong dollar. However silver is looking particularly undervalued. Some investors are choosing to trade in gold for silver right now in order to maximize portfolio value.

What this means for investors: Looking back at the gold-silver ratio from 1991 to 2007, the current ratio is sitting closer to the market low than to later highs. Yes, silver prices are low right now, and that’s why it is a great buy. The charts indicate that a bullish break for silver is coming. Historically, wide gold-silver ratios like the current one precede upward price movement, which is why savvy investors are buying now while silver is cheap. The ratio now is similar to what it was just prior to the 2008 financial crisis and recession. Following the financial meltdown, silver rallied 400% over three years, as these charts show. Read our original article about the Gold-Silver Ratio here.

Turmoil in Turkey Sends Markets Into Retreat

TurkeyOn Friday, stocks took a big hit over economic turmoil in Turkey with the Dow falling triple digits. The Turkish lira dropped 28% this week with investors worried that Turkey can’t cover its debt. Furthermore, President Trump authorized tariffs on metals imports from Turkey. This was done over the jailing of an American minister that Turkish president that Erdogan accused of participating in an attempted coup last year. Other emerging market currencies experienced a hammering as well. The European Central Bank was concerned over the Turkish contagion spreading to banks in Germany, France, and Italy that were not adequately hedged. These geopolitical concerns raised volatility, which is usually a driver for gold prices.

What this means for investors: Turkey seems to have been preparing for an event like this. For example, they have been repatriating gold, shifting reserve holdings to gold, and private citizens have been buying more gold. Gold, as the ultimate safe haven, offers a lifeline as Turkey faces currency crisis. It is also worth pointing out that emerging markets in general were hammered by the news from Turkey. If volatility continues to go up over possible contagion spreading from Turkey, expect stocks to continue to get hit. Surprisingly however, gold only got a small boost from the news, since the dollar is still looking strong as a safe haven.

Warren Buffet’s Favorite Market Indicator

Billionaire Investor Warren Buffett

The stock market is overvalued. Numerous investors and analysts have been warning for some time of this. In the words of Ron Paul, we’re in the biggest bubble in the history of mankind right now. Famed investor Warren Buffett’s favorite indicators are the saying the same. That indicator is simply the total market value of all stocks divided by the gross domestic product. When that ratio is over 100%, stocks are considered overvalued. Prior to the dot-com bubble burst, it was at 145%. Right before the 2008 financial crisis, it was at 110%. Currently, it’s at 149%.

What this means for investors: This means that the stock market right now is the most overvalued it has been in American history. But the overvalued stock market isn’t the only recession indicator at play right now though. The yield curve has been flitting towards inversion for some time now. With more Fed rate rises on the way, short term bond rates are threatening to move higher than long term rates, which historically has always preceded recession.

 

 


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

Trading the Gold-Silver Ratio

What Is the Gold-Silver Ratio?

gold-silver ratioYou may have already heard the term Trading the gold-silver ratio, but let’s look into what the ratio represents and why it is often advantageous to exchange metals within a position. The gold-silver ratio is often a signal for an investor to exchange silver for gold or vice-versa to optimize the value of a precious metals portfolio. The gold-silver ratio measures the value of an ounce of gold relative to an ounce of silver. In other words, how many ounces of silver it takes to equal one ounce of gold. Right now, in August of 2018, the gold -silver ratio is unusually high. It’s currently sitting at about 80, and such a ratio indicates a lucrative buying opportunity for silver. This means that 80 ounces of silver are equivalent in price to 1 ounce of gold. Historically, a ratio like this precedes a bull run. As you will see in the chart below on this page, a ratio in the 80-90:1 range is quite rare, as the range historically represents only 5.3% of the the monthly closes since 1915. So through every economy in the past 103 years, including the crash of ’29, the ensuing Great Depression, BOTH World Wars, crash of 1987, and the banking disaster of 2008– throughout all of that history– we have only been in this range a little over 5% of the time. That simply makes this market of mid 2018, and the corresponding ratio, historic.

Silver, like gold, has been considered something of monetary value used to mark wealth throughout human history. Take a look at the fluctuations in the gold-silver ratio over the centuries. (Source)

–  2011 – The ratio collapsed to about 31. Silver had rallied, collapsing the ratio to 31.

  2007 – For the year, the gold-silver ratio averaged 51. This means 51 ounces of silver were equivalent in price to an ounce of gold.

–  1991 – When silver hit its lows, the ratio peaked at 100.

–  1980 – At the time of the last great surge in gold and silver, the ratio stood at 17.

–  End of 19th Century – The nearly universal, fixed ratio of 15 came to a close with the end of the bi-metallism era.

–  Roman Empire – The ratio was set at 12.

–  323 B.C. – The ratio stood at 12.5 upon the death of Alexander the Great.

Understanding and Reading the Gold-Silver Ratio

So how exactly does the ratio work, and how does an investor read it?  It’s no secret right now that metals prices – both gold and silver – have been facing headwinds against a strong dollar. Even in an economic environment of trade war, tariffs, record debt, an overvalued stock market, and uncertainty, metals haven’t been getting the demand one might expect to drive prices. Silver is looking particularly undervalued. But reading the gold-silver ratio can help predict how to maximize a portfolio’s value.

Looking back at the gold-silver ratio from 1991 to 2007, the current ratio is sitting closer to the market highs than to later lows. Yes, silver prices are low right now, and that’s why it is a great buy. The charts indicate that a bullish break for silver is coming. Historically, wide gold-silver ratios like the current one precede upward price movement, which is why savvy investors are buying now while silver is cheap before it makes makes that bullish break. The ratio now is similar to what it was just prior to the 2008 financial crisis and recession, when it also hovered around 80. Following the financial meltdown, silver rallied 400% over three years.

The ranges of the gold-silver ratio

Why Silver Prices Will Go Up

It isn’t just investment buying that drives silver though. Silver has a multitude of expanding uses as an industrial metal (more so than gold). Some of these applications are solar panels, medical devices, and touch screen technology – all technology expected to grow. Rising demand in these sectors will eventually contribute to a rise in silver prices.Price of Silver Aug 1998-Aug 2018

Trump vs Fed Rate Hikes

Trump Vs the Fed: The President Confronts Federal Reserve on Rising Rates

Gold Market Discussion

Trump vs. the Fed

It was President Trump vs the Fed and chairman Jerome Powell this week. The President caused a stir when he questioned the Federal Reserve’s monetary policy.  It was something of an unprecedented move. Since the Federal Reserve is independent and separate from the federal government, it broke the standard norm of the relationship between President and Fed.

Trump’s sharp words towards the Federal Reserve had to do with the continued, gradual raising of interest rates. The Fed is projecting another rate increase in September, and it could be making the dollar less competitive, which is why President Trump isn’t a fan. Trump disapprovingly contrasted the dollar’s resiliency to the declining Euro and Chinese yuan. Have a listen here.

Trump: I don’t necessarily agree with raising rates from CNBC.

What this means for investors: So what did gold do this week? After the President’s words, gold jumped about $14 and the dollar’s raging strength fell back. Silver had a similar spike. Uncertainty over policy and the possibility of pressure on the dollar were the reasons for this. Overall, gold had a slightly stronger week this week than last, but is still battling the headwinds of the strong dollar. On Friday, positive economy growth (at 4.1%!) stats triggered a pullback on metals as well.

Is Trump 2 Steps Ahead or Behind?

Trump vs. the Fed

In the Trump vs the Fed drama, who has the upper hand? It turns out it isn’t just Trump who doesn’t like the rising interest rates. In fact, he’s far from the only one. Analysts – including some Fed officials – have been wary for some time of rates rising too fast. Timing is everything with rising rates. In an economic environment strong enough to handle them, they are stabilizers. However when they go up too fast, it sets off a chain reaction. Higher borrowing costs lead to less spending, which in turn leads to recession. This is what Trump is afraid of right now.

He has good reason to be. Look at what happened during Herbert Hoover’s Presidency. Rates were rising, government spending increasing, tariffs set off a trade war, and the chain reaction culminated in the market crashing. Right now, the markets have dropped when rates have gone up. If the Fed loses control, a big market crash is going to be ultimately blamed on the President. The question now is whether Trump is going to be able to get ahead of the Fed now (as he is trying to do) with his caution, or whether monetary policy might undercut him.

What this means for investors: Regardless of how Trump’s confrontation of the Fed plays out, just taking on the Fed in this unprecedented way is going to increase uncertainty in the markets. The Friday growth numbers were positive, raising optimism in the markets. But if Trump is right on the rising rates, it’s time to think about preserving your wealth.

Your Safety Deposit Box May Not be Safe after all

Bank Deposit BoxHow often (if you have one) do you check the contents of your deposit box at your bank? Recently, some Bank of America customers realized not often enough. A Bank of America customer in California went to check her box of 16 years only to find it had disappeared and the bank had no explanation where the jewelry and coins it stored had gone. Another customer had her possessions (some of which were damaged) from her deposit box mailed to her randomly in a plastic bag with no explanation. Yet another family had their items shipped to them in a similar manner, but with $17,000 worth of jewelry missing. While Federal rules allow banks to drill safe deposit boxes when there is a court order, search warrant, delinquency on fees, or requests from estate administrators, these actions were unprecedented and inexplicable.

What this means for investors: If you’ve been storing your precious metals or other valuables in a bank safety deposit box, now may be the time to consider other options. While it is true that the cases here are not the norm for safety deposit box holders, is it worth the risk to give a bank control over your valuable assets? There are other options for storing your gold or silver safely. Consider a deposit box at a private vault (many of which have 24 hour access) or a secure, home safe storage system. If you have any questions on home or private storage, our advisers are happy to discuss with you.

Ron Paul: We’re In the Biggest Bubble in the History of Mankind

The stock market’s bull run has been painting a rosy picture for some time now. Certainly it has made many investors excellent returns. However, Ron Paul, a longtime market bear, cautions that we are still in a bubble, and its the biggest one yet. According to the former Congressman and Presidential candidate, the underlying problem is debt and a fiat currency. Have a listen.

There’s a bubble building in markets that will burst, Ron Paul says from CNBC.

Problem viewing the video? Click here for the direct link.

Gold Is Still Important on World Stage

Upper Savior CathedralAlthough it appears gold is being shunned by investors right now, world powers continue to gobble it up. Russia, for example, is dumping US bonds and buying gold. In 2010, it was one of the world’s top ten holders of U.S. debt. Since March, its treasury holdings have dropped from $96 billion to $14 billion. In that time, Russia has overtaken China as the largest holder of gold. In beleaguered Venezuela as a socialist economy collapses with a worthless currency, famine, and medicine shortages, sanctions against Venezuela are leading the government to start refining gold in Turkey.  The South American country is rich in oil and gold, and gold mined in the south is sent to Turkey to be refined and then returned. Venezuela is using gold to shore up its reserves that have tumbled since the economy’s implosion.

What this means for investors: The dollar won’t remain the world reserve currency forever. Increasingly, nations are looking for other options. Gold is so far the option of choice, as it has been for centuries.


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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Mining Experts Caution that World Gold Supply Is Running Out

Gold Market Discussion

Mining Experts Caution that World Gold Supply Is Running Out

gold mineThe miners are getting nervous as it appears the world gold supply is running out. Experts are warning that discoveries of gold are becoming more difficult to find. In fact, they expect to hit “peak gold” (which is the maximum rate of extraction) within a year. For the last forty years, production has been increasing, but it appears to have hit the peak and will start decreasing now. Numerous mining companies and industry experts are sounding the same warning. Not only is it ore becoming more difficult to find, but exploration costs are making it more expensive to mine. As the rate of extraction from the ground dwindles, it is difficult to see how gold demand will be met.

What this means for investors: One of the reasons gold has been so valued as wealth for millennia is because of scarcity. It sounds like it will soon become even more scarce, if the industry experts are right. Basic economics says that as supply falls, prices increase. Expect dwindling global supply to support gold prices in the long term.

President Trump Announced $200 Billion More Tariffs against China

US and China trade warThe trade war continues. It intensified this week after the President Trump slapped 10% tariffs on $200 billion worth of Chinese goods. China responded with harsh rhetoric and threats of counter-tariffs.

What this means for investors:Why aren’t we seeing the upset that happened in 1930 after the Smoot Hawley Tariff Act and ensuing trade war? There could be a few reasons. One is that there was confidence in the U.S. economy before the trade war kicked off, so the effects are taking longer to affect the markets. In fact, confidence is already starting to waver as fears mount of rising prices leading to economic slowdown. It could also be that investors think it will be an easily won war (as the President has asserted) or that the tariffs won’t come to pass. But China, Canada, and the EU have all already struck back against U.S. goods, so escalation seems inevitable.

Gold Prices Still Feeling Resistance This Week

gold vs dollarsUncertainty from trade war wasn’t enough to lift gold prices significantly this week. Gold continued to face headwinds from a stronger dollar, as did silver. An expectation on higher interest rates also created some push back on prices. Spot price for gold dipped under $1,250. The summer is historically a slow time for metals.

What this means for investors: There are still bullish investors, and there are still reasons to remain bullish. Gold is attracting buyers looking for a bargain who see turbulence ahead. For example, rising inflation in an overheating economy will drive investors back to gold. Escalation between the U.S. and China over trade should eventually spur some safe haven buying as well.


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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us-china-trade-war-mi

Trade War with China Dominated Market Movement

Gold Market Discussion

Gold Made Slight Gains for the Week

gold chart July 2-6, 2018

Gold posted slight gains for this week after battling tough headwinds the last couple of weeks. It closed over $1,250. On Wednesday with the U.S. markets closed for 4th of July, gold hit over $1,260 on the global exchange. The dollar softened and fear levels were elevated this week over trade fear. Silver prices also had a slight gain. We’re still not seeing a flight to safe haven metals that would boost prices because the dollar is maintaining strength while other major world currencies devalue.

Trade War with China Dominated the News

On Friday, the markets opened to the news that China had imposed the promised tariffs on U.S. imports, and the repercussions over trade war with China dominated the headlines. The tariffs on Chinese goods coming into the U.S. are going to impact sectors like airline manufacturing, the auto industry, and other industrial spaces. The Chinese tariffs are most significantly on things like pork, soy beans, and other agricultural products (among other).

A trade war in a rising rates economy. We’ve seen it before in 1930, and it’s a lesson that few analysts are reporters are paying attention to. Read back on our blog about the Smoot Hawley Tariff Act and what it did to economic recovery during the Great Depression. However, there is another factor to pay attention to here. In 1930, the trade war was primarily with Canada, a friendly neighbor. Right now it’s primarily with militaristic China, with whom the U.S. has never been exactly been friends (despite China being a primary holder of U.S. debt). Couple that with Chinese build up in the South China Sea and a U.S. naval presence in the Pacific that China is vocally unhappy about, and it’s a different equation entirely. It’s also worth noting that two U.S. warships sailed through the Taiwan Strait in the aftermath of the trade war announcement.

What this means for investors: Volatility. The markets and monetary policy makers are still feeling it out. There is certainly an increased risk sentiment though. We saw gold get a little boost on Friday, and if trade tensions continue to worsen, we will see more of it.

Tariff News Triggers Stock Sell-Off

Made in China is getting more expensiveThe tariff announcement triggered a sell off in the stock market Friday. Last week investors were already exiting U.S. stocks at near record pace. Outflows from U.S. stocks were the third highest ever at $24 billion and the largest since the financial crisis. A chief investment strategist at Merrill Lynch said that this selling was reversing a “pervasive euphoria” about U.S. stocks from earlier this year.

What this means for investors: Investors are shifting from stocks to safe havens like U.S. treasuries. Gold should eventually see higher demand too if the safe haven buying trend continues. Likewise in the silver market.

Fed Warns of Upcoming Volatility in the Economy 

Federal Reserve BuildingThe Federal Reserve announcement this week was seen as more of a non-event for market movement. However, it is still worth noting what the Fed said. The announcement stated that the next planned rate hike would go forward as intended, due to the economy running strong right now. However, the officials also noted the trade war and tense geopolitical relations are raising risk and could start strangling growth and hurting business sentiment and investment.

What this means for investors: For the last few rate hikes, gold weakens beforehand, and rallies in the immediate aftermath. Rate hikes are usually negative for gold, but there are other factors to consider that are undermining that relationship. Fear in the Eurozone around ECB head Mario Draghi’s monetary policy and rising inflation expectations are keeping gold afloat. For more on what the end of quantitative easing means for gold, click 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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gold bars for diversification

Weak Gold Demand Kept Prices Subdued This Week

Gold Market Discussion

Weak Gold Demand Kept Prices Subdued As Dollar Stays Strong

stacked gold coinsIt was a quiet week for precious metals. Weak gold demand kept prices subdued continuing the trend from last week. Gold spent much of the week fluctuating just over the $1,250 mark. Silver closed out the week at $16.10. Friday saw metals slightly up with some pull back on the dollar. The stronger dollar has reined in gold prices for now. There was also significant sell off of both gold and silver this week, which brought metals down. Canada’s announcement that it would place tariffs on U.S. goods on Sunday also gave a slight boost to metals. Stocks trended similarly to gold being down most of the week.

Looming trade wars are actually boosting the dollar right now. Because of that, for now, gold prices are going to be against some pressure. Countries like China are having to devalue their currency, which helps the dollar. Canada and the European Union also engaged in trade tariff tit-for-tats with the United States. Falling oil prices as OPEC increases production has also dragged adversely on gold prices.

What this means for investors: There is uncertainty in the markets right now, but the uncertainty is over how the trade wars are going to play out. Safe haven buying of gold remains in a holding pattern, as the dollar’s support is keeping investors there for now.

When Is Gold Going to Pick Up?

There are many analysts confused by gold’s lackluster performance lately. In this video, Bill Baruch of Blue Line Research discusses long term possibilities for gold and the technical indicators.

Precious Metals Analyst Suki Cooper of Standard Charted Bank discusses buying the dip and why the second quarter of 2018 is going to be the weakest quarter for gold.

 

Inflation Data Picking Up

inflation pushing down what the dollar buysA key indicator of inflation in the U.S. just hit a 6 year high. The rise in the Personal Consumers Expenditures price index came even as consumer spending slowed. Weak spending could weigh on GDP growth in the second quarter.

What this means for investors: Rising inflation generally correlates to rising gold prices. The Fed is trying to allow inflation to run above target for a while, in fact, to compensate for growth rates. When inflation runs up, gold and silver are the best stores of value.

 

Bitcoin Down 70% in Half a Year

Gold as a safe haven is down right now. So are bitcoin and other cryptocurrencies. In recent years, advocates for crypto have touted it as being an alternative safe haven investment that could trounce gold. In fact, many enthusiasts have sold gold or other investments to get on the bitcoin train. However now it’s down 50% for the year, and even more than that off its high. In December 2017, bitcoin traded over $20,000. Now it’s struggling in the $5,000 range.

What this means for investors: Gold may be down right now too, but it has stood the test of time as a storage value. Blockchain technology used by bitcoin and cryptocurrency certainly has exciting potential for future application. However it’s volatile journey so far proves that it isn’t going to be gold’s replacement. Gold and silver are true money and preservers of wealth.

 


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

Russia ditching US treasuries

Russia Is Ditching Treasuries for Gold, Re-Thinking Safe Haven. But Gold Prices Remained Stuck This Week.

Gold Market Discussion

Russia Is Ditching Treasuries for Gold, and It’s Not the Only One

Russia buying gold instead of US treasuriesAre the Russians re-thinking safe haven? Russia is ditching treasuries for gold in recent months. In April, Russia slashed its holdings of U.S. debt in half. This was following fresh sanctions slapped on various Russian businesses and individuals. The senior adviser at Danske Bank stated the reason had to do with rising yields and Russia wanting to “keep money safe.” In the wake of the sell-off, Russia added another 600,000 oz of gold to its reserves, raising its total holdings now to 62,000,000 oz. It’s the highest level of gold reserves in Russian holdings in over 18 years. Furthermore, Putin stated in his recent inaugural address that Russia is looking to break from the dollar.

What this means for investors: U.S. treasuries are generally a source of safe haven refuge, but gold is still the ultimate safety. Despite gold under-performing treasuries so far this year, central banks are finding gold more attractive. It seems the Russians are more focused on saving for a rainy day than making an immediate return on investment. And it’s not just Russia. As geopolitical tensions and trade war rhetoric heat up, countries like India, Turkey, Mexico, Iran, and China are also drastically increasing gold holdings. The question now is whether China will follow suit. China owns significantly more U.S. debt than Russia did – $1.18 trillion.

Gold Prices Still Stuck This Week

gold prices stuckGold continued to face the headwinds that pulled it down last week.  The dollar retained the strength it has been building up, which weighed on gold prices. In fact, they were at their lowest level in months, but the gold market is now short-term oversold which means it’s due for a corrective bounce. Trade war fears continue to weigh on stock and commodity prices.

What this means for investors: Trade war fears aren’t generating the flight to safety gold demand that one might expect. The U.S. economy right now is still growing in contrast to struggling markets in the EU and other countries. As the U.S. trades of tariffs with China and the EU, global investor demand is still in dollars for now. Uncertainty in these other markets though is driving gold demand there. On Friday gold got a slight reprieve as the EU imposed new tariffs on U.S. goods increasing uncertainty in the markets.

The Fed’s Bank Stress Test

The Fed is testingThe Federal Reserve released the results of its annual stress test this week. Its optimistic outlook weighed on gold too. The bank stress test was introduced after the 2008 financial crisis as a means to prepare for future crises. Since the first test in 2009, the biggest banks’ results have generally improved, and this year once again, all the test banks met the minimum capital requirements.

What this means for investors: The Fed modeled the test around a similar 2007 – 2009 scenario. However, there could be discrepancies between the next downturn and the Great Recession. One thing to consider is that there will be less room for fiscal stimulus given that U.S. debt-to-GDP has increased from 63% to 106% since 2007. This is a problem around the globe as well. Furthermore, an increase in automation in industry has replaced many jobs. So while right now the economy is growing and unemployment is down, in a shrinking economy, the loss of labor will affect a greater number of people. For more analysis on the stress test, click here.

How Much Gold Is Left in the U.S.?

How gold is left?As countries like Russia and China increase their gold holdings, many countries are also repatriating gold that has been held overseas. Germany is the prominent example of this, but Austria, Hungary, The Netherlands, and Belgium have also brought their foreign held gold back within their borders to have greater control over their wealth. Turkey is the latest, having reclaimed 220 tons of gold this year that was held in the Federal Reserve system. But how much gold does the U.S. hold itself? The U.S. Treasury claims it is 261,000,000 ounces in Fort Knox and elsewhere. But the lack of reliable and consistent auditing has many skeptical. This lack of transparency has many of these countries nervous.

What this means for investors: There’s a global shift away from the dollar as the world reserve currency. Russia, China, and Iran have also vowed to break from the dollar. Increasingly, there is talk of a return to gold as a basis of wealth. The uptick in repatriation and gold buying around the world is one prominent indicator of a future break in the dollar’s hegemony.

 


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 Hammered by Strong Dollar Friday And Trade War with China Remains in Focus

Gold Market Discussion

Gold Hammered by Strong Dollar Friday As Trade War Remains in Focus

Trump TarriffsPrecious metals struggled Friday. Though gold hit a two week high earlier in the week climbing to $1,313, Friday saw gold hammered by strong dollar index. Trade war and tariffs dominated headlines. President Trump levied 25% tariffs on 800 Chinese imported goods, and China countered with their own tariffs. In this environment the dollar surged to an 11-month high, and gold pulled back to $1,280. Prior to the announcement, gold had rallied on uncertainty, but the dollar’s pick up in strength brought it down on Friday.

What this means for investors:Trade wars in a rising rate economy like what we are seeing right now never bode well. Read back on what happened with the Smoot Hawley Tariff Act in 1930 that contributed to sinking the economy into the Great Depression. This week the trade spat with China strengthened the dollar thereby hammering gold prices, but this is a short term effect. Furthermore, although gold priced in dollars was down this week, gold priced in nearly very other world currency is up as currencies around the world teeter.

Commodities and Stocks Down

gamble on stock marketGold was acting more in line with commodities than as a safe haven as it fell this week. The whole commodities sector reacted negatively to the tariff announcement. The stock market also had a rough close to the week. Gold didn’t get the safe haven lift that it usually does when the equity market drops because of the dollar’s renewed strength Friday.

What this mean for investors: Inflation and geopolitics are still factors for the gold trade. The geopolitics trade has been quieter lately due to the diplomatic meeting between President Trump and north Korean leader Kim Jong-Un. Trade war and Middle East conflict will increase tensions though.

Eyes Were on the the Fed and ECB This Week

The world’s leading central banks announced monetary policies that helped gold prices this week. The Federal Reserve raised interest rates another quarter point this week, giving gold prices a boost. In the European Union, the European Central Bank’s Mario Draghi is putting the brakes on. Uncertainty and volatility are becoming a prominent feature in the Eurozone as Italy’s populist, Europskeptic governing party toys with the idea of alternate currency and excessive spending. Additionally, the whole southern EU region is seeing a slowdown, which is worrying investors and bankers.

What this means for investors: The Fed is expecting to raise rates a few more times this year. The more hawkish monetary stance could be too much too fast. Gold’s boost from the rate rises is an indicator of that.

Economy Expected to Slow? Inflation Grows at Fastest Pace in 6 Years

Fed Rate Hike!Despite Fed chair’s optimism this week, analysts are predicting an economic slowdown in 2019. The International Monetary Fund (IMF) cautioned that the current optimism in the global economy’s growth would stagnate by 2020. The report cited trade war and rising inflation as reasons. Other estimates are that the U.S. economy will slow sooner.

What this means for investors: The stock market is continuing to surge, unemployment is at an 18-year low, and earnings reports are solid right now. However wage growth has not been keeping up, and earnings growth is expected to stall. Inflation is growing at the fastest pace in six years and eating away at wage growth. As prices rise and wages stall, less spending means a slower economy. This is why buying gold when it’s down before hard times hit pays off in the end.

 


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

Italian Bond Market Worries

Gold Fluctuated with the Dollar This Week While Italian Bond Drama Continued

Gold Market Discussion

Italian Bond Drama Continued This Week

Italian coinsEuropean geopolitics continued to cause volatility in the markets this week. Last week, Italy in particular triggered concern, and this week the Italian bond drama continued. This week, the Italian 10-year bond yield was at a 4 year high while the Italian 2-year yield had its biggest jump in more than 25 years. While this certainly spooked the markets, it is happening in an incredibly easy monetary policy environment that helped stave off some of the pain for now at least. Without a central bank offering support, or when monetary policy has become more normalized, the shock would be much harder to disperse. As it was this week, the European Central Bank (ECB) was able to ease the bond pain in Italy.

What this means for investors: The coalition, ruling parties 5 Star and Lega also finalized their coalition deal, which helped to ease some fear. However, the coalition’s penchant for spending will put the country’s finances on an unsustainable track. Italy is the third largest economy in Europe, so contagion there could wreak havoc on the Eurozone. It is similar to the situation preceding the great Recession.

Gold Back and Forth with the Dollar

dollar and gold Gold prices were back and forth this week. Bond worries, of course, were one of the factors. Mid-week, the dollar index fell and boosted gold to around $1,305. By Friday though the dollar gained back some strength on upbeat jobs data, and gold fell just under the $1,300 mark. Promising signs of dialogue between the United States and North Korea eased some of the safe haven buying from last week as well. Silver closed out the week just short of $16.50.

What this means for investors: May is historically a slow month for gold. Because of that, it is often a time to look for price dips to buy. If the dollar index maintains its strength, gold could be under pressure for a while yet. However, sky-rocketing debt, inflation, currency crises around the world, and a too-rapidly-rising-rate environment are poised to support gold prices long term.

Trade War Fears Were Back This Week

Trump Trade WarThe markets retreated on Thursday on fears of trade wars, which boosted gold prices. The United States put tariffs on steel and aluminium imports Canada, Mexico, and the European Union. The EU expressed displeasure, Mexico threatened tariffs, and Canada did impose tariffs on some U.S. goods. Commerce Secretary Wilbur Ross, however, stated that he doesn’t think it will be detrimental long term. Stocks recovered some of those losses by Friday.

What this means for investors: We have previously discussed the historical lesson from the Smoot Hawley Tariff Act of 1930 here, but it warrants looking back at again this week. It also involved impositions of tariffs by the United States on key trade partners, and retaliatory tariffs by those partners. Furthermore, it occurred in a rising bond yield environment much like today’s. The repercussions of the Tariff Act ultimately furthered the economic pain of the Great Depression and hindered recovery. Of course though, a successful re-negotiation of NAFTA (which is President Trump’s plan) could stave off future volatility around trade and currency.

Gold and Oil Price Correlation

oil rigsGold and oil prices have had a predictable correlation since the early 1970s when the United States left the gold standard. That correlation (a ratio of around 15 to 1, give or take) stayed much the same through the 1980s and 90s. Through the Great Recession the two commodities held together until 2014 when oil took a huge dive and gold took a lesser fall. Right now, the prices are converging again and the ratio seems to be stabilizing.

What this means for investors: Interest rates, the dollar’s strength, uncertainty in the markets, and volatility are all the chief drivers for gold prices, but some of these other factors too, like the relationship to oil prices, are indicators worth noting. As oil prices continue to rise and the oil price to gold price correlation normalizes, gold could sees some additional support.

 


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

North Korean tension

Gold Rallies on North Korea Fear, and Interest Rates Are Sounding Alarm Bells

Gold Market Discussion

Gold Posted Best Day in over a Month on North Korea Tension

threats from North KoreaGold had its best day in over a month this week. On Thursday, gold prices pushed back up to over $1,300 after continuing to struggle from last week. Gold held on to the gain through Friday. Silver prices hovered around $16.55.

A stronger dollar was keeping gold down earlier in the week. However metals got a slight boost Wednesday from Federal Reserve data released. Gold got its big push from heightened geopolitical fears though. President Trump announced Thursday that the much-anticipated summit with North Korean leader Kim Jong-Un was cancelled due to, what the President called, “tremendous anger and open hostility” by the North Korean regime.

What this means for investors:

Investors were hedging risk with gold this week. Conflict with North Korea has been a significant market mover in the past, and the de-escalation talks had alleviated those fears until this week.

Interest Rates are Sounding Alarm Bells

Rising Interest Rates sounding alarmsAfter the news on the North Korea summit this week, bond buying started up again, leading to a fall in yields. However, U.S. bond yields have been surging over 3% recently. It is alarming because rates could be rising too fast. Minneapolis Fed President Neel Kashkari warned of exactly that this week. His fear was that the Fed is getting too aggressive with its rate hikes. Dallas Fed President Robert Kaplan expects the economy to slow over 2019 and 2020, and is also more dovish on future hikes. However the Fed is still projecting more hikes this year.

Right now, the yield curve is flattening. Short rates are moving faster than long rates and indicates an expected higher interest rate environment. As the curve flattens and inverts, this is often a harbinger of recession, as we have discussed before.

What this means for investors:

Every Fed tightening cycle has produced some kind of “event” or crash. Check out some charts and examples here. For example, in 2004-2006, the Fed tightening cycle seemed benign, but in its wake followed the housing bubble collapse that set off financial contagion in the whole global financial system. The liquidity that has been driving the current bull market is fading, and it is going to cause volatility to skyrocket.

The question of how this will affect U.S. debt is noteworthy as well. The U.S. continues to pile up debt (over $20 trillion) that is already near impossible to pay back. Rising interest rates means higher payments to service the debt. Interest payments alone on the national debt is on pace to take over as the number one budget line item.

Rising rates can push gold prices down, since gold bears no interest and thus becomes less desirable. But when they are rising too fast in this kind of environment, it can lead to a crash and recession.

Return of the PIIGS? European Economies in Trouble with Bond Sell-Off

PIIGSInterest rates are sounding alarm bells in a big way in some of the periphery, European economies too. Notably, there seem to be problems stemming from the “PIIGS” (Portugal, Italy, Ireland, Greece, and Spain) – the acronym for the countries at the hub of contagion during the last financial crisis.  This week, it was primarily the Italian economy and political scene triggering uncertainty and alarm.

On Friday, Italian bond yields soared with the 2-year having its biggest one day rise in five years. the 10-year was at the highest in over a year. Partly this is due to uncertainty over Italy’s new government. It is being formed primarily by populist, Euroskeptic parties Lega and Five Star, and they have a penchant for spending and an anti-EU outlook. The new government has supposedly even proposed a new currency, “the mini-BoT” for parallel trading, perhaps in an attempt to ditch the euro. Consequently, the sell-off in Italian bonds widened the gap over German bund yields by 18 basis points. Portugal and Spain also saw a significant sell-off, which could signal that Italian contagion is spreading and economic momentum slowing. Greece, which was the hub of contagion during the last crisis, is continuing to have its economy artificially propped up, having just completed its fourth bail out.

What This Means for Investors:

The possibility of Italian contagion spreading would put pressure on the euro. If Lega/Five Star embark on their proposed idea of departing from the euro and EU, this will be even more pronounced. Economic weakness or collapse would force the European Central  Bank (ECB) to halt its tightening plans  and force Mario Draghi to embark on more quantitative easing. Contagion in the eurozone could certainly spread through the whole financial system. In this case, expect gold prices to soar.

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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

gold bars

Gold Prices Struggled During Sell-Off, But There’s Still an Upside with Increased Volatility

Gold Market Discussion

Gold Prices Struggled This Week and Saw a Sell Off

gold bars bullionIt was a tough week for metals after a positive week last week. Gold prices struggled and dropped under $1,300 as a huge sell-off took further toll on prices. Silver was down this week too, but posted gains on Thursday. Gold was struggling against a stronger dollar index, and hit its lowest point so far this year. On the geopolitical front, not a lot happened initially to boost safe haven buying, although gold did get some support from disagreements between North Korea and the U.S. over the upcoming, historical meeting in Singapore next month.

Gold rebounded though Friday on global equities volatility. Investors were worried over possible Italian debt problems and elections. Italy’s next government pledged increased spending, which could trigger a worse debt crisis than the Greek crisis.

A Stronger Dollar Kept Gold Down, But There’s Still an Upside

strong dollarRising rates and an upbeat dollar kept gold down this week, but gold has been on an upward trajectory this year. One reason is because of increased volatility. The CBOE volatility index, or “fear gauge,” has surged as high as 50 this year, and has been trading mostly around 20-25 range. Over the past couple years, it was trading around 9, so fear is certainly creeping back into the markets after some historic lows.

What this means for investors: Volatility is rising slowly across all asset classes, and as it does, gold demand will pick up. Money managers, including Ray Dalio, are maintaining bullish positions. Because of this, look at these price dips as opportunities to buy gold “on sale.”

Sanctions on Iran, Russia are Bullish for Gold

iran and russia sanctionsLast week the U.S. nullified the Iran deal that was a trademark of the Obama administration. Along with the nullification was the imposition of sanctions against the Islamic republic. The news sent oil prices soaring, and gold rallied alongside.

What this means for investors: Sanctions and trade wars weigh heavily on fiat currencies. It is one reason that central banks like to hold so much of their reserves in gold. The Russian and Chinese central banks, for example, have been raising gold reserves at very high rates in recent years. Russia has been sanctioned by the U.S. and Europe ever since its annexation of the Crimea in 2014, and sanctions have only increased. Gold, however, is fungible, and holds value, so while sanctions put the brakes on a nation’s economic growth, gold offers a safe refuge of maintaining wealth.

 

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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.

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gold ingots

Gold Posted a Positive Week after Early Struggle

Gold Market Discussion

After Battling a Strengthening Dollar This Week, Gold Posted a Positive Week by Friday

cash on goldMetals were down in the early part of the week. However on Thursday it got a slight boost that it held onto through Friday. In the end gold posted a positive week despite the earlier losses. The dollar rallied this week putting pressure on gold prices. Some disappointing inflation data Thursday gave gold a boost and softened the dollar though. Geopolitical uncertainty further supported metals. The inflation data was positive for gold because it indicated that price pressures are increasing, but not at a pace that warrants aggressive action from the Fed.

The uncertainty this week was over Iran and Israel. President Trump announced that he would be withdrawing the United States from the Iran treaty brokered under President Obama. Furthermore, the U.S. re-instated sanctions against Iran. On Thursday in the wake of the announcement, Iran launched rockets at Israeli military positions in the Golan Heights, and Israel countered with launching rockets against Iranian military infrastructure in Syria.

What this means for investors: With reconciliation on the Korean peninsula looking more promising, gold has not been getting much support on the geopolitical trade. However there is still a ramping up of tension in the Middle East that is going to increase volatility. Gold is up for the year, and in fact has outperformed the S&P 500 so far this year, despite the continuing stock rally.

Oil Prices Hit Highest Level since 2014

oil at high since 2014After news of the President cancelling the Iran deal, oil prices shot up to $70 a barrel. They reached their highest level since 2014 as sanctions were re-imposed against Iran. This is due to lower expected output of oil with the Iranians out of the market. In early 2016, oil prices were sitting around $30 a barrel as eased sanctions were helping Iran raise the global supply. However, the global supply has already been tightening, and the news this week increased investor fears of rising oil prices.

What this means for investors: Gold prices are often positively correlated to oil prices. The spike in oil prices likely contributed to some of the bump gold prices got this week. Rising oil prices indicates trouble ahead, and gold rises on safe haven demand.

Take a Look at the Gold-to-Silver Ratio

silver to gold ratioThe gold-to-silver ratio is at a 20 year extreme right now. It’s a near record high at about 80 to 1 (80 ounces of silver being equivalent to approximately an ounce of gold).

What this means for investors: We are recommending converting gold to silver right now. It’s a buying opportunity for silver. Give us a call to discuss further how the gold silver ratio is impacting your portfolio right now and how to optimize your precious metals holdings.


Rick Santelli on the U.S. Debt

It’s not news anymore that the U.S. debt level is at unprecedented levels. This year it hit $21 trillion and interest payments on the debt alone are at $800 billion. In the following video, Rick Santelli breaks down why we should be paying more interest to the debt problem.

Santelli Exchange: Taking more “interest” in our debt from CNBC.

 

 


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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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Bandaged Ben

Fed Leaves Interest Rates Unchanged and Inflation Expectations Are Increasing

Gold Market Discussion

Gold Battled Headwinds

gold barsEarly in the week gold struggled against a rising dollar index. It managed to hold just above $1,300. Some muted geopolitical fears after North and South Korean peace talks continued to put the brakes on gold as well. There was also some sell-off, which pushed prices down further. On Wednesday though, gold prices rose again. They continued to hold around $1,315 through Friday. Following a Federal Reserve announcement and as inflation expectations are increasing, buyers turned more bullish on gold. Gold prices also remained positive on Friday after a weaker than expected jobs report with fewer jobs created than were expected. While unemployment decreased, the labor force participation rate remained high.

Federal Reserve Leaves Interest Rates Unchanged This Week, Lifting Gold Prices

Fed Building

The Federal Reserve announcement on Wednesday was the most anticipated event for the week. Gold had dipped ahead of it, but bounced higher after the announcement that rates would remain where they are for now, with a rate hike in June still in the cards.

What this means for investors: A rise in rates this week might have kept gold prices down, since higher interest rates usually mean interest bearing assets are more desirable than gold. However when rates rise too fast, which is something many analysts have been concerned about for some time, it overheats the economy. As rates rise, consumer prices rise and spending often goes down if not offset by rising wages). This in turn leads to slower corporate spending and a slowing economy.

The significant reason that investors are concerned about the rate rise right now has to do with the 10-year U.S. Treasury bond. In just a few years, the interest rate on bonds has gone up more than 200 percent (from 1.4 to around 3%). The recent, heightened volatility in the bond market is making investors nervous, since such a rise in bond rates has historically been a harbinger of recession. Right now, the Federal Reserve is trying to cool off the market. However the interest rate balance is very fragile right now, and could collapse. When it gets out of control and rates rise too quickly (leading to recession) gold goes up as a safe haven asset.

Inflation Expectations are Increasing 

inflation pushing down the dollarA key part of the Fed announcement for gold prices was the indication that inflation expectations are increasing. Inflation has been low recently, and in low inflation environments, gold is often up against headwinds. On inflation, the Fed said that inflation has moved close to 2% and is seeing things as symmetric. This implies that the Fed is going to let inflation run on the higher side for a while before raising rates in an effort to maintain the balance between growth and interest rates.

What this means for investors: As inflation goes up, the dollar index goes down. This leads to higher prices for both gold and silver. While some inflation is healthy, out of control inflation leads to currency devaluation and collapse. For an extreme case of hyperinflation that is happening right now, look at Venezuela. The South American country has seen inflation quadruple in only two months to 18,000 percent. There is currently no end in sight, and the country is being ravaged by food and medicine shortages and skyrocketing prices.

Billionaire Converts Half of Assets into Gold

Naguib Sawiris
Billionaire Naguib Sawiris

The second richest man in Egypt, Naguib Sawiris, recently invested half of his assets in gold. The billionaire’s wealth is second only to his brother’s. He announced this week that he had converted half of his $5.7 billion assets into gold. Sawiris is apprehensive about the overvalued stock market, and sees gold surging. He also warned that there would continue to be crises coming out of the Middle East and China, and that gold will be the best protection.

What this means for investors: For the full interview, click here to see the video.


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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.

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dollar and gold correlation

Gold Under Pressure This Week from the Greenback, But Problems in the Bond Market Are Looming

Gold Market Discussion

Gold Under Pressure from Rising Greenback This Week

dollar-14-year-highPrecious metals were rallying early in the week, but faced some push back on Thursday. By Friday gold prices lifted again slightly and were sitting just over $1,320. Silver ended the week around $16.55. The resistance mid-week came from a rising dollar index. As it retreated again Friday, metals were able to eke out a slight edge up, but remained vulnerable for the week.

What this means for investors: The dollar’s strength and its fluctuation has been subject to much debate by political leaders recently. President Trump and Treasury Secretary Steve Mnuchin have both said recently that the dollar is too strong, and later flipped to say it needs to stay strong. Gold and the dollar generally have an inverse relationship. However in the past year, the price of gold relative to the value of the dollar has gone up while the dollar went the opposite. Even as gold is under pressure this week, there’s a longer term trend indicating more movement for gold ahead. Furthermore, rising inflation looks bullish for gold.

Historic Korea Summit 

A historic summit between the leaders of North and South Korea on Friday eased back potential safe haven buying. Kim Jong-Un and Moon Jae-In vowed to finally end the Korean War. It has been 65 years since the armistice that ceased hostilities, though the war technically never ended. They also pledged to end nuclearization on the Korean peninsula.

What this means for investors: Gold has been getting a consistent boost over the past couple years from bellicose rhetoric from North Korea and its missile tests. The welcome news of reconciliation will mean less of the short term, geopolitical fear bumps gold has been getting.

 Rising Interest Rates and Problems in the Bond Market

rising interest ratesWhile a volatile stock market the past couple months has prompted jitters from investors, problems in the bond market are also looming. Yields have risen to levels not seen since the 2008 crash, and the yield curve is flattening. As the yield curve narrows, it generally means less optimism about economic growth. Right now, the Fed wants to keep raising rates as projected, despite the troubling signs of inversion on the yield curve.

What this means for investors: Yields over 3% is partially what kept gold prices down this week. Usually higher interest rates do mean lower commodity prices. Although that won’t be the case when it leads to economic crisis. Right now the Fed is tightening monetary policy by pushing up short term rates. However as it attempts to “normalize” rates, it is actually flattening the curve. If it inverts, the Fed is going to have to slow down or reverse current policy to prevent an overheated economy. This is something many experts are already preparing for.

Rising interest rates is also a problem for the huge budget deficit. The U.S. is running a $100 billion deficit PER MONTH and rising interest rates compound the problem. U.S. interest payments on debt alone are set to nearly overtake defense spending as the number one line item in the federal budget.

Further reading: Currency Crisis?

For further reading on the topic of Federal Reserve manipulation, fiat currency, and inflation, check out this excellent article from the Ludwig von Mises institute by clicking here. It explores the fragility of fiat money systems and their inevitable boom and bust cycles, and what current economic conditions in the bond and currency markets – despite pundits’ optimism – are warning.

 


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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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Magnified Crossover

The Price of Gold Relative to the Value of the Dollar in the Last Year

Gold Market Discussion

The Price of Gold Relative to the Value of the Dollar – CHART

Dollar to Gold Chart

This chart depicts the price of gold relative to the value of the dollar over the last 15 months. The price on the left is the movement in gold prices since January of last year until last month. The right side shows dollar index level. What it reflects is that the value of the dollar is declining in terms of the price of gold (the dollar illustrated by the green line and gold by the blue). In dollar index terms, gold spot price has gone up, while conversely in gold price values, the dollar index has declined.

What this means for investors: The dollar index is going to be up against a significant amount of pressure ahead. Rising interest rates and raging debt are going to lead to further dollar decline. Gold and the dollar move inversely, so as the dollar takes heat, gold becomes more desirable. The interest payments alone on U.S. debt is approaching $800 billion. As interest rates go up and the debt expands, the dollar is going to be further devalued.

Gold Price Up and Down This Week

gold up and downGold prices were stuck this week. On Wednesday, it had its highest close in a week after rallying over $1,350. Gold had started the week just under $1,350 and closed just over $1,350. Inflation concerns, tension with China over trade, and carrying over geopolitical fears prompted gold’s gains. Some of the fear trade abated by Friday, and gold prices slipped from the Wednesday highs. The prospect of higher interest rates also helped the dollar recover, which put some resistance on gold.

What this means for investors: It was a relatively quieter week for gold than it has been in recent weeks. However it is still holding on to its gains it has made this year. As long as the dollar finds some resiliency, it will continue to face headwinds. Metals are holding on though, and sitting poised for a break out.

Silver Rallies This Week and Looks Poised to Go Higher

silver barsSilver’s movement this week gave silver bulls optimism for the metal approaching a break out point. The white metal hit an 18 month high this week reaching $17.35. It was up from Monday’s open of $16.66 and finished the week at $17.15. Silver prices have been stuck relative to gold in recent months, so the rally this week bodes well for both metals.

What this means for investors: Silver, being cheaper, is always more volatile than gold. It has more industrial uses than gold, which can drive prices. Investors are seeing more potential for silver right now to break out right now, and took advantage of the buying opportunity last week while prices were still low. The gold-silver ratio also narrowed this week to its lowest level in a few months.

The Gold Repatriation Trend Continues as Turkey tries to Move Further from the Dollar

TurkeyThis time Turkey is repatriating its  gold reserves that previously had been stored in the U.S. Germany recently repatriated its foreign-held gold and other countries such as Hungary have made similar moves. Meanwhile Russia, China, and India have been ramping up gold reserve accumulation. Turkish president Erdogan further said that the country’s debts “should be in gold rather than the dollar.”

What this means for investors: Not only are these countries moving further towards gold, but they also are attempting to move away from the dollar. China announced recently as well the launch of the petro-yuan to challenge the petro-dollar for oil trade. The U.S. dollar has been the medium of exchange for crude oil for decades, and the petro-yuan challenges the dollar’s dominance in the crude market.


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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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Syria conflict

Gold Hit Its Highest Close in 2 Years This Week as Tensions Ramp Up in Syria

Gold Market Discussion

Gold Hit Its Highest Close in 2 Years

golden buying opportunity in July 2017On Wednesday, gold hit its highest close in 2 years. Gold started the week at around $1,335, climbed to over $1,350 mid week, and settled around $1,345 by Friday. Silver finished the week just shy of $16.70. Silver looks poised for  surge right now, in fact. Gold is hanging on to recent gains, and the gold-silver ratio (the amount of ounces of silver needed to equal an ounce of gold) is narrowing. It’s a bullish indication for silver right now.

What this means for investors: Gold’s recent rally has been due in large part to uncertainty over trade war fears with China. This week it was bigger fears over actual war in Syria that propelled gold higher. There was some pull back Thursday due to the Fed announcing interest rates, but for the most part gold’s rally remained consistent. Late Friday the U.S., U.K., and France launched around a hundred missile strikes at Syrian facilities. The rush to safe haven gold will likely continue through the next week.

Crisis in Syria, Missile Strikes, and Heightened Geopolitical Tension

Syria planesThreats of military action and retaliation between The United States and its allies and Russia and Syria were a significant mover for gold and the markets this week. Images and reports came out of an alleged chemical attack by Syrian President Bashar Al-Assad on civilians (days after Trump announced potential withdrawal of U.S. troops). The United States and allies like France and the U.K. denounced the attack and threatened military action against the Syrian regime. Russia, Syria’s primary ally, declared that it was not an attack by the Syrian government. Russia stated it was more likely the work of government opposition fighters or perhaps even staged. President Trump responded forcefully, and even went as far as to tweet to Assad that “smart missiles may be coming.”

Russian ships at Tartous Port in Syria immediately left port after the news to begin exercises offshore while the U.S. sent aircraft carrier the USS Harry S Truman to join the U.S. sixth fleet in the Mediterranean. Russia has warned the U.S. about retaliation if the U.S. were to target the Assad regime with strikes. Yet late Friday, the U.S., France, and the U.K. launched a joint missile strike against Syrian facilities rumored to be responsible for chemical weapon manufacturing. Russia condemned the strikes in the strongest terms.

What this means for investors: As foreign military presence increases, likelihood of all out war between powerful countries increases. There is no shortage of Iranian, U.S., French, and Russian military bases in Syria now as this map shows. Buyers will continue flocking to gold as tensions continue to ramp up. As Russia, and the U.S. all vie for influence in Syria, the chance of peaceful resolution seems less likely.

Not Just War Fear Driving Gold

Russian Army ParadeHowever, it wasn’t just the bellicose rhetoric and that spurred gold prices this week. Gold certainly reacted to the fear of war with Russia, but a weak dollar is driving gold up as well. Weak inflation data also helped push gold higher on Wednesday in addition to the Syria worries.

What this means for investors: Even if military action is not as imminent as the markets seemed to fear this week, gold is still looking bullish. Some strategists suspect that the inflation data may make the Federal Reserve slower to raise interest rates. However, the Fed has yet to say anything to the contrary. Jobs data last week was also reported to be lower than expectations. A weak dollar, indications of some slowing growth, and the choppy couple months the equity markets have had all point upwards for precious metals.

Gold Taking Defensive Spotlight Back from Cryptocurrency

As defensive plays for protecting wealth took the spotlight this week, gold was clearly preferred by strategists over bitcoin and other cryptocurrencies as an alternative wealth storage option. Gold hit its highest close in 2 years as uncertainty rocked the markets, and cryptocurrencies continued to see investors move out of them and into physical gold.

What this means for investors: It’s not just geopolitical uncertainty and crypto disillusion that’s going to drive metals though. This gold rally has been years in the making. Check out this video to see more.

Gold is surging to two-year highs. But does the rally have legs? from CNBC.

 

 

 


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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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US-China Trade War

Gold Continued to Rally on Trade War Fear This Week and Stagnating Output

Gold Market Discussion

This Week Gold Continued to Rally on Trade War Fear, Stocks Got Slammed

china-yuan-dollarsThe biggest news this week for the markets and gold was trade war fears. Gold continued to rally this week as China and the U.S. imposed and threatened new tariffs on each other. By Friday the Dow had fallen nearly 3%.

The U.S. announced tariffs on $46 billion more of Chinese goods. China countered with tariffs on $50 billion worth of American goods. Late Thursday, President Trump threatened $100 billion more in tariffs.

What this means for investors: History has already taught us some important lessons about what happens in a trade war. The most notable example, which we’ve talked about before but bears remembering, is the Smoot Hawley Tariff Act  of 1930. Gold finished out the week around $1,335 and silver was around $16.50. The dollar is going to continue to be a catalyst for gold prices to go up as well if it continues to weaken.

Gold Met Resistance Thursday, But Recovered by Friday

Jobs Data is weakOn Thursday, some of the trade war fear eased, and gold pulled back while the stock market recovered some of its recent loss. However, that was short lived, as Friday brought new tariff talk and the Dow fell over 600 points. Treasury Secretary Steve Mnuchin and Commerce Secretary Wilbur Ross tried to calm market fears, but the plunge continued until the close.

Soft economic data also was also something to watch this week. The U.S. jobs report released Thursday showed weaker than expected jobs growth. This kind of data usually boosts gold, but it was mostly overshadowed by the drama around trade war.

What this means for investors: China has another possible move in a trade war. It holds $1.1 trillion in U.S. treasuries. If China dumped its American debt holdings, it would devastate the U.S. economy. China doesn’t seem poised to do that just yet, despite rumors a few months ago that it wanted to dump treasuries.

Is Now the Time to Buy?

As gold prices start to climb, there are several reasons to remain bullish on gold. Analysts discuss why now is the time to move into safe haven bets like gold.

Gold is catching a bid on trade war fears, but is now the time to buy? from CNBC.

Stagnant Gold Production and Increased Global Demand Will Send Gold Prices Up

Gold production seems to have peaked. The World Gold Council estimated that gold mining output peaked last year, and this means prices will move up. There is a lack of exploration, and the industry is not able to replenish the reserves that it is mining. However while supply is falling, demand on a global scale is increasing. Countries like Russia, India, Turkey, and China continue to shore up their gold buying.

What this means for investors: Higher demand and lower supply always mean higher prices. If production didn’t peak last year, it will this year, according to the WGC.


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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 bars

Several Reasons Gold Is Looking More Bullish Right Now to Investors

Gold Market Discussion

Gold Is Looking More Bullish As Goldman Sachs Upgrades Gold Expectations to “Outperform”

Goldman SachsAs the stock market teeters on correction mode, gold is looking more bullish. Goldman Sachs even upgraded gold outlook this week. The investment bank expects precious metals to “outperform” over the coming months. This is based partly on empirical data that shows gold outperforming after four of the last six interest rate hikes. With the Fed promising more rate hikes this year, it looks good for gold.

Last week the Dow entered correction mode. This also has prompted gold prices to move higher as investors start looking to safe havens. The Dow was back and forth this week, but some analysts are warning of as much as a 30% correction.

On Monday, gold hit a 5 week high over $1,350 continuing its rally from last week. Gold prices held strong through the week, with some resistance Thursday as the stock market managed to recover and trade in the green. Gold stayed over $1,320 though, and safe haven buyers took the dip as a buying opportunity. Silver followed trend.

What this means for investors: Continuing trade war fears also kept gold’s rally going this week. As the gold bulls finally start seeing significant potential for gold prices, it’s a perfect time to buy. Dips like Thursday’s are an even better opportunity. Furthermore, gold has been posting over 10% yearly gains now for the past few years, so it’s no surprise gold is finally breaking out.

Gold Has Best Run So Far Since 2011

gold bars

Gold accomplished just something that hasn’t happened since it’s run in 2011. It posted its third consecutive quarterly gain, with gold up between 1.6 and 3.1% over the last three quarters. The rise has been coming even as the Fed raises rates.

What this means for investors: Furthermore, global buying is picking up as well. Everything from inflation to politics to Fed policy to an overweight gold market is looking bullish for gold right now.

Three Reasons Gold Is Going to Climb

Gold IRA with physical gold

Other than stock market correction, there are three other important reasons that gold is looking more bullish.

Inflation. Inflation is trending up right now, and it seems to be rising faster than expected. Higher inflation is always bullish for gold prices.

Weaker dollar. The dollar has shown incredible resilience for the past couple years, but it’s strong run looks like it’s coming to an end. Even President Trump and Secretary of the Treasury Steve Mnuchin have been quoted saying the dollar needs to weaken. A weaker dollar is better for trade, and with the new tariffs that the President has imposed on imports and threat of counter tariffs by key trade partners, trade will be an incentive for a weaker dollar policy.

Politics. Geopolitical events almost always trigger gold prices to climb higher as well as domestic politics.

What this means for investors: Some are even predicting gold could hit $1,500 or more this year. As the graph here shows, gold prices have actually crushed the markets so far this century. Precious metals certainly go through corrections and bear markets, but in the long run, they always keeps value.

The Gold Supply is Falling

stacked gold coins

A lack of gold could eventually be another reason that gold prices could go up. Mine supply of gold seems to be peaking out, and new discoveries are not occurring at the same rate as they used to. Looking forward several years, the supply is expected to tap out even further.

What this means for investors: Gold is a finite resource, and only so much of it can be taken out of the ground. When supply of any good declines, prices go up.


 

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

trade wars

Trade War Fears, Market Sell-Off, and Fed Action Triggers Moves This Week

Gold Market Discussion

Trade War Fears Spark Market Sell Off

Trade wars with ChinaIt was another dramatic week for the markets as the Dow fell over 700 points on Thursday due to trade war fears. In fact it was the worst week for stocks in over two years. President Trump announced the likelihood of tariffs on at least $50 billion worth of Chinese imports as well as tougher restrictions on acquisitions and technology transfers. The prospect of trade war between the world’s two largest economies rocked the global markets through Friday trading as well. Furthering the trade war fears, on Friday China proposed measures to slap $3 billion of U.S. imports with tariffs. China also threatened to stop buying U.S. treasuries on Friday.

These tariff threats between China and the U.S. are reminiscent of the trade war sparked in 1930 after the passage of the Smoot Hawley Tariff Act. The U.S.’s imposition of tariffs on imports prompted key trading partners to impose counter tariffs. Ultimately, the result was higher prices and economic slowdown, which exacerbated the Great Depression.

What this means for investors: The global stocks fear predictably sent investors to gold and other safe havens. Gold started the week just over $1,312, however on Thursday it shot up over $1,330 and nearly hit $1,350 in Friday trading. Silver closed around $16.55.

Federal Reserve Announcement on Rates Was Bullish for Gold

Federal Reserve BuildingIt wasn’t only trade war fears that lifted gold this week. Gold got a boost on Wednesday as well following a Federal Reserve announcement. Chairman Jerome Powell kept to the plan for three rate hikes this year. Furthermore, the dollar weakened as the Fed raised a key short term rate by a quarter point, and gold went up. A weaker dollar generally means higher gold.

What this means for investors: One reason for gold going up is that the economy growth projections are slightly lower than what is expected. Inflation expectations are going to be key going forward as well. There is some growing worry that the recent tax cuts are leading to higher inflation without the expected economic growth. Rising rates often work against gold, but regardless, last year gold was up 13% for the year despite rising interest rates.

U.S. Debt Hit $21 Trillion This Week

Another important event this week was the $1.3 trillion omnibus spending bill signed by Trump on Friday. It is the second biggest spending bill in U.S. history, and the President signed it to the chagrin of many conservatives. The bill follows immediately in the wake of U.S. debt topping $21 trillion. One trillion of that was in the last six months. The passing of the spending bill avoided a government shut down, but is a huge step closer to an impending debt crisis.

What this means for investors: There is concern that the ramping up of spending – including higher defense and infrastructure spending – is going to happen without a solid plan to raise government revenue. This is all highly inflationary and bodes ill for the dollar. When fiat currencies devalue, gold’s intrinsic value increases significantly.

Gold Poised to Spring Out?

Trade war fears and inflation are just some of the reasons why gold looks poised to make significant gains this year. Even before gold hit a one month high this week, analysts were making the bullish case for gold. Last month the stock market had a steep correction and gold failed to rally as much as the gold bugs expected. This week the markets had a steeper correction with the combined inflation expectation and trade war fears and gold shot up. The dollar index is key to watch for gold right now. Check out what Vertical Research’s Michael Dudas sees for gold this year.

Gold ‘jitters’ to fade and prices will rise, metals expert predicts from CNBC.

 

 

 


 

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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 Remains Desirable Despite Struggle to Break Out This Week

Gold Market Discussion

Mixed Week for Gold and the Markets

gold moves

Gold had an up and down week. It was under $1,320 to start out Monday, but during the week it rallied past $1,325. However on Friday it pulled back again to around $1,315. Silver followed a similar rise and fall pattern. The stock market was similarly choppy. It dropped mid-week on political uncertainty with Secretary of State Rex Tillerson’s departure from the State Department. The dollar index also struggled until rebounding Thursday, putting pressure on gold. Bond yields were up with the 2-year hitting its highest level since 2008. The cryptocurrency market had the roughest week with a market drop of about $60 billion this week across the board.

Gold Remains Desirable

gold remains desirableDespite the struggle this week, gold remains desirable right now. It has been trading this week on uncertainty trade coming from geopolitics and domestic politics, but other factors are driving it as well. For one, gold and bonds are not trading together, and a breakdown in the bond market could benefit gold. Gold has also been reacting bearishly to hawkish interest rate policy tones out of the Fed, while the dollar strengthens. Historically though, the correlation is not as clear cut as future speculators think and react. This is a short term pattern for gold and the dollar.

What this means for investors: No one can say exactly when the break out is going to come for gold. The stock market’s run has extended further than many expected already with indications it could continue to stay strong for a while yet. Gold and silver are still both treading water for now though and investors are taking advantage of buying opportunities in expectation of a break out in the near future. As the dollar puts pressure on prices, look for those dips to buy.

How Much Gold Is in Fort Knox?

How much is really in Fort Knox?It’s well known that countries like China, Russia, and Turkey are rapidly increasing gold buying. Where does the U.S. stand for gold consumption? The U.S.government  reportedly has 8,133 tonnes of gold sitting in vaults in Fort Knox, Kentucky (according to Federal Reserve data). The Fed claims it has been at this level since 1974. In 1953 though, the U.S. had 20,000 tonnes of reserve gold. 1953 was also the last year it was audited. So although over 11,000 tonnes were recorded as sold between 1953 and 1974, between 1974 and now, there has reportedly been none sold since. While this would be reassuring if verified, it does not seem plausible.

What this means for investors: Does the U.S. gold hoard and how much is there really matter? Absolutely. Gold is a bedrock of financial security. Inflation today is 79 times greater than what it was in 1953, and, adjusted for inflation, the debt level is over 900 billion dollars higher now. There is nothing to back up or ensure all of this fiat money if they become worthless one day. What will it mean for the dollar if those countries holding the majority of U.S. debt accumulate more gold (which seems likely)? Certainly nothing good. These emerging market countries want economies with a sound position in gold because gold is real wealth.

Hungary Is the Latest Country to Take Back Gold

Hungarian Parliament Building
Hungarian Parliament Building

The rate of gold buying by governments and central banks has been rising for some time as gold remains desirable. However, it’s not just gold buying that some countries are doing. Germany recently repatriated most of its physical gold from abroad back to within its borders bringing it back to its direct control in Frankfurt. Now Hungary just followed suit. The National Bank of Hungary (NBH) brought back 100,000 ounces (3 tons) of gold that was being held in London to Budapest. The head of the NBH said it was not just to have a safe investment secured within the nation’s borders, but to have a strategic tool to support economic confidence both domestically and abroad.

What this means for investors: As the threat of geopolitical risk rises, nations are increasingly keen to have physical assets secure and under their direct control. Gold is wealth and means security and confidence both in geopolitics and to the private individual.

 

 


 

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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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Buy gold now

Mixed Week for Gold as Trade War, Geopolitics, and Jobs Data Drives Markets

Gold Market Discussion

Mixed Week for Gold Starts with Rally

Gold BarsIt was a mixed week for gold this week. Monday started out with gold continuing its upward move from last week and crossing $1,330 midweek. On Friday though it fell to just over $1,320. Silver also had a midweek spike. By Friday though, metals pulled back initially as the dollar index had strengthened.

Last week, President Trump announced that the U.S. would levy tariffs on imported steel and aluminum this week as a fulfillment of a campaign promise. The tariffs are touted as an effort to make domestic manufacturing more competitive, however, many analysts worry it could lead to trade war and higher prices.

Trade War, Tariffs, Italy, and North Korea

North Korea ThreatsThe tariff announcement immediately triggered fear of an impending trade war last week. It is reminiscent of the Smoot-Hawley Tariff Act of 1930 that led to higher prices, exacerbated the Great Depression, and hindered recovery. This week the White House gave further details on the tariffs and offered temporary, possible exemptions for Mexico and Canada as well as key military allies. Trading partners such Japan, Brazil, and as those in the European Union (among others) expressed strong disapproval and threatened (or imposed) counter-tariffs on U.S. goods.

Gold also got an early week boost on political uncertainty in Italy. The Italian elections over the weekend resulted in a sizable shift towards populist, anti-EU, and anti-establishment parties. This could lead to further push back against an already weakening EU by member states. In other geopolitical news, President Trump agreed to meet North Korean leader Kim Jong-Un sometime between now and May to discuss de-nuclearization. He will be the first sitting U.S. President to talk to North Korea’s leader by person or phone.

What this means for investors: The tariff announcement carried over this week in shocking the markets, and the uncertainty gave gold a boost. If a trade war shakes out, it will mean higher prices on goods both domestic and imported. Right now the move is causing uncertainty and prompting safe haven buying.

Political uncertainty in Europe as populist movements win elections and turn against the establishment is going to continue as well. Geopolitical instability generally leads to hedging with gold, and buying has been increasing significantly in Europe for a couple years now. The prospective talks with North Korea did the opposite and helped calmed the markets with the hope of diplomatic resolution to the crisis. These conflicting geopolitical factors contributed to the mixed week for gold.

Jobs Data Release Friday Triggers Pullback for Gold Friday

US Jobs and Labor ForceThe prospect of diplomacy with North Korea helped to boost the markets on Friday, but the markets got the most significant lift from the U.S. Labor Department’s jobs report that was released. 313,000 jobs were added last month, which was slightly higher than expected. The unemployment rate remained low as well. The dark cloud for the jobs report was that wages only rose a tenth of a percent. This initially led to a decline in gold during Friday trading as it was a positive indicator for the economy. However gold reversed some of its losses as the dollar index weakened Friday against other currencies, and the weaker dollar meant higher gold prices.

What this means for investors: Economic indicators are a mixed bag right now though. The euphoria over the jobs report might not last as there are deeper, not-talked about worries on the horizon, which even Janet Yellen warned about recently. The most notable is the expanding U.S. debt. It’s been a scary prospect for years. Last year the projection for government debt for 2018 was $689 billion. The projection has now increased to $1.15 trillion for this year with increased spending and a drop in tax revenue. Inflation is already rising, and budget deficit numbers like these will spur it on. Check out these charts for more on the debt projections.

Gold’s Near and Long Term Prospects

Gold Eagles- BullionDespite this week’s pull back on the economic report, investors aren’t ditching gold just yet. One reason is because analysts are expecting a top out and correction of the stock market any day now. No one can agree on the exact timeline, but it can’t continue to hit record highs much longer, and ultimately complacency is going to lead to correction. Daniel Pinto, a co-President of JPMorgan Chase, forecasts the correction to be as much as 40% when it hits. Even despite gold’s pull back on lessening fear and more risk appetite this week, it is continuing to hang on, and silver looks like it is moving to catch up. Inflation is going to be a key feature as well in affecting gold prices as it starts to creep in.

What this means for investors: A strong dollar index was keeping gold down for much of this week. Metals continue to show resiliency though despite the prospect of rate hikes and a persisting stock market rally. It’s always a good idea to buy when prices are low. As the prospect of a stock market correction comes closer to happening, those who moved into safe havens like gold ahead of time will be glad they did.

 


 

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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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Looking Back at the Smoot Hawley Act after Trade Tariff Announcement This Week

Gold Market Discussion

Possible Trade War? It’s Time to be Looking Back at the Smoot Hawley Act of 1930

Smoot and Hawley
Smoot and Hawley on April_11,_1929

History has a cyclical way of repeating itself, and looking back at the Smoot Hawley Act could provide some crucial lessons right now. The big news of the week for the economy was President Trump’s announcement that the U.S. would impose tariffs on imports next week. Such a measure was not entirely unexpected. When Trump first came in to office he was toying with the idea. Now it has come to fruition, as countries exporting steel and aluminum to the United States will now have to pay a higher tariff (a 25% duty on steel and 10% on aluminum). The claim is that it will make domestic goods more competitive and give materials companies an edge.

It isn’t the first time the government tried this experiment though, and looking back at the Smoot Hawley Act shows the lesson to be learned is the opposite of the intended outcome. The protectionist Tariff Act of 1930 raised tariffs on 20,000 imported goods and, in the opinion of the majority of economic historians, exacerbated the Great Depression. The agriculture and manufacturing sectors suffered significantly.  The 1930 bill had a multitude of fierce opponents, but President Hoover yielded to his party’s pressure and signed it into law.

The result was that key U.S. trading partners imposed counter-tariffs, which reduced U.S. exports by more than half in an all out trade war. Canada, the U.S.’s chief trading partner, imposed new tariffs on 16 goods that comprised 30% of the U.S.’s exports to its norther neighbor. This time, Canada is again willing to punch back in a trade war. Major trading partners like China issued similar cautions.

Dow Turns Negative for the Year after President’s Announcement

President Trump Tariff
photo by Gage Skidmore

Trade war and tariff talk was the hot topic for the markets and economy. The stock market fell on the news, reversing much of its recent gain. After the tariff announcement Thursday, the market fell nearly 500 points. On Friday morning it dropped a further 300. By Friday afternoon, the Dow Jones had experienced its longest losing streak since September, and is overall negative for the year.

What this means for investors: In 1930, protectionist trade policy deepened the crisis of the Great Depression. In this case, we are approaching the end of a long bull run for stocks, and a potential trade war could worsen a correction and hinder recovery.

Gold Suffered This Week on Higher Rates, Stronger Dollar, but Rallied on Friday

stronger dollar holding down gold
Metals started out the week with a pull back. On Wednesday, Federal Reserve chair Jerome Powell testified before Congress. Powell stated again the case for gradual rate hikes. This boosted the dollar index, but hurt gold and stocks. Gold managed to tread water above the $1,300 mark though. At the low on Wednesday it reached $1,310. It started the week around $1,328 and was back above $1,320 in trading Friday.

What this means for investors: Powell also made a case for rising inflation. As it rises, gold should rise as well. Gold’s Friday rally was driven by safe haven buying against the tariff talk. There is also some fear that the economy is overheating and the Fed may need to ease back on interest rates.

Volatility Is Up as Fear Grows of Stock Bubble Burst

Even if the stock market continues to rise for the time being, it is in a different atmosphere than 2017’s rally. Last year we had ultra low volatility, whereas this year it is creeping ever higher and causing some worry.

What this means for investors:

The hedge fund manager who called the October 1987 crash just gave a stark warning from CNBC.

David Stockman: Market crash will be a ‘doozy’ from CNBC.


 

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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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BRICS

Gold Buying Goes Up Around the Globe As BRICS Countries Eye More Gold, Venezuela Toys with Gold Backed Cryptocurrency

Gold Market Discussion

Russia Passes China in Gold Holdings as Gold Buying Goes Up Around the Globe

The Russian central bank passed China last year in increasing gold holdings as gold buying goes up around the globe. Russia has been buying gold every month for almost three years, while China’s accrual has tapered off slightly. This past month, Russia acquired 20 metric tons to put its gold reserves at 1,857 tons. It also makes it the fifth largest holder of sovereign gold in the world. The U.S. is still far ahead though with over 8,000 metric tons reportedly held in Fort Knox. Russia considers its gold holdings as a feature of “national security.” Russia Central Bank’s first deputy governor Sergei Shetsov said that Russian citizens and banks owning gold is a way of “beefing up national security.” His implication of course is for economic security rather than military for the U.S. and EU sanctioned Russia.

Shetsov also discussed the possibility of possible BRICS (the nickname Brazil, Russia, India, China, South Africa due to similar features of large, fast-growing, emerging global markets) agreements on gold pricing and trading to upset the current global dominance of the U.S. dollar. Moscow and Beijing have already signed a memorandum of intent on bilateral precious metals trading. This will likely pave the way for further avenues for gold hubs in global trading. Furthermore, in the past couple years China has introduced the Shanghai Fix as an alternate gold pricing market to the New York COMEX and London Fix.

What this means for investors: It is clear that on the global stage, gold is considered wealth. The BRICS countries consider it a key part of sustaining economic security and gaining power in the global market. As geopolitical tensions around the globe increase, expect gold acquisition to increase as well.


Currency Alternatives: Can Gold and Crypto Salvage Venezuela? 

As gold buying goes up around the globe for powerful, emerging markets like Russia, Venezuela looks at it as a possible life raft. Venezuela’s ravaged economy has much its people unable to buy food and necessities. In the midst of the severe economic crisis, hyperinflation has pushed the Venezuelan bolivar down to next to nothing. It is worth less than World of Warcraft virtual currency and 100,000 bolivars is worth only $4 USD.

In an effort to prevent a worsening of the political and economic situation, President Maduro is attempting to launch a national cryptocurrency. First he announced the launch of an oil-backed cryptocurrency called the petro. The following day he announced a coming gold-backed cryptocurrency called the petro gold. He gave few other details about the currencies though.

What this means for investors: Maduro must believe himself out of options to bank on something as volatile as cryptocurrency. The oil and gold backed cryptocurrencies are an attempt to skirt financial sanctions. However, they will probably not save Venezuela from hyperinflation and its collapsing, socialist economy. Investors question whether they have any real, impactful value given concerns about Venezuela’s solvency and transparency. Maduro’s thought is probably that commodities like gold and oil have tangible, lasting value. Whether this will translate to the murky world of cryptocurrency though is doubtful. Venezuela right now is a lesson on the pitfalls of fiat currencies in a socialist system, and there is no apparent easy way out of its current crisis.

Gold Swings Back and Forth This Week on Stronger Dollar and Interest Rate Hikes

Gold stayed rather quiet this week. At the beginning of the week it was trading lower in anticipation of a Fed announcement on interest rates. Sure enough, the Fed announced a rise in interest rates that raised bond yields and firmed the dollar. However there is also an expectation for rising inflation that led to a softening of the dollar index and a gain for gold by Thursday. Rising inflation generally means rising gold prices. However, overall, gold struggled this week and had one of its worst weeks for the year.

What this means for investors: Despite the weak performance for gold this week, there are reasons to remain bullish on gold. Check out analyst Carter Worth’s case for gold to reach $1,400.

 

3 charts that show gold is going to $1,400 from CNBC.

The Gold/Silver Ratio

gold-silver-ratio-5 year chart

Analysts often look at the gold/silver ratio to predict movements in the precious metals markets. The ratio is simply the price of gold per ounce divided by the price of silver per ounce – or how many ounces of silver it takes to buy an ounce of gold. Right now, the gold/silver ratio is indicating that silver is relatively cheap compared to gold. The last time we saw such a relationship was February of 2016, and shortly thereafter, both metals took off. In recent weeks as gold saw some big upward movement, silver lagged behind, but once it catches up, both metals could be in for gains.

What this means for investors: Silver prices jump around with greater volatility than gold prices. Historically, the current pattern is bullish for metals, so this is a good opportunity to increase both. With silver relatively cheaper and poised to make a catch-up run, it is an especially good time to consider silver.


 

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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 bars

Gold Was Up and Down this Past Week As Inflation Concerns Set In

Gold Market Discussion

Gold Was Up and Down This Past Week

Analysts predict $1500 gold
After previously being quiet, gold was up and down this past week. However by Friday it was on pace for its biggest weekly gain in two years. It started the week just under $1,320 and rallied to $1,350 on Wednesday. Friday opened with gold still over the $1,350 mark. Silver rose with gold mid-week as well, but it remained under $17 an ounce all week. Metals were helped in part this week by a weaker dollar index (a 3 year low) and some inflation concerns. Chinese gold buying ahead of the Chinese New Year (the Year of the Dog begins this weekend) also helped gold.

 

Inflation Concern Leads to More Gold Buying

inflation chartGold got its bump this week in part due to Wall Street starting to eye it.  The U.S. Labor Department released its Consumer Price Index (CPI) report Wednesday, and this helped give gold that mid-week boost. The CPI (which tracks prices of consumer goods) had risen more than expected. This was its largest increase in thirteen years. Another labor report documented an unexpected rise in wages and sparked an equity sell-off, sent the Dow Jones into correction, and lifted the 10-year Treasury note to a four year high.

What this means for investors: There is growing indication that inflation is making a comeback. Precious metals are the classic hedge against inflation, and with its return, gold prices will likely rise. Gold was up and down this week, but rising inflation will eventually translate to rising gold.

Stock Market Bounces Back for Week of Gains

gamble on stock marketThe stock market bounced back this week after it’s drop off last week. Last week it dropped by levels not seen since 2008. The markets posted gains throughout this week though. In fact, it reversed most of the correction from last week. Despite the correction last week, gold remained fairly quiet, and metals actually gained more this week due to the weaker dollar and rising bond yields. The bull market for stocks doesn’t seem to be over quite yet, despite the eerie correlation of this economic climate to 1987.

What this means for investors: Some analysts still think volatility is ahead for stocks though, despite the bounce this week. This means that these gains wouldn’t last. The 10-year Treasury yield will probably continue to rise higher, which is going to worry stocks. Strategist Jim Paulson expects a 15% correction later this year. Rising rates and potential inflation are worrying investors and starting to think about safe havens now.

Emerging Market Junk Bonds Less Risky than U.S.

US junk bonds riskier than emerging marketsRight now, U.S. junk bonds are riskier than those from emerging markets. According to Bloomberg data, bond yields on emerging market junk bonds are below those of the U.S. for the first time in over two years. Emerging markets are essentially economies in countries that do not have advanced levels of market efficiency and strict standards in accounting and regulation, but are moving towards it (for example: Hungary, South Africa, Brazil, Mexico).

What this means for investors: The bond market and rising yields is what has many investors worried. This spike in risk in U.S. junk bonds indicates a disconnect between fundamentals and prices in this economy.

 


 

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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

Stock Market Drop Off: One of the Worst Weeks Since 2008, but Gold Remains Quiet

Gold Market Discussion

Stock Market Has One of the Worst Weeks since 2008, But Gold Remains Quiet For Now

DJIA fallsVolatility was the word of the week. The Volatility Index went as high as 40 points Friday before closing around 30 (last week it was around 17). The volatility in the stock markets is becoming more pronounced, especially following last week’s shaky week. Once again this week – and to a greater extent – the markets experienced wild falls and fluctuations. By Friday afternoon, the Dow regained some of the lost ground in the afternoon, but it had its worst week in two years. It was a similar story for the S&P and Nasdaq. In fact the Dow traveled 20,000 points this week. Furthermore, on Monday it experienced its worst daily point drop on record.

On Friday, the stock market was on pace for one of the worst weeks since 2008, but gold remains quiet at the moment. Gold closed out the week just shy of $1,320, which was down nearly $20 from the week’s open. Silver fell too just over 20 cents over the week. This seems counter-intuitive for metals, given the heightened stock volatility over the past couple weeks. You would expect some safe haven demand to pick up.

However, there were other forces weighing on gold this week. It was under some pressure from expectation of rising interest rates and a stabilizing dollar. Some analysts also estimate that there was gold selling this week as investors sold some of their holds to meet margin calls on leveraged equities.

What this means for investors: It looks like the stock market’s bull run is come to a head, as the stock, bond, and currency markets have been flashing warning signs of for a while. Investors are preparing for more volatility ahead with rising inflation expectations and rising bond yields.

With rising inflation, expect gold prices to rise as well. Despite gold’s quietness this week through the upswing in volatility, the future is looking good for gold. Long term, a dropping stock market is going to push investors to the safe haven buy in gold. Gold did not drop below $1,300 on the firming dollar, which indicates it has support. Gold is up 6% from its December lows. If the market volatility has you concerned, look for gold buying opportunities as a hedge.

Foreign Gold Buying Continues to Climb on Volatility Expectations

foreign goldThe global equity market volatility is just one reason why foreign gold buying is going to continue to rise. Russia has been buying gold at record pace for some time now. China, the second largest economy in the world, is the top global buyer, and India is also becoming a significant player in the global market. The latest Bank of England policy signals that U.K. investors should think about buying gold now. The BoE voted to keep rates unchanged, and analysts are worried that at this rate, rates will not raise fast enough to offset inflation. The central bank is acting out of line with its methodology and previous policy outlines.

What this means for investors: Gold generally gets an additional boost at the beginning of the year from traditional Chinese New Year gold buying. However, as volatility ramps up, the speed of buying is going to continue.

Cryptocurrency Rout Eases

cryptocurrency volatility
The cryptocurrency markets have been experiencing even more volatility lately than the stock market did this week. With the focus on the stock market drop this week though, cryptocurrencies had a bit of a breather. More and more analysts though are coming out against the concept of it as a currency, despite some of the other practical applications for blockchain technology. With volatility fears plaguing the stock market now though, it appears investors are not leaping to put their money into the even more volatile cryptocurrency markets.

For more on what this means for investors, check out the link below…

 


Read our latest original article to see what the gold investor should know about cryptocurrency

WHat gold investors need to know about cryptocurrencies
Bitcoin and cryptocurrency are undoubtedly a hot topic right now. How exactly the virtual, unregulated “currency” works though can be complicated to understand. Check out our original article that breaks down bitcoin mining, blockchain technology, and their future implications for gold, money, and society.

Read the article here!

 


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

Stocks Tumble

Volatile Week for Stocks Sparks In Worst Trading Week in 2 Years

Gold Market Discussion

After a Volatile Week for Stocks, Gold Set To Move Higher?

Stocks are downIt was a volatile week for stocks all week with Friday marking the worst day this year for the markets. Friday saw the Dow Jones plunge nearly 700 points and it marked the biggest loss in 2 years for the Nasdaq. It was overall the worst week for stocks since January 2016 with the markets down most of the week leading up. The VIX rose 28% to 17 after hovering at record lows several months prior. It was the highest percentage point loss since the Brexit turmoil in June 2016 and steepest point decline since the 2008 financial crisis.

What this means for investors: A rapid jump in treasury yields is one of the reasons for the sharp sell off Friday. Rising rates are making the markets jumpy, and this is a stock market already due for a correction. In fact it has not corrected more than 3% in nearly two years. Many analysts – including Goldman Sachs – are predicting a high probability of a coming correction. This could be a start, especially if the bond market continues along this path. For metals, the spike in volatility should give gold a boost as it spurs some safe haven buying.

Fluctuating Dollar Index Shakes Up Gold This Week

The dollar is fluctuatingDespite the heavy Dow loss on Friday, gold was down as well to close out the week. Generally gold would be up with such a decline as investors move to safe haven assets, but it was not the case this week. Gold hovered in the mid $1340 range for the beginning of the week, but closed Friday closer to $1330. The dollar, which has been showing weakness recently, got a boost this week from the Fed announcement and economic data released Friday. Silver, which is always inclined to more volatility than gold, started around $17.30 and closed just under $17 at the end of the week.

What this means for investors: Metals have been taking a cue from the dollar recently and moving in opposition. The dollar was still showing some resiliency Friday, which is part of the reason why the plunge in the stock market didn’t lift gold as much as it might have seemed it would. However, many buyers still took advantage of the price drop Friday to hedge against increased volatility in the stock market.

U.S. Debt Set to Spike Over $600 Billion in Next Several Months

time running out on debtA big story that is probably not getting enough attention though is the U.S. debt level and its projected increase. The U.S. national debt is set to spike by $617 billion in the next five months, according to the U.S. treasury. Its approaching its debt ceiling again, and Secretary treasury Steve Mnuchin called on Congress to lift the ceiling as soon as possible.

What this means for investors: Having such a massive deficit is fiscally reckless not to mention dangerous. In 2008 the economy turned on a dime. If it were to make a similar turn in the next few years, a deficit like this would make recovery even more difficult. The dollar would crumble and set off a chain reaction around the globe. And yet the government is increasing spending programs rather than addressing the debt problem.

Cryptocurrency Can’t Replace Gold

cryptocurrency can't replace goldOn Friday bitcoin fell under $8000. This is an over 50% decline from its December high of $20,000. Other cryptocurrencies experienced similar declines this week. The Friday rout resulted in an overall market loss of about $100 billion in cryptocurrency. Cryptocurrency certainly has made many investors richer quicker than gold ever has, but it won’t replace it as a store of value in the long run. These massive spikes in price over short amounts of time are indicative of that. The World Gold Council recently released a report on how crypto is far too volatile to ever replace gold. Gold has a more liquid market, trades in an established and regulated framework, and has well understood value in an investment portfolio.

What this means for investors: The crypto mania of last year is quickly fading as its volatility becomes more alarming. Because of this, the amount of early bitcoin buyers taking their profits and turning them into physical gold is rising exponentially. Until recently it was the opposite, with investors selling gold and mortgaging property to buy into the craze at its height, often to quickly experience significant losses. For a more in depth look at how bitcoin and gold are related (or just to better understand it), check out our original article below.

 


Read our latest original article to see what the gold investor should know about cryptocurrency

WHat gold investors need to know about cryptocurrencies
Bitcoin and cryptocurrency are undoubtedly a hot topic right now. How exactly the virtual, unregulated “currency” works though can be complicated to understand. Check out our original article that breaks down bitcoin mining, blockchain technology, and their future implications for gold, money, and society.

Read the article here!

 


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

The dollar is losing value

Gold and Oil Hit Multi-Year Highs This Week While the Dollar Hit a 3-Year Low

Gold Market Discussion

The Dollar Hit a 3-Year Low, Boosting Gold Over $1,360

Dollar to Gold 3 Year Chart
The recently falling dollar hit a 3-year low this week, and helped gold rally to its highest level in 17 months. The last time we saw gold prices reaching $1,360 was in August of 2016, and it looks like they will keep rising. Silver also rallied this week. It touched just under $18 on Thursday and settled to around $17.43.

The recent dollar weakness we have been seeing was further exacerbated this week by Treasury Secretary Steve Mnuchin’s comments at the Davos World Economic Forum – the annual summit of world and business leaders that takes place in the Swiss Alps. On Thursday Mnuchin said that the dollar needs to weaken, and that it will be good for trade if it does. Later that day however at Davos, President Trump stated – in a reversal of his position 13 months ago – that the dollar would get “stronger and stronger,” pushing the index up again. Following his address on Friday there was a further boost. Gold prices had some pull back, but seemed to remain supported.

Despite the boost though from Trump’s comments, the dollar remained stagnant. GDP data released Friday was less optimistic than expected. The euro was also up this week which weighed on the dollar index.

What this means for investors: A weaker dollar means higher metals prices. When the dollar is down, gold, the world’s oldest currency, is a better wealth preserver. The dollar is signalling a buy sign right now as its strength of the past few years retreats. But the dollar isn’t the only thing signalling further optimism for gold right now…

Oil Reaches Multi-Year High This Week Alongside Gold

Gold to Oil 3 Year Chart
In an inverse movement, oil prices hit a 3-year high this week while the dollar hit a 3-year low. Oil price passed $71 per barrel for the first time since 2014 due in part to OPEC supply cuts and dwindling U.S. crude inventories.

What this means for investors: Rising oil prices are historically a bullish indicator for the entire raw commodity sector. Both gold and oil have an inflationary relationship and historically move up when the dollar is down. Movements in oil have a significant impact on gold, and until recently oil has not been moving much. It looks like that could be about to change. Geopolitics also drive both, and growing volatility in the Middle East and Korean peninsula will fuel safe haven buying. Furthermore, there is rapidly growing appetite for both in China, the world’s second largest economy.

Bonds and Interest Rates Signal Time to Buy Gold

Gold to Interest Rates 3 Year Chart
The bond market is also signalling that it’s time to buy metals. The slope of the yield curve can give indications on short term interest rates, inflation, and economic activity. A flattening yield curve can be a harbinger of recession. Interest rates and yields keep going up as bond prices go down. If the bond sell off continues, it could be disastrous for the markets and economy.

What this means for investors:Right now we are seeing rising bond yields, Fed tightening, a weak dollar, and a soaring stock market: just like in 1987 before the crash . Metals are security in such an environment, and rising inflation will lift prices.

Is Silver Finally Confirming the Gold Rally?

Silver on the rise
In recent weeks as gold rallied, silver has been lagging a little behind. This has made a great buying opportunity for the cheaper, more volatile metal. But it looks like it could be catching up. Silver, along with gold, rallied this week and posted a 4 month high and 3% gain. The weaker dollar and boost in oil prices this week also lifted silver. The gold to silver ratio has been unusually wide lately, and some analysts have been looking for signs about whether this bodes well or poorly for the gold rally, worrying it could mean gold is headed lower.

What this means for investors: Both metals look on track to continue their rally. Silver’s move this week allayed some fears that gold was running too fast too quickly. The current ratio along with the indications this week that silver will keep riding gold’s coattails is indicating buy silver now.

 

 


Read our latest original article to see what the gold investor should know about cryptocurrency

WHat gold investors need to know about cryptocurrencies
Bitcoin and cryptocurrency are undoubtedly a hot topic right now. How exactly the virtual, unregulated “currency” works though can be complicated to understand. Check out our original article that breaks down bitcoin mining, blockchain technology, and their future implications for gold, money, and society.

Read the article here!

 


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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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The Bitcoin bubble

Good News for Gold in 2018: Bitcoin, Bonds, and Bubbles to Drive Prices?

Gold Market Discussion

Investors Fleeing Bitcoin to Gold in Increasing Numbers

Bitcoin for goldGold continued to hold strong above $1330 this week. There was some pull back midweek on profit taking, but by Friday it got another bump on news of a possible government shut down.

While gold rose though, crytpocurrencies had another sharp drop off. This week bitcoin came down over $10,000 from its pre-Christmas high that broke $20,000. There could be a subtle correlation here; or, at least, it brings up a recent trend among crytpo investors looking for exit options. Many of those who are selling bitcoin right now are looking to transfer their profits into gold. Bitcoin can be tricky to move out of though. Sellers have to sell through intermediaries before purchasing gold (or other assets). Online trading platforms have been known to go suddenly offline, and there are often high transaction costs. Yet regardless, physical gold dealers have seen a both long and short term bitcoin buyers getting out now – some with enormous profits.

What this means for investors: On paper, gold and cryptocurrency couldn’t be more different. They represent opposite ends of the spectrum: volatility and safe haven. However gold, with its 4000 year history as a gauge of value, will always be what investors return to when they get spooked by bubbles.

Bond and Stock Market Bubbles = More Good News for Gold in 2018?

David Stockman, Ronald Reagan’s White House budget chief, issued a warning this week that gold is the only safe asset left. In his interview, he cautioned that the new tax plan will add $2.5 trillion to the public debt. His most dire warning though was about movement in the bond market:

“…By the fall (of 2018), they (the Federal Reserve) will be shrinking their balance sheet by $600 billion a year.  What that means in plain simple English is that they (the Fed) are dumping $600 billion a year of existing bonds into the market just as Uncle Sam will be attempting to borrow $1.25 trillion more.  Now, if you don’t think that is a financial collision waiting to happen, then I am not sure what would be.

We are heading for a thundering collision in the bond market that will drive yields upward far more than the market is expecting.  The stock market operates on the illusion of permanently low interest rates.  When interest rates start to rise, everything is going to come apart because cheap debt has been priced in forever, and we are heading for far more expensive debt. . . . Bond prices are going to collapse when yields begin to rise. . . . Stock prices are going to collapse big-time when the underlying predicate of cheap debt, massive stock buy backs and M&A deals and everything else supporting the market today finally reverses.”

What this means for investors: The financial crisis that Stockman is predicting might seem like a depressing prospect – rightfully so. Gold gives investors peace of mind during such times though – hence Stockman’s praise of it as the only safe asset to buy right now.

Watch the full, 36 minute video with Stockman here.

Gold Has Room to Run with Global Demand on the Rise

gold has room to grow

Although this week gold eased back some from its New Year rally, strategists are seeing multiple reasons for it to continue this year. One analyst even predicts it reaching $1,400. January and February are also historically the strongest months for gold, so there could be some pull back before that higher climb. However, a weaker dollar and a bearish bond market could continue to drive metals all year. Global demand is another significant factor that will boost gold. Demand in China especially continues to stay strong.

What this means for investors: A smart strategy is to watch for the dips and buy. Gold is still nowhere near its peak. The unraveling bond market and weakening dollar will eventually break the stock market rally. Investors are starting to see this and looking for exit options into safer havens.

Silver Could Be Set to Soar in 2018

silver set to soar in 2018Good news for gold in 2018 will be good news for silver as well. In fact, right now silver might have some catching up to do. The gold/silver ratio has averaged about 63.8 for the last ten years, but right now it’s sitting at 78.1. This means it is historically speaking undervalued right now. Silver is traditionally much more volatile than gold, so given the volatility, its current under-performance, and the potential for gold right now, silver is in an optimal position to start a run up. When gold demand increases, silver demand inevitably follows.

What this means for investors: As more investors start positioning into gold to protect their portfolios, silver will eventually catch up. Furthermore, silver has a high industrial demand that gold does not. There are multiple reasons to be bullish on silver right now, and while it is approaching a break out and prices are low is a perfect time to buy.

 

 

 


Read our latest original article to see what the gold investor should know about cryptocurrency

WHat gold investors need to know about cryptocurrencies
Bitcoin and cryptocurrency are undoubtedly a hot topic right now. How exactly the virtual, unregulated “currency” works though can be complicated to understand. Check out our original article that breaks down bitcoin mining, blockchain technology, and their future implications for gold, money, and society.

Read the article here!

 


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

The Crypto Craze

A Bearish Bond Market, Inflation, and Gold – What’s Ahead?

Gold Market Discussion

A Bearish Bond Market, Inflation, and Gold

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

The “bond king”, Bill Gross, was on record this week saying that the bond market is falling. For the past 25 years the bond market has been on a roaring bull run, so there are significant implications to this turn. A bearish bond market, inflation, and gold – what’s the relationship and how will it affect the markets?

The bond market picks up on seismic change before stocks. Right now, bonds are falling in price resulting in yields spiking above their 20-year downtrend. Meanwhile the dollar is also weakening (posting a loss for 2017). These are both indicators of inflation on the horizon. Inflation always means higher metals prices as the purchasing power of the dollar decreases.

What this means for investors: The debt market and currency market have much higher market caps than the stock market. Thus they are more accurate indicators of significant shifts in the economy. Contrast the raging stock market right now against these and you get a much darker picture for what’s ahead than what the market bulls are saying. A bearish bond market, weakening dollar, and rising inflation are all indicators of an environment where demand is going to spike for safe haven assets like gold. As demand spikes and the dollar devalues, metals have nowhere to go but up.

China Thinking of Halting Treasury Purchases? Meanwhile the U.S. Set to Rack Up More Debt

China
There was further pressure on the bond market this week after a report was released that indicates China could halt or slow their buying of U.S. treasuries. U.S. debt is supposedly becoming less attractive to the Chinese. The dollar and bond market fell on the news and gold rose. The next day, however, China refuted the report.

What this means for investors: Despite the assurances from Beijing, there are reasons for the markets to be nervous on this front. China could be wielding a political move to pressure U.S. – China relations. President Trump has been vocal about unfair advantage for China in U.S. – Chinese trade relations, and his talk of a more protectionist trade policy from the U.S. isn’t ideal for China. China, however, owns $1.2 trillion in U.S. debt, which is more than any other country, and wants the U.S. to remember who their banker is.

Speaking of debt...the U.S. is on pace, according to Goldman analysts, to more than double treasury issuance in 2019. The U.S. will need to borrow a staggering amount of money to cover ever growing spending and decreasing revenue. Where will this money come from? The debt is already at levels that can never be resolved. How long will this be sustainable?

Gold Outperforms Everything Since Latest Rate Hike

Gold Market May Bull
Gold started 2018 with a rally, and seems to have solidified a base to continue strong. It ended the week nearly reaching $1,340 and silver was just short of $17.30. Since the last Federal Reserve rate hike in December 2017, gold has outperformed stocks, the dollar, and bitcoin. On Wednesday it hit a four month high. It’s counter intuitive for gold to rise with rates, but it was the norm all through last year. With more rate hikes projected for this year, these could bump gold further.

What this means for investors: Gold moved up against headwinds last year. The rallying stock market, tax reform bill, falling unemployment, and rising rates all should have depressed gold, but instead it rose 12.1%. Gold is going to be driven by more uncertainty and volatility than last year as geopolitical tensions heat up. The unsustainable “everything bubble” is also approaching its burst.


Read our latest original article to see what the gold investor should know about cryptocurrency

WHat gold investors need to know about cryptocurrencies
Bitcoin and cryptocurrency are undoubtedly a hot topic right now. How exactly the virtual, unregulated “currency” works though can be complicated to understand. Check out our original article that breaks down bitcoin mining, blockchain technology, and their future implications for gold, money, and society.

Read the article here!

 


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

WHat gold investors need to know about cryptocurrencies

What Bitcoin and Cryptocurrency Means for Gold Investors

Bitcoin.
Cryptocurrency.
Mining.
Blockchain.

These are all hot buzzwords right now whether in the media, on the internet, or in casual conversation.

With all the attention they are getting though, the world of cryptocurrency is still new and murky for most people. In this article, we want to clear some of the mystery around how bitcoin and cryptocurrencies work, what their implication is, and what it means for gold and your money.

What is cryptocurrency?

Bitcoin is just one of several virtual currencies or “cryptocurrencies,” albeit the one with the most recognized name. Cryptocurrencies are also called “blockchain” currency and can be acquired through virtual mining or trading on dedicated, crypto-coin trading platforms. Other popular cryptocurrencies you may have heard about are ethereum, litecoin, and ripple, but there are over 700 different kinds. Still other cryptocurrencies (such as GoldMint, Onegram, and Xaurum) are already linked to physical gold. With so many cryptocurrencies up well over 1000% since the beginning of 2017, many investors are eager to ride the craze and make a massive return on their investment.

The basics. How does the blockchain and mining work?

the blockchain

Similar to gold, there is a finite amount of bitcoin, which helps ensure its value. In total there are 21 million bitcoin that can ever exist. Once they are all mined, there will never be anymore unless the protocol changes. So how exactly do you mine for bitcoin? It has to do with how blockchain technology works.

Blockchain technology was devised for bitcoin by an unknown person or group of people under the pseudonym Satoshi Nakamoto. The blockchain has no single, centralized location. Rather, information stored on the blockchain is held by a shared, continually updated, and reconciled network. Essentially, millions of computers are hosting it simultaneously meaning that the information and records are public, verifiable, and has no single source that could be hacked or corrupted.

A full discussion of what blockchain means is beyond the scope of this article. For a fantastic summary, read more about how blockchain technology works here.

Are you a visual person? Get up-to-speed with this excellent six minute video below:

The real value of bitcoin and crypto currency technology – The Blockchain explained from Sebas van den Brink on Vimeo.

How do you buy or sell bitcoin?

bitcoin exchange

Bitcoin is “mined” by each computer that is connected to the blockchain network. The connected computer uses a client that validates and relays transactions. The blockchain is automatically downloaded when it joins the network. “Mining” is a bit of a misnomer, however. What each computer is actually doing is competing to win bitcoins by solving computational puzzles. Bitcoin mining requires a tremendous amount of power to run efficiently.

A user stores his or her bitcoin in a virtual, encrypted wallet. It can only be accessed with an encrypted password, and has both public and private “keys” that enables the user to enact a transaction. Bitcoin and cryptocurrencies can be exchanged through dedicated, online coin trading platforms such as Coinbase or Coindesk (among others).

What is the difference between the various cryptocurrencies?

Types of Crypto currencies.
Just like the dollar isn’t the only currency, Bitcoin is not the only cryptocurrency.

Bitcoin is a specific brand, but it has become a generic name for all cryptocurrencies. Some cryptocurrencies are up about 2000% (litecoin) or in even more extreme cases 8000% this year (ripple). They share the same basic blockchain features, but have different draws.  Another thing they all have in common is extreme volatility.

Is bitcoin real money?

is Bitcoin real money?There are many who think blockchain cryptocurrencies could eventually be the primary means of exchange for goods and services. In fact some companies accept bitcoin payments already. However there is also usually high transaction costs associated with bitcoin.

Furthermore, there is no way to ensure price of bitcoin. It is an incredibly volatile mover. On multiple occasions its moved up or down thousands of dollars in only a couple minutes.

It is not real money in the same way dollars or any of the other current fiat systems is. It is not even real money in the same way as gold has been for thousands of years.

The governments of countries like South Korea and China (where the cryptocurrency craze is red hot right now) have even undertaken moves to ban or limit its trading. One of these most recent government crackdowns in South Korea prevents any new cryptocurrency accounts being opened. On January 8th, there was another huge daily crash by all the cryptocurrencies (especially ripple). This followed news that China could start pushing out crypto miners. China has the largest percentage of cryptocurrency servers in the world thanks to relatively cheap hydroelectric and coal power to power mining efforts.

Pros and cons of bitcoin

One of the most obvious pros is that bitcoin is up about 1500% for the year (others cryptos even more), and some buyers have become millionaires from it. Another significant attractor is the decentralized nature of it. There’s no central authority that controls it, so it has a high degree of transparency.

However the lack of regulation could also be a huge pitfall. When cryptocurrencies were getting routed right before Christmas, Coinbase suddenly went offline. Thus if investors wanted to get out that day, they couldn’t. If there is nowhere to trade, then it is essentially worthless and the money spent to purchase it vanishes. Trading platforms have also been hacked and lost millions of dollars of crypto. With no regulating authority, there is no security that its value will be ensured. There have also been cases of bitcoin holders losing their wallet key or throwing out hard drives that hosted their wallet. In England, one man’s bitcoin worth over $1 million ended up in a landfill by accident.

What’s more, these cryptocurrencies are incredibly volatile movers. Don’t buy bitcoin unless you like the thrill of huge risk (albeit with a huge reward prospect).

Bitcoin mania: is it a bubble?

Numerous analysts and experts say that yes, bitcoin is a bubble. If it is a bubble, it’s already dwarfing other financial bubbles such as the Nasdaq in the late 90s and the Dow in the 1920s. Take a look at the chart referenced below or by visiting the original source here.

bubbles chart

Not only is it a bubble, but there are other risks. Jordan Belfort, the real “Wolf of Wall Street,” warned further about the danger of an unregulated commodity like bitcoin. He called it a massive pump and dump scheme, and that while the crypto world has many promising possibilities, it’s an almost guarantee that it will eventually come crashing down.

What bitcoin and cryptocurrency means for gold: volatility vs. safe haven

Gold and crypto are polar opposites in many ways. Crypto is volatile, gold is a safe haven. Gold is long term security and storage of wealth, crypto…we don’t know yet. Right now, with bitcoin prices rising and falling thousands of dollars in such short time spans, it is too volatile to be considered “safe,” even if blockchain is the way of the future. Cryptocurrency does have some of the same draws that gold does, however, so demand for bitcoin has weighed negatively on gold demand. Buyers like its decentralized nature and the privacy of holding it in an encrypted wallet. Because of that, people have been selling gold, taking out mortgages on homes, and gambling their savings on bitcoin.


Just as the two assets themselves, investors are torn on the true long-term value of the crypto craze. Where do you stand? Have questions? As always, we are studying the markets, so let us know.

Gold up in 2018

Gold Kicked Off 2018 Above $1300 and Ends Week on Rally

Gold Market Discussion

Despite Stock Rally, Gold Kicked off 2018 above $1300 and Held on to Gains

gold bars
In contrast to last year, gold kicked off 2018 above $1300 and held on above $1310 for the first week of 2018. It continued its rally through trading on Friday to end the week just over $1,320. Gold just had its best year in 7 years, and finished 2017 up 13%. After the release of the Federal Open Market Committee meetings on Wednesday, gold eased back slightly, but posted gains through the rest of the week. There was also some profit taking mid week.

The minutes seemed to indicate a more hawkish monetary policy going forward with more interest rate hikes down the road. Often hikes depress metals prices, however the past few have boosted them. Another factor this week that might have weighed on gold prices was the Dow rally to a record 25,000. Gold continued to rally regardless though.

What this means for investors: A weak dollar index is one of the things supporting gold prices right now. In fact, the dollar is at a 3-month low this week. Confidence in the stock market is still high right now, but gold is rallying regardless. Optimism is still high after the tax reform plan, but buyers are growing wary about overvaluation.


2018 Looks Bullish for Silver

silver bars

Silver is on a rally as well. The World Gold Council recently predicted that gold will continue its climb in 2018, and it looks like silver could as well. Silver’s performance for 2017 was less than gold, but the technicals indicate a stronger rally could be coming. The white metal bottomed in mid-December and is now up 10%. Last week it closed above the trend-line resistance from September and is now poised to break out above the 200 day moving average.

What this means for investors: Additionally, many of the same factors that affect gold (dollar index, geopolitics, interest rates, etc.) affect silver. There is already a bullish case for gold, so that means silver will go up as well.

 So What is Going to be Driving Metals This Year?

Jerome Powell
President Trump’s Pick: Jerome Powell, Appointed Chairman set to take the top spot at the Federal Reserve in February 2018.

Things to look at this year that could drive metals up or down:

Federal Reserve

The direction of monetary policy could lead to a pull back in metals prices, although it doesn’t seem to be the pattern right now. The new Fed chair is indicating a more hawkish tone than Janet Yellen, but too fast of a rate will destabilize growth.

Geopolitics

This is always a big driver for gold prices. Tensions with Iran are increasing, North Korea continues bellicose rhetoric and missile tests, Saudi Arabia is experiencing a power re-alignment, and the global community is at odds over President Trump’s acknowledgement of the capital status of Jerusalem in Israel.

Global demand

There is strong global demand for gold. China, the world’s largest, had gold demand increase 40% in 2017. India, the number 2 consumer on the world market had a 67% increase. This speaks to ever growing global momentum and will ultimately raise prices. The surging demand for decentralized, private cryptocurrency also bodes well for gold, as demand from both stems from similar motivation of buyers.

Asset rotation

There is still a great deal of optimism in the stock market after the 2017 rally. Investors are going to start looking for what’s next though in anticipation of the next market correction. With gold looking favorable, it will attract a lot of these buyers.

Low supply

Gold mining for 2017 was at its lowest it has been since the financial crisis. Risks are increasing in many parts of the world, and struggling mines in Africa and southeast Asia closed this year. As output from the ground decreases limiting future supply, prices in the long term will go up.

 

 

 


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!”

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gold bar on grains

Gold Will Continue Its Climb in 2018, Say Analysts at the World Gold Council

Gold Market Discussion

Gold Will Continue Its climb in 2018, According to WGC

golden buying opportunity in July 2017The World Gold Council (WGC) released a report on Friday that predicts gold will continue its climb in 2018. This year it is up 9% and in 2016 it was up 8.5% for the year. This followed after three years of decline for gold. It is worth noting as well that metals rose these past two years even as the dollar remained bullish and the stock market continued its bull run.

Metals rose this year on an increased amount of geopolitical tensions from North Korea, Saudi Arabia, and Israel, and most expect further escalation going forward. The WGC report also stated that monetary policy and increased demand around the globe will fuel the rise. Furthermore, it looks like the Federal Reserve is going to continue to hike rates and unwind its balance sheet while the Bank of Japan reins back quantitative easing and the European Central Bank slows its monetary policy. This could contribute to gold demand around the world. Gold demand has been on the rise in countries like Russia, Germany, India, and China, and these trends are projected to grow further.

What this means for investors: Gold prices have been struggling against a stock market that has hit multiple new records this year. Prices are down from the highs over $1,300 that it experienced this year, but metals have managed to stay slightly bullish. Long term growth looks positive for both gold and silver.

Federal Reserve Hikes Rates, Dollar Fluctuations Move Gold

Gold was up and down this week. It was fluctuating inversely to the dollar index as it moved up and down this week as well. Uncertainty on the tax reform bill going through was partly responsible, as was the release of U.S. economic data. On Wednesday after the Federal Reserve announced a quarter point rate hike, metals rallied with the stock market. Generally higher rates would send gold down, as higher interest rates would lower demand for non-interest bearing assets like gold. However lately interest rate hikes have been slightly bullish for gold.

What this means for investors: Gold prices are likely looking at the long term picture and rising. The dollar index fell after the Fed announcement despite its anticipation that it was going to happen. This was a contributing factor to gold’s rise. The dollar fell because long term growth projections remained largely unchanged and the Fed did not adjust its plan for interest rates for next year.

 A Chart to Watch Going into 2018

Domestic Stock Market Cap

This is an important chart to watch going into the new year. It represents the domestic stock market cap as percentage of U.S. GDP. Right now, the stock market cap is 184% of GDP.

What this means for investors: The other two times in recent history that the stock market cap reached such levels was in about 1998 and 2007. This predicated market crashes and recessions. Currently, the percentage is even higher. The market is overvalued, and will have to undergo a correction eventually.

 Bitcoin Eating Away at Gold Investing?

I’ve discussed several times now the relationship between gold and cryptocurrencies like bitcoin. As the bitcoin craze continues to surge, investors are taking out mortgages on their houses to buy it, taking out loans to buy it, and, it turns out, selling gold to buy it.

What this means for investors: Bitcoin and other cryptocurrencies are up in some cases over 1000%. It is starting to look more and more like a massive, speculative bubble. When investors start using debt to buy up something like bitcoin, it stinks of a bubble. It looks like it could still run for a while yet, but if the bubble bursts, it would give gold a boost when all that debt money disappears from bitcoin.

 

 


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

Janet Yellen

The Runaway National Debt Problem… and Why It Keeps Janet Yellen Awake at Night

Gold Market Discussion

Fed Chief: Runaway National Debt Problem Should Keep Us Awake at Night

Chairwoman Janet YellenIt’s no secret that there is a runaway national debt problem in the U.S. The total national debt right now is about $20 trillion and rapidly rising. Federal Reserve chair Janet Yellen was recently on record of saying that she is worried about the sustainability of the rising trajectory. She furthered this by saying that this is, “…the type of thing that should keep people awake at night.”

Along with the massive scale of U.S. debt, what is further troubling is that this is the first time in modern history that U.S. government debt will surpass household debt. On one hand, since the 2008 crisis, many households have been more prudent on accumulating excessive amounts of debt and thus the rate is not rising too sharply (although household debt still surpassed its pre-crisis peak this year). However the rate of government debt accumulation is spiking. This means in the event of another significant economic downturn, recovery and government bail out will be far less feasible.

What this means for investors: The Fed arguably helped balloon the national debt through its low interest rate policy. In fact between 2008 and 2015, the debt expanded 77%, so it is significant that its current chief is now raising alarm. A national debt level like this is unprecedented in history, and such overspending always leads to a system collapse eventually.

Gold Finishes the Week Down

gold barsGold struggled this week. It fell from the mid-$1,2700s to around the $1,250 mark. However mid-week it was able to eke out some gains. It got its boost Wednesday on geopolitical crisis fears after President Trump announced the United States’ recognition of Jerusalem as the capital of Israel. Most analysts are fearful of heightened tensions in the region over the move. Gold was under pressure this week from jobs data released on Friday and the market enthusiasm after the passage Senate tax reform bill. Bitcoin’s massive surge this year is also pulling some “safe haven” buyers that direction and away from metals.

What this means for investors: Gold and silver were both up against resistance this week. Silver finished the week $15.80 down over 50 cents from the start of the week. Stock market highs and a stronger dollar index are weighing on metals. Something to watch going forward is how geopolitical developments move the markets as the implications of heightened tensions is realized.

Bitcoin Reaches $19,000 This Week. Safe Haven or Speculation?

BItcoinThe cryptocurrency bitcoin took much of the spotlight this week after it surged over $19,000 on Thursday before pulling back. Bitcoin has rallied 1,400% this year, and other cryptocurrencies have also been on the rise. The virtual currency is drawing both investors who thrive on volatility and, ironically, who like safe havens because of the lack of government control over it.

What this means for investors: Bitcoin’s appeal for many buyers is its decentralization and lack of oversight. However it has the massive drawback of being created essentially out of thin air, and lack of oversight means fewer protections for the buyer or miner. There have been many situations already where cryptocurrency trading platforms have crashed, the virtual wallets have been hacked, or people have lost access to their bitcoin. Bitcoin has certainly made a lot of money for some people, but in the long run, it won’t preserve wealth like gold does. It is a bubble that will keep growing for a while before crashing.

The Market Could Have a Problem

bear looming over bull
Is the bear looming?

Stocks finished the week up, and many investors are still bullish for now. After all, this Dow has been hitting new records nearly every week. The problem though? There might not be anything left for investors to rotate into. The frenzy in recent weeks has been spurred by traders buying into sectors that will be helped by the tax reform bill, but while the tax bill is a positive market mover right now, there is some vagueness about its implementation that could lead to uncertainty down the road. Discrepancies between the House and Senate bills over timeline of corporate tax cuts and the corporate tax rate cut will probably lead to some political deadlock. Ultimately as well, this kind of trading in the past few weeks looks like it will be topping out.

What this means for investors: Compounded with this is the fact that a great deal of stock buying right now is fueled by corporate stock buybacks. Stocks could stay bullish for a while, but the indicators point to lack of sustainability in the long term. If you’re thinking of diversifying with precious metals, now is a good time while 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!”

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The Capitol Building

A Wild Week for Gold and the Markets Due to D.C. Drama

Gold Market Discussion

Tax Reform and D.C. Drama Made for a Wild Week for Gold and the Markets

Michael FlynnIt was a wild week for gold and the markets. The Dow went from breaking above 24,000 to falling over 350 points Friday. Gold also fluctuated rising to just under $1,300 at the start of the week to dropping below $1,280 to close out Friday above $1,280 again.

Drama in domestic politics was a significant reasons for the fluctuations this week. The possibility of the Senate tax reform bill passing is looking more certain, which helped cue the stock market to its midweek rally. But on Friday the market took a sharp downturn due to political volatility when former National Security Adviser Michael Flynn admitted to lying to the FBI over their investigation of foreign interference with President Trump’s election. The dollar index took a sharp plunge on Friday as well, and this helped boost gold prices. The Dow recuperated some of its losses by the close after enough Senators came out in vocal support of the tax reform bill to ensure its passage.

What this means for investors: Unforeseen events that trigger the markets like the Michael Flynn situation cause immediate, short term moves. But the repercussions can ripple into longer term uncertainty. Gold is still remaining on the quiet side for now, and lower prices mean better buying opportunity.

U.S. Margin Debt Equal to Economy of Taiwan

 

US Margin Debt Chart
The U.S. margin debt recently reached the same size as the entire economy of Taiwan. Margin debt is money borrowed by stock investors to buy more stock, and in October it hit the astounding level of $561 billion. In the event of a sell off, when margin debt is at such high levels, the sell off will accelerate and lead to a sharp tightening of financial conditions. The liquidity from margin debt vanishes in the event of a sell off just when liquidity is needed the most.

What this means for investors: Few people are talking about these numbers, and yet they are significant. The 2007-2008 financial crisis was amplified by margin debt sell off, and in 2017, margin debt has risen 16%. When the correction comes, this is certainly going to adversely affect the recovery.

The Return of Volatility?

more market volatility Volatility has been relatively low this year, although it surged on Friday due to political turbulence. In fact, volatility is at a historically low level right now according to Dallas Fed President Robert Kaplan. We haven’t had a 3% correction in the stock market in 12 months, which is highly unusual, and being monitored carefully. Stocks are surging, but so are corporate stock buybacks, which begs the question of how much substance is behind this rally. Corporate earnings and expectations of a December rate hike helped boost stocks this week, but volatility was also on the rise during the week as monetary policy between the Fed and ECB (which is still at negative interest rates) seems to start to diverge.

What this means for investors: Gold protects against market volatility. Volatility is certainly creeping back into the markets. It will rise rapidly as geopolitical tensions continue to increase and Washington keeps running into political deadlock. Additionally, the stock market rally is continuing to run for now, but eventually will  become unsustainable. Corporate buybacks can’t fuel the rally forever, and margin debt levels should be sending up red flags.

Gold’s “Unusually Quiet Year”, According to One Metals Expert

Metals prices have been showing some stagnancy lately as stocks continue to rally. However, gold is on pace for its biggest yearly gain since 2010. Metals expert Michael Dudas of Vertical Research sees gold going higher next year.

Dudas’ bull case for gold and silver from CNBC.

 

 

 


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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 bars 50 day moving average

Gold Broke Out Over Its 50-Day Moving Average As Stock Market Fell This Week and Yield Curve Flattened

Gold Market Discussion

Gold Broke Out Over Its 50-Day Moving Average This Week

fine gold barsClosing out the week just over $1,290, gold broke out over its 50-day moving average this week. With gold making its second weekly gain, it was building on last week’s safe haven rally. It opened the week at $1,277. Silver opened at about $16.95 and ended the week at about $17.20. Gold has been meeting with resistance at the 50-day moving average of about $1,292, so it bodes well for gold that it pushed past it on Friday.

What this means for investors: Gold was at a one month high on Friday, and it is preparing to test the next resistance level. Breaking the 50-day average signaled an important psychological point for investors. Gold had been trading in a narrow margin for some time now as investors waited for another bullish sign, and this could be it. The next test for gold is the medium-term resistance at $1,310.

Flattening Yield Curve Sending Red Flags

Yield Curve FlatteningA key thing to watch right now is the yield curve. The yield curve flattened this week, which historically is a harbinger of looming recession. The curve flattens when the spread shrinks between short and long term bonds, an when this happens, it makes gold more attractive because opportunity cost goes down.

What this means for investors: Some Wall Street analysts  are arguing that the flattening curve isn’t an indicator of an imminent recession this time. However for decades, there has always been a correlation between the flattening curve and recession. It is going to be an important thing to watch and prepare your portfolio for if the historic trend continues.

 

Stock Market Bulls Turning Wary

Bear fighting the bullThe stock market had a sharp pull back this week that helped shore up gold falling to its lowest level in months exactly a year after the historic Trump rally really kicked off. The Dow Jones fell as many as 167 points on Wednesday. Gold and silver prices also popped on the weaker dollar index, as the Federal Reserve appears to be aiming to tighten monetary policy. One of Wall Street’s most outspoken stock market bulls is now warning of a major pull back. Jeffrey Saut sees a 5-10% pull back coming for the markets any time.

What this means for Investors: A weaker dollar always boosts gold, as does a falling equities market. Volatility is increasing in the markets with these fluctuations and turning the bulls into bears. If the stock rally is exhausted as some analysts are predicting, investors will be making a significant shift into gold.  Keep an eye on silver too. It moves more erratically than gold, but will be driven by the safe haven buy as well.


Tax Reform and Geopolitics

tax-reformThere were many additional factors driving gold and stocks this week. The U.S. House tax reform bill passed on Wednesday. This was another key market-impacting event. Although the House bill passed and the Senate bill has advanced past the draft phase, the outlook for the latter passing looks less certain. There are discrepancies between the two bills that must be resolved though if it passes.

Furthermore, there were geopolitical rumblings that fueled some safe haven buying. Venezuela defaulted on its debt payments this week, and analysts are warning that it could be one of the messiest defaults ever. Tensions in the Middle East over the Lebanese prime minister’s resignation continue to add uncertainty as well.

What this means for investors: The markets have had mixed reaction to the tax reform proposals. Initially stocks rallied because of proposed corporate tax cuts, but with the possibility of these being delayed, the markets turned down. The Middle East turmoil is going to keep raising demand for gold as well.

 


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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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Alwaleed bin Talal

Political Developments Sparked a Gold Rally This Week after Slow Week

Gold Market Discussion

Political Developments Sparked a Gold Rally This Week

Trump and Prince Deputy Crown Prince Mohammed Bin Salman
President Trump and Prince Deputy Crown Prince Mohammed Bin Salman

Gold ended the week around $1,275 after climbing over $1,285 earlier in the week. Political developments sparked a gold rally that broke the rut that gold has been stuck in the last few weeks. Some of these political developments driving the rally were overseas, and some domestic.

On the international stage, Saudi Arabia is undergoing a very interesting shake up in the power structure. This past week, over 200 people were arrested on corruption charges. This number includes eleven princes and thirty-eight government officials and businessmen including billionaires, the head of the National Guard, and the economy minister.  Observers are noting that it appears to be a power move by Crown Prince Mohammed Bin Salman to consolidate his position.

Furthermore, there are indications that Saudi Arabia and Lebanon (and by proxy Iran) are escalating tension. Saudi Arabia ordered its citizens out of Lebanon, and Hezbollah Sayyed Hassan Nasrallah warned that The Kingdom has declared war on Lebanon. This was after the Lebanese prime minister flew to Saudi Arabia and unexpectedly announced his resignation. Iran-backed Hezbollah accused the Saudis of holding him against his will. Yemeni rebels also launched missiles at Saudi Arabia, which Saudi Arabia has accused Iran of providing.

What this means for investors: Gold initially jumped more than 1% on geopolitical risk and safe haven buying as it always does with major events like these. Keep an eye out for more news on the escalation in bellicose rhetoric in the Middle East.

Greenback Up Earlier in the Week, Metals Down

Gold BarsAt the beginning of the week, the dollar was on a strong tear again. Its strength was keeping gold down at the beginning of the week. On Thursday, however, the dollar index weakened, and gold prices saw an uptick. The stock market also fell Thursday on news in domestic politics.

In U.S. politics, the Senate Republicans revealed their tax proposal on Thursday. Last week, the President’s announcement about the proposal led to a stock rally. This week, it did the opposite as it delayed corporate tax cuts until 2019. Investors also started to worry that the reform plan wouldn’t pass. This boosted metals prices at the end of the week.

What this means for investors: With the upcoming fight over the tax reform plan, there will likely be more volatility entering the markets that could lift gold prices. There are other reasons to remain bullish for gold as well. Some analysts and traders are predicting that Federal Reserve won’t actually raise rates in December. This could be positive for gold and silver prices going into 2018.


Cryptocurrency Locked up after Coding Error

There has been a great deal of discussion about gold vs. bitcoin lately and how they compare as a safe haven. Cryptocurrencies are subject to some major glitches though, as this week proved. $300 million of cryptocurrency Ethereum disappeared in the blink of an eye due to a coding glitch. It appears it was a simple mistake by a user who accidentally had it transferred to himself, deleted lines of code to reverse the transfer, and instead deleted hundreds of millions of dollars of the currency.

What this means for investors: Cryptocurrencies certainly have their appeal, and investors have made fortunes off of them. But they are not winning everyone over. Other analysts are warning that it is simply a bubble that is growing too big too fast and will eventually die out. Gold is real money though, and will continue to be. You can’t simply delete its worth with a few clicks. Tangible gold and silver will always have value.

 Counterfeit Gold Scarily Convincing

fake goldRecently, a sealed, stamped Royal Canadian Mint 1 oz. gold bar was revealed to be a counterfeit. It was such a convincing counterfeit that even a branch of the Royal Bank of Canada (from where it was purchased) had certified it. Investigators are still trying to get to the bottom of how it passed certification there, and how such a convincing packaging was created. It’s certainly not the first time either that extremely convincing looking bars have hoodwinked jewelers and dealers.

What this means for investors: Be cautious when choosing a dealer. Look for companies and dealers who have extensive, specialized experience in appraisal and can more easily detect counterfeits.

 

 


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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

October Spending Hit A Quarter of a Trillion Dollars – How Massive Can the Deficit Get?

Gold Market Discussion

October Spending Hit a Quarter of a Trillion Dollars

government spendingThe big story right now that no one is talking about is that October spending hit a quarter of a trillion dollars. October is generally considered a better month for the U.S. Treasury Department with the additional revenue of tax extension filers, but even with the extra checks coming in, the federal government added about $220 billion in that one month alone. To put that number in perspective, that’s 4% of U.S. GDP, and ten years ago, $161 billion was the entire U.S. deficit.

By 2023, the national debt could be at $25 trillion at this rate. These numbers are staggering, and no one is talking about them. Furthermore, consumers are drowning in personal debt. Defaults on debt are increasing, and eventually these debt numbers will trigger a significant event to attempt to correct.

What this means for investors: This is all indicating an inflationary trend. Money is being created that cannot possibly ever be repaid. This is going to spark a leap in gold as the dollar’s value plummets. Historically, gold and silver both experience terrific rallies when this happens.

In the Markets – President Trump Announces Tax Plan and Names New Fed Chair

Jerome Powell
Jerome Powell, Janet Yellen’s successor as Fed Chairman

Despite the wildly spiraling debt, President Trump’s tax plan announcement this week promised tax cuts. Less revenue for the federal government along with higher spending. The stock market, however, took it as a rallying cue this week.

The President also announced a new Fed chair to replace Janet Yellen, whose term ends next year. His pick is Jerome Powell, a governor of the Fed board since 2012. The expectation is that Powell will be generally of the same ilk as Yellen on monetary policy. If he keeps raising rates as Yellen proposed, the cost of servicing the burgeoning debt is going to be enormous. It will be approximately $875 billion a year just to SERVICE the debt (not even pay it off) by 2023 if we stay on the current path. So although the announcement kept the gold market in check this week, long term gold will start looking like a safer place for parking assets.

What this means for investors: Gold this week stayed in the mid $1270 range. Silver opened the week at $16.70 and closed at $17.15. Investor optimism continued to boost the stock market this week along with the announcements from the President. Gold and silver both are both at a good buy price right now for long-term holdings.

Is This the Beginning of the End of Fiat Money?

Jim Reid, an analyst at Deutsche Bank, recently published a controversial report on the beginning of the end of fiat money. In it he pointed at record debt, financial bubbles, and central bank policies that are leading to another financial crisis. In Reid’s assessment, it is the fiat money system that has encouraged and necessitated the boom and bust cycles that we see. When the system shed the gold standard in the 1970s, the fiat system catalyzed burgeoning budget deficits, unstable markets, imbalances, and crises.

What this means for investors: Historically, fiat currencies are always associated with high inflation. Reid’s report raised the question about whether over the next decade or two, we may need to implement an alternative to the unstable fiat system we have now. He pointed to the popularity of cryptocurrencies and blockchains as evidence of this. Gold has been real money and wealth for thousands of years, and returning to it could help stabilize this volatility our current system is subject to.

Gold Demand Rising in Europe

gold british sovereignAlthough the gold markets have been remaining fairly quiet lately, gold demand in Europe is quietly on the rise. New EU directives on bank “bail-in” programs have investors moving their savings out of precarious savings accounts and into gold.

For example, in Italy, banks are collapsing, and citizens are worried about losing their hard earned savings if the banks go under. Germany has seen a sharp uptick in physical gold investors as well.

What this means for investors: Investors on the other side of the Atlantic are worried about the recovery…more specifically, the lack of recovery among some major banks. They are buying now while prices are still staying quiet, and ultimately this demand will help push prices higher.

 


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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

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

 


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

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.

 

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 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.

 

 

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 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.

 

 

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 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.

 

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 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!”

jim-sign