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September 19 2018

moneymetals

Which Precious Metals Are Likely To Be Better Investments During The Next Market Crash?

The question on the minds of many investors, is which of the precious metals will be better investments during the next market crash? I should know because I receive this question in my email box quite often. So, I decided to test the price action of several metals and how each traded during a large market correction.

This article will focus on the top four precious metals, gold, silver, platinum, and palladium. Even though Rhodium and other metals are considered precious, the ones listed above take the lion’s share of the investment market. Furthermore, while platinum and palladium are purchased as investments, they have a much larger industrial component than gold or silver.

As I have mentioned many times, gold and silver disconnected from the broader markets when the Dow Jones Index fell 2,000 points in the first six weeks of 2016.

The two reasons I believe gold and silver jumped considerably as the markets sold off at the beginning of 2016 were:

  1. Gold and Silver were extremely oversold, and the Commercial hedgers’ short positions were at a low, thus very bullish
  2. Investors were extremely worried that the Dow Jones and markets were beginning a massive correction, so they moved into both gold and silver

To explain why investors were spooked in 2016, we need to look at the following chart:

Dow jones (september 14, 2018)

Typically during a major correction, the market makes several attempts at a top. In 2007, there were three tops made before the market finally came down in 2008. Then in 2015, we had three more tops and two large corrections. The reason investors’ worry turned into fear at the beginning of 2016 was that the last top did not reach the previous 18,000 level.

Full Article: https://goo.gl/asrgNh

September 17 2018

moneymetals

A Reader Asks: Should I Sell Gold and Buy Bitcoin?

Although the fervor has diminished substantially since the crypto price smash earlier this year, we do still see a degree interest in bitcoin among precious metals investors.

Question and answer

Bitcoin and metals arguably share some appeal as an “honest” alternative and as a hedge against the fiat dollar and the insolvent U.S. government which backs it.

In light of the bitcoin price falling dramatically this year, one reader asked, “Is now a good time to swap gold for bitcoin?” Below is our response.

It may be bad form to answer a question with another question, but it seems like a good way to approach this subject. So we ask; are you in the mood to gamble? If you are, it might make sense to swap some metal for bitcoin.

Cryptocurrency can potentially generate bigger returns... in exchange for bigger risk. Since there is no tangible backing to bitcoin, it could conceivably go to zero – much like shares in a defunct “dot com” company.

The two assets are far from interchangeable and will serve different purposes in your portfolio. Bitcoin has often been called “digital gold,” but that comparison is dangerously wrong. Gold is a reliable store of value with a track record thousands of years long. Bitcoin’s price has collapsed from its all-time high of nearly $20,000 to $6,000.

This is a vital difference between gold and bitcoin: gold will always retain some intrinsic value, while the price of a digital token might go all the way to zero. That is not our prediction for bitcoin. It is, however, a possibility.

A technology, which is one way to think of bitcoin, must hold its value amongst a growing number of alternatives. If it cannot, it will be replaced. That happens, even to leaders. Remember Napster and CompuServe?

Continue Reading: https://goo.gl/EHsJYV


August 21 2018

moneymetals

Spot Prices Are Falling, But Premiums Are on the Rise

Gold and silver premiums – the price dealers add to the melt value of an item to cover manufacturing and overhead – began climbing in the past two weeks.

Many clients see falling gold and silver spot prices as an opportunity to buy, but some are disappointed to find the premium for the item they want is suddenly higher, negating some of the price drop.

The challenge they face is that lots of other bargain hunters are trying to jump on the same opportunity.

Supply & demand

Premiums are very sensitive to supply and demand in the retail market for finished coins, bars, and rounds, and the reasons are pretty straightforward.

First, when prices drop, retail bullion investors stop selling and start buying. That has a profound effect on the availability of resale, or secondary market, product inventory.

The large quantities coins, bars, and rounds coming back to market in the past year or two have driven premiums to the extraordinarily low levels we saw recently. Now, supply from the secondary market is drying up fast.

Second, there are only a few mints and refiners making coins, bars, and rounds. Like any manufacturer, they gear production to market demand. Scaling up takes a bit of time, and it isn’t something most will do without first developing some confidence that the higher demand will persist.

​Continue reading: https://goo.gl/cRFcUF​

August 20 2018

moneymetals

Dr. Engelhardt: Economy Beholden to Fed Interest Rate Policy; Here's One Way Gold Could Reach $14,000+...

Well now, without further delay, let’s get right to this week’s exclusive interview.

Mike Gleason: It is my privilege now to welcome in Dr. Lucas Engelhardt associate professor of economics at Kent State University. Dr. Engelhardt is an Austrian economist who has been a guest lecturer at the Mises Institute and in his teaching specializes in macro-economics in the examination of the business cycle, and it's certainly a real pleasure to have him on with us today. Lucas, thanks so much for taking the time and welcome.

Dr. Lucas Engelhardt: Well thank you for having me on.

Mike Gleason: Well, I'm excited to have you on today because there is a lot to discuss with you. For starters I think a good place to begin is the business cycle. Now, but before we get into the misunderstandings that the Keynesians seems to have about this, explain the business cycle if you would and why it's important in order to have a proper understanding of monetary policy.

Dr. Lucas Engelhardt: Sure. Now, as you mentioned, I come from the Austrian economic framework. And Austrian economics describes the business cycle as the consequence of manipulations happening in the money supply, specifically in credit markets. So starting from that point, so how the business cycle happens is that we have somebody in the banking system. We know in modern America it would be the Federal Reserve is generally responsible for this. Decides to push down interest rates, normally to stimulate the economy.

Austrians, we definitely do not deny that this actually does work for a while. That the lower interest rate does actually encourage investment, especially in very long structures of production. The types of things that won't pay off maybe for five, 10, or even more years. We see lots of research and development, lots of construction, these types of things happening when interest rates get pushed down.

The problem is that the way that the Fed pushes interest rates down, as I suspect most of your listeners know, is by adding additional money into the economy through the banking system. Eventually this money gets out into the economy and prices start going up. You have more money, the money loses value, the flip side of that is that prices are higher. It takes more money to buy anything.

Now, there are a couple ways this can go. The central bank could just ignore this fact and continue with the low interest rate policy, just pumping out more and more money to the point where the money is worthless. We see that happen right throughout history, and we see that happening today in places like Venezuela. Now, what the Fed has done historically most of the time is get nervous about this rise in prices and start tamping back on the increase in the money supply. Of course, as soon as they do that interest rates go up. Once interest rates go up, all these investments that looked great when interest rates were low, that research and development, building new houses and what have you, stop looking as good.

So, we see all of these areas that expanded then start contracting, and that's where we see the bust of the business cycle come in. We see there it's really all centered on what the Federal Reserve in modern America is doing in interest rates.

Mike Gleason: Now, you come at things from an Austrian viewpoint as you mentioned. I'm curious if sometimes you feel like a lone wolf in the wilderness, because nearly everyone in the mainstream financial world and among the central bankers and central planners throughout the globe seems to have that Keynesian mindset where government and a tight management of monetary policy is the answer to every economic problem. So, why is it dangerous in your view, expand the point if you would about a centrally planned economy instead of letting the free market forces dictate things. What are they so afraid of?

Full podcast here: https://goo.gl/dUWCp8​

August 16 2018

moneymetals

How Gold & Silver Will Trade During The Next Market Crash

While many investors believe the gold and silver price will crash during the next market meltdown, I see a much different outcome. Yes, it is true that the metals may sell off initially in the beginning, but I believe gold and silver will disconnect from the broader markets and move up much higher.

The reason I see the precious metals disconnecting from the broader markets during the next major correction is due to the much different setup today in the gold and silver market than it was in 2008.Precious metals investors forget just how overvalued the gold and silver prices were based on technical analysis. Of course, I am not talking about the true “Store of value” properties of the precious metals, but rather, how they trade in reference to the market in general.

As I have stated many times, the paper trading market determines the price of gold and silver, not the physical buyer. Thus, the paper market will continue to control the gold and silver prices until investors realize the dollar is just another worthless fiat currency.

In my newest video, How Will Gold & Silver Trade During The Next Market Crash, I use a few indicators to explain why I don’t see a huge crash in the gold and silver prices during the next major market correction:


In the video, I discuss how the broader markets are setting up for a significant correction lower while the precious metals are behaving more like a coiled spring. Although, in the initial stages of market meltdown, we could see a broad-based selloff across all markets. However, the technical analysis suggests that the gold and silver prices are much closer to a bottom than a top.

Furthermore, another indicator, the Gold Hedgers Chart also provides more evidence that gold is become oversold, rather than overbought:

Gold hedgers position

The gold short hedge position is now back to almost the same level as it was at the beginning of 2016 when gold was trading below $1,100 an ounce. This chart shows that when the gold hedgers position moves back towards the zero line, then the gold price is forming a bottom.


Continue reading...

August 07 2018

moneymetals

The U.S. Government To Fork Out A Half Trillion To Service Its Debt In 2018

The U.S. Government is going to surpass another significant milestone this year. According to the recently released data from the TreasuryDirect.gov, the government will fork out a stunning half trillion dollars just to service its debt in 2018. Unfortunately, as U.S. interest rates rise, along with ever-expanding public debt, the cost to service the debt will continue to increase.

In just the first nine months of the year, the U.S. interest expense has increased by an additional $40 billion. Last year, the U.S. Government paid only $375 billion to service its debt from October to June, but this year it has jumped to $415 billion:

U.S. interest expense 2017 vs 2018 (oct-jun)

Now, if we consider that the U.S. Treasury paid $83 billion in interest expense for the three remaining months last year, and add it to the current total, it would equal $498 billion. However, the U.S. interest expense is up over 10% already. So, if we assume that the interest expense for July-Sept will also be up 10%, then the estimated total debt service for fiscal 2018 will reach $506-$510 billion.

Continue Reading:

August 01 2018

moneymetals

Top Gold Miners Production Declined 15% While Costs Escalate

Even though the gold price increased in 2018, the top gold miners production declined while costs continue to escalate. Output at three of the top gold miners in the world fell in the first half of 2018 compared to the same period last year. With rising costs due to higher energy prices, on top of decreasing production, the top gold miners free cash flow declined precipitously in 2018.

While many analysts focus on the company’s profits or net income, I like to pay attention to its free cash flow. Free cash flow is nothing more than subtracting capital expenditures from the company’s cash from operations. Because the gold mining industry is very capital intensive, the company’s free cash flow is a better indicator of financial health rather than the net income.

As mentioned, all of the top three gold miners suffered production declines in the first half (1H) of 2018 versus the same period last year. The biggest loser was Barrick, whose production declined over 20% by falling to 2.1 million oz in 1H 2018 compared to 2.7 Moz in the previous year. Goldcorp’s production fell 10%, while Newmont’s output dropped by nearly 9%:

Top miners gold production 1h 2017 vs 1h 2018

Altogether, the top three gold mining companies’ production fell 15% or approximately 1 Moz in the first six months of 2018 versus last year. Even though Goldcorp isn’t the third largest gold miner in the world, the company has already posted its second-quarter results. AngloGold is the third largest gold miner, but it won’t publish its financial statements until August 20th. Also, Kinross is likely ranked number four ahead of Goldcorp, but the company posts its production figures in “gold equivalent ounces.” If a company has to publish its gold or silver production in “equivalent ounces,” then the analysis is a bit flawed in my opinion.

Regardless, these top three gold miners all experienced declines in production which impacted their financial balance sheets. To get a better idea of the true cost of production and the health of the gold mining industry, I have come up with an “Adjusted Earnings Breakeven” price as well as a “Free Cash Flow” breakeven price.

July 31 2018

moneymetals

GOP Congressman Investigates Undisclosed Gold Market Intervention by China and the Exchange Stabilization Fund


Rep. Alex Mooney (R-WV) Calls Out Fed & Treasury for Dodging Questions on Gold Activities

Washington, DC (July 31, 2018) – A member of the U.S. House Financial Services Committee is calling out the Federal Reserve and the U.S. Treasury for dodging questions about their activities involving America’s gold reserves.

In a letter dated July 27, Representative Alex Mooney (R-WV) wrote to Jerome Powell, Chairman of the Federal Reserve, and Steven Mnuchin, Secretary of the U.S. Treasury, after receiving perfunctory responses to his April 24th letter, noting “a few questions were either not addressed at all or not fully addressed.”

In particular, the Fed and Treasury would not articulate any U.S. policy toward gold and refused to comment on historical U.S. State Department documents pointing to a U.S. policy of “driving gold out of the world financial system in favor of the Federal Reserve Note or Special Drawing Rights issued by the International Monetary Fund.”

In his follow-up letter, Rep. Mooney provided evidence of involvement by the Exchange Stabilization Fund in the gold market and called attention to “the recent correlation of the gold price with the price of the Chinese yuan and the valuation of the IMF’s Special Drawing Rights.”

Check out the full press release


July 27 2018

moneymetals

Ed Steer: When JP Morgan Decides to Stop Shorting Silver, Prices Will Shock You

Well now, without further delay, let’s get right to this week’s exclusive interview.

Ed steer

Mike Gleason: It is my privilege now to welcome in Ed Steer of Ed Steer's Gold and Silver Digest. Ed has covered the precious metals markets for going on two decades now, having written for Casey Research prior to his latest project, and is also a director at GATA, the Gold Anti-Trust Action Committee, where he and his colleagues work to expose the manipulation in the gold and silver markets.

Ed, it's a pleasure to have you back on, and thanks for the time today.

Ed Steer: And thanks for having me on.

Mike Gleason: Well, Ed, let's start off by getting your assessment on the gold and silver markets here. Prices fell below some key technical support levels recently but have found some support and have rallied slightly in the past few days, and I should note we're talking here during after-hours trading on Wednesday. But these are trying times for metals investors, Ed, so what are you expecting from the markets in the months ahead?

Ed Steer: Well, there's no question these are trying time, especially this last take down since the middle of June. Everybody knows that the precious metals have been basically in the dumpster for the last five or six or eight or ten years, and this final kick in the pants, the down side, has just demoralized everyone.

What I think it is, in the technical support lines or whatever they are, is based on technical analysis, and what's going on basically is what Ted Butler has pointed out, is that this is JP Morgan and the commercial traders taking the managed money traders on another financial ride for fun profit and price management purposes.

When this is pretty much done to the down side, and it appears that we're done now, Mike, it really looks like the low is in or if not very close to it. Once that is done there is nothing left but blue sky and hopefully that JP Morgan Chase, which has been the big short seller of last resort, they don't step into the next rally and we’re going to be away to the races in pretty short order.

Mike Gleason: We aren't too sure why speculators are still willing to enter the gold and silver futures markets given the evidence that they are likely to be cheated. We know that bullion banks, like JP Morgan, have a nice set of tools for fleecing clients and controlling prices, chat rooms for coordinating attacks, high frequency trading set-ups designed to front run trades, the ability to sell essentially unlimited quantities of paper silver to sop up any amount of demand. What we don't see is serious effort to provide honest alternatives. It seems like there would be good demand for an exchange that does a better job of guaranteeing fair treatment. Miners, who are harmed the most by any price suppression that may exist, have legitimate hedging needs and it seems like they would be thrilled to have an alternative, but we aren't aware of any serious movement towards creating something better. Are you and why have we been stuck with such a flawed and fraudulent system of price discovery for the metals for so long?

Check out the full podcast here.
moneymetals

Ed Steer: When JP Morgan Decides to Stop Shorting Silver, Prices Will Shock You

Well now, without further delay, let’s get right to this week’s exclusive interview.

Ed steer

Mike Gleason: It is my privilege now to welcome in Ed Steer of Ed Steer's Gold and Silver Digest. Ed has covered the precious metals markets for going on two decades now, having written for Casey Research prior to his latest project, and is also a director at GATA, the Gold Anti-Trust Action Committee, where he and his colleagues work to expose the manipulation in the gold and silver markets.

Ed, it's a pleasure to have you back on, and thanks for the time today.

Ed Steer: And thanks for having me on.

Mike Gleason: Well, Ed, let's start off by getting your assessment on the gold and silver markets here. Prices fell below some key technical support levels recently but have found some support and have rallied slightly in the past few days, and I should note we're talking here during after-hours trading on Wednesday. But these are trying times for metals investors, Ed, so what are you expecting from the markets in the months ahead?

Ed Steer: Well, there's no question these are trying time, especially this last take down since the middle of June. Everybody knows that the precious metals have been basically in the dumpster for the last five or six or eight or ten years, and this final kick in the pants, the down side, has just demoralized everyone.

What I think it is, in the technical support lines or whatever they are, is based on technical analysis, and what's going on basically is what Ted Butler has pointed out, is that this is JP Morgan and the commercial traders taking the managed money traders on another financial ride for fun profit and price management purposes.

When this is pretty much done to the down side, and it appears that we're done now, Mike, it really looks like the low is in or if not very close to it. Once that is done there is nothing left but blue sky and hopefully that JP Morgan Chase, which has been the big short seller of last resort, they don't step into the next rally and we’re going to be away to the races in pretty short order.

Mike Gleason: We aren't too sure why speculators are still willing to enter the gold and silver futures markets given the evidence that they are likely to be cheated. We know that bullion banks, like JP Morgan, have a nice set of tools for fleecing clients and controlling prices, chat rooms for coordinating attacks, high frequency trading set-ups designed to front run trades, the ability to sell essentially unlimited quantities of paper silver to sop up any amount of demand. What we don't see is serious effort to provide honest alternatives. It seems like there would be good demand for an exchange that does a better job of guaranteeing fair treatment. Miners, who are harmed the most by any price suppression that may exist, have legitimate hedging needs and it seems like they would be thrilled to have an alternative, but we aren't aware of any serious movement towards creating something better. Are you and why have we been stuck with such a flawed and fraudulent system of price discovery for the metals for so long?

Check out the full podcast here.

July 26 2018

moneymetals

The Swamp vs. Alternative Currencies

In Federal Reserve chair Jerome Powell’s testimony before Congress last week, he reiterated his intent to continue the central bank’s gradual rate-hiking campaign.

Among those who are "not thrilled" about the prospect of higher interest rates: the President of the United States.

Trump Tweeted:

"....The United States should not be penalized because we are doing so well. Tightening now hurts all that we have done. The U.S. should be allowed to recapture what was lost due to illegal currency manipulation and BAD Trade Deals. Debt coming due & we are raising rates - Really?"

Trump seems surprised that the Fed careerist he promoted to be chairman isn’t embracing Trump’s economic priorities. But nobody drawn from the fiat money swamp should be expected to act contrary to what’s in the institutional interests of the central bank – and the banking elite more broadly.

Swamp creature Powell couldn’t even bring himself to express support for Trump’s pro-growth tax and regulatory reforms during last week’s testimony. He nervously evaded a simple question from a Republican Congressman about whether tax cuts and deregulation have boosted business confidence. Even when pressed, he wouldn’t answer it.

Powell apparently didn’t want to say something that might offend Democrats. The Fed is “independent,” after all, and non-partisan. It has to keep up appearances before Congress.

But when it came to the question of cryptocurrencies, the government’s top banker felt free to go on at length about why he doesn’t like them.


​Continue reading here.​

July 24 2018

moneymetals

THE INDIAN INVESTOR: The Major Wild Card In The Silver Market

There’s a sleeping tiger in the silver market, and it isn’t the Chinese. While the Chinese continue to acquire a lot of gold, they aren’t that interested in silver However; it’s the Indian investor who is has been the dominant player in the silver market. Why?

According to an article published last year on LiveMint.com, “Silver is so ingrained in Indian tradition that the country’s currency, the rupee, is named after ‘Rup,’ the Sanskrit word for silver.” How interesting. I have been doing research in the silver market for over a decade, and I just found out from this article that India’s currency, the Rupee, is named after silver. It just goes to show, we learn something new every day.

Thus, it makes perfect sense that the Indians are the major player in the silver market as their silver imports have accounted for a significant portion of annual global mine supply. In a recent article by Louis at Smaulgld.com, he provided the following charts on Indians monthly and annual silver imports:

Indian silver imports 2017-2018

(Indian Monthly Silver Imports)

Indian silver imports 1999-2018

(Indian Annual Silver Imports)

As we can see, India imported a record 902 metric tons of silver in April since last year. Furthermore, as Louis states in his article quoted above:

Indian silver imports through April 2018 were 2,889 or an average of 722.5 tons. If this average holds throughout the year, India would import 8,667 tons of silver in 2018.

If India continues to import the same amount of silver as it has over the past four months for the remainder of the year, it will reach nearly 8,700 metric tons (mt) and surpass its previous record set in 2015 at 8,529 mt. Now, if India did import 8,700 mt of silver this year, it would account for 32% of total world mine supply.

Continue reading....

July 19 2018

moneymetals

How to "Measure" Your Precious Metals Holdings

Now that the "summer doldrums" for the metals and miners seem to be upon us – which may or may not last until after Labor Day – it might be worth your time to "measure" your precious metals' holdings.

Let's start by taking a look at the terms and (simplified) definitions for foreign and domestically-listed mineral resource-sector companies that are listed on a Canadian stock exchange.

Called the National Instrument (NI) 43-101, this reporting review was put together in an effort to protect investors, after a "fake mining story" of truly epic proportions erupted in the late 1990's...

Time: gold's fools magazine

It was the infamous Bre-X scandal, in which a Filipino geologist, Michael de Guzman, operating as a property project manager in Borneo, began "salting" ore samples with gold flecks shaved from his wedding ring.

As word got out about the "big find," the price of the company, Bre-X Minerals Ltd. rose from $0.30 cents a share, to an eventual open market high of over $250!

To keep the scam going, he bought panned gold from the locals, so that when examined, the new ore samples would show "color."

Before long, some of the largest mining companies and investment houses in the business – and even the Indonesian government – were touting the story and trying to get a piece of the action.

Independent auditors sent in to look at samples noted that the gold had rounded edges (which you might expect to find with stream-deposited placer gold), but Guzman simply made up excuses – which at first, everyone accepted. In late 1996, Lehman Brothers issued a "strong buy," calling it "the gold discovery of the century."




July 16 2018

moneymetals

Bitcoin Holders Are Today Learning Something Goldbugs Already Know

Precious metals investors have learned a difficult truth in recent years. The best way to control a market is to put Wall Street in charge of it.

Gold and silver futures were created in the 1970s with the admitted purpose of “increasing volatility” in the markets and discouraging the ownership of physical bullion. It is a lesson that participants in other markets would do well to learn – specifically the Bitcoin and cryptocurrency markets.

Officials were terrified that free markets built around the supply and demand for tangible (not paper) gold and silver would wind up destroying confidence in the fiat dollar.

President Richard Nixon defaulted on the Bretton Woods agreement with other nations to redeem dollars for gold in 1971.

The confidence in the dollar would evaporate if the dollar price of gold spiraled higher.

The COMEX launched trading in gold and silver futures in the early 1970s. The gambit nearly failed by the end of that decade as the gold and silver priced in dollars began rising exponentially. But the Wall Street insiders behind the COMEX, with the support of federal regulators, managed to regain control.

They were able to pin the blame for price increases on the Hunt Brothers’ attempt to “corner the market” rather than on failing confidence in the dollar and the rapid price inflation going on at the time.

Through their control of the exchange, COMEX officials used a one-sided tool and stopped accepting buy orders in silver futures, only allowing orders to sell. What happened to the price in a “market” which allowed zero buyers was predictable.

The central planners at the Fed also stepped in. Chairman Paul Volcker raised interest rates dramatically, helping stem the tide of people dumping dollars and taking the shine off of gold. 

Continue reading...

July 10 2018

moneymetals

How NOT to Become a Casualty in the War on Cash

Lots of bullion investors wonder if the metal they hold might one day be needed for barter and trade. They bought gold and silver, at least in part, as a form of insurance. It just might come in handy in an extreme circumstance such as a currency crisis of the sort Venezuelans are grappling with right now.

However, a hyper-inflationary collapse in the dollar isn’t the only dire scenario to insure against.

War on cash

It is now clear that the dollar, and the financial network it runs on, is a mechanism for controlling people who don’t toe the government line.

That fact may be a greater reason for alarm than the prospect of a dollar collapse. But it gets far less consideration.

Wall Street banks and government regulators have teamed up against your liberty and your privacy.

Officials would like to track 100% of what you do with your money, and the banks would like to charge a fee on 100% of those transactions. Those motivations are at the root of the today’s war on cash – the push to eliminate paper cash and replace it with electronic transactions.

The Bank Secrecy Act will soon turn 20 years old. Banks have filed millions of secret Suspicious Activity Reports on transactions involving cash. And Americans performing a transaction involving more than $10,000 in cash may have an IRS Form 8300 documenting their transaction filed with the federal government.

Americans trying to transact privately with cash are being watched, and they have no idea how closely.

​Continue reading: ​
https://www.moneymetals.com/news/2018/07/09/not-become-a-casualty-in-war-on-cash-001571

July 05 2018

moneymetals

Trump’s Trade Wars Could Spark Global Flight to Gold

President Donald Trump’s “America First” trade policies are upending decades of global arrangements and entanglements. Globalists are aghast that the leader of the free world is openly confrontational toward NAFTA, NATO, the European Union, United Nations, and World Trade Organization.

In rebuffing the global community by pursuing unilateral tariffs and vowing to win trade wars against both rivals and putative allies alike, Trump is playing a high stakes game. Trump’s trade wars could test the U.S. dollar’s status as world reserve currency.

According to economist Brad Schiller, “Nations are willing to accept U.S. dollars in exchange for their goods because they trust that the dollar will retain its value… The long history of U.S. dollar stability gives the U.S. this unique trade advantage — a key reason we can import more goods than we export year after year.”

Schiller, like many conventionally trained economists, seems to believe that our ever-growing trade deficit benefits us. In the near term, we do get to consume more things. But countries that are sending us stuff in exchange for our dollars are effectively accumulating claims on our future.

China holds title to an enormous hoard of U.S. dollar IOUs. U.S. taxpayers now owe China more than $1.2 trillion. China ran a $366 billion trade surplus in 2017 alone.

President Trump has moved to impose tens of billions of dollars in tariffs on China and other trading partners including Canada, Mexico, and the European Union. They have responded with retaliatory tariffs affecting everything from wheat crops to Harley-Davidsons.

United states tariffs

Winning trade wars may not be as easy as Trump had thought.

Dying U.S. Senator John McCain, a longtime Trump detractor and globalist, is among those who are actively rooting against the U.S. administration and consoling foreign countries.

“To our allies: bipartisan majorities of Americans remain pro-free trade, pro-globalization & supportive of alliances based on 70 years of shared values. Americans stand with you, even if our president doesn’t,” McCain ranted on Twitter.

It's not clear the failed former presidential candidate speaks for “bipartisan majorities of Americans” as he boasts. Nor is it clear that these foreign alliances reflect our “shared values.”





June 29 2018

moneymetals

Frank Holmes: Tariff War Akin to Raising Taxes, Recession Looms

Mike Gleason: It is my privilege now to welcome in Frank Holmes, CEO and Chief Investment Officer at U.S. Global Investors. Mr. Holmes has received various honors over the years, including being named America's Best Fund Manager for 2016 by the Mining Journal. He is also the co-author of the book, The Goldwatcher: Demystifying Gold Investing and is a regular guest on CNBC, Bloomberg, Fox Business, as well as right here on the Money Metals podcast.

Frank, welcome back and thanks for joining us again. How are you today?

Frank Holmes: I'm great, and it's great to be chatting with you about this languishing gold market.

Mike Gleason: Yeah, we certainly have a lot to talk about. Never a dull moment here in these markets. To start out here, Frank, when we had you on back in March, we talked about the steel and aluminum tariffs Trump imposed. Things have escalated since then. The president is talking about tariffs on European automobiles and another $2 billion on imports from China. We're very curious about what impact this trade policy might have on the dollar and, by extension, precious metal. So far, at least, the dollar has been strengthening, but we aren't sure how seriously the markets are taking the possibility of a trade war becoming a currency war. If that happens, the U.S. certainly seems vulnerable. We have by far the most to lose given the dollar's status as a global reserve currency. What do you make of the recent strength in the dollar, and where do you think things may be headed if we wind up in a full-blown trade war?

Frank Holmes: Well, first, what I'd like to say is I wrote a piece said, "President Trump, you can't suck and blow a balloon at the same time." It was a just amazing feat to get corporate taxes down, and that was really the catalyst that launched the stock market, that fulfilled and provided visibility for the next several years of robust economic growth. When I talk to all the macroeconomists, all the macro analysts who are pointing out that immediately Walmart increased salaries as a consumer company, and a manufacturing company started spending more money on factory upgrades. 10 years since they've really spent a lot of money on durable goods. And that was really important for the metals as a whole.

But with this whole tariff war, well, that's basically raising taxes. Tariffs are always an indirect tax on an industry or sector of the economy, and it's defeating. And this week, the Fed chair was saying that, Powell, that he's getting feedback that exports are starting to be canceled because of the tariff battle right now. So I think the combination of the stronger dollar along with the tariff battle is only going to set us up for a recession faster than we thought, unless he can tune back what he's been talking about.

But I think to understand capital markets, the flows of funds, that historically when the two-year government bond, which is the bond that relates to all the short-term currency fluctuations, they compare 90 days and two-year government yields to the inflationary rate of their country, and then they look at all the countries and compare them to net positive return. And right now, the U.S. dollar is strong because the two-year government bond is above the dividend yield of the S&P 500. Well, as soon as that happened, immediately, pension fund institutions stopped buying stocks because they can turn around and get a guaranteed yield for the next two years with no risk on a dividend yield that's higher than what the S&P's forecasted to deliver in the future of two years and giving now.

So that creates this VIX explosion. And then we have this sort of fear that rates are going to continue to rise with the CPI number because inflation is rising, and that's put a dent in the price of gold and made the dollar strong. But a strong dollar at this stage, along with tariffs, is the worst thing for economic growth and prosperity. And Trump's ego is big enough and rational that he wants growth and he wants economic growth, so I think we're going to see in the second half, we've had a peak in rates, and we'll see rates come off. And I think then you'll see this move in the price of gold.

Mike Gleason: Setting aside any ramifications for the dollar, do you think the U.S. can win a trade war? I mean, the president certainly seems confident. On the one hand, we agree with an observation you made when we spoke last, China has stolen a lot of intellectual property, and it would be nice if we could do something about that. But on the other hand, tariffs are bound to raise prices for Americans. It's a tax, like you said, and there are plenty of examples of trade restrictions and that sort of central planning leading to all sorts of unintended consequences. So how do you rate the president's chances for success here, Frank?

​Read/Listen to the entire article here. ​


June 25 2018

moneymetals

A Bargain Hunter’s Delight

Falling prices and low premiums did prompt strong retail buying in the markets for physical bullion in the past week.

The market is presenting the best opportunity to buy popular products in a very long time. Spot prices are the lowest they have been since December, but premiums are the lowest they have EVER been in more than a decade.

Consider pre-1965 90% silver coins, for example.

Silver bottomed under $14/oz in 2015, but premiums on silver dimesquarters, and half dollars were north of $5/oz at the time. Investors had to spend close to $19/oz to buy those coins. Today they can be purchased for well under $17/oz – only a few cents over spot for larger orders.

Silver Eagle premiums are at generational lows as well. Random year Silver Eagles are selling for as low as $2.05 over spot, for example​.


Article source: ​
https://goo.gl/tVsnUZ

June 13 2018

moneymetals

Some Probing Questions from Customers Like You...

Client communications are a priority for us. If someone calls, we have live people answering the phone and ready to provide service. If you need support by email or by live chat, we respond promptly. This is, of course, good business as it makes for happy customers!

Q & a

However, it is great for another reason. A big part of what we do is provide timely and useful articles and podcasts you can use to stay current on developments which impact the metals markets and your investments. It helps us immensely to know what our clients are thinking about and what questions they have.

Here are a few good questions we’ve seen recently, along with our responses…

Question: What is the best buy currently – bars or sovereign coins?

Answer: Whether it is sovereign coins or bars that represent the “best buy” will depend on what is important to you. In terms of silver, bars (and 1-ounce silver rounds) offer the lowest overall cost per ounce. If “best buy” means “lowest price,” these are the way to go. You can’t go wrong buying the maximum number of ounces for the least amount of money, provided you are getting a quality product made by reputable mints and refiners.

2017 american silver eagle

Premiums on Silver Eagles
are very low by historical standards.
Shop here.

On the other hand, coin premiums are at cycle lows and there is a floor of sorts beneath them. Sovereign mints, unlike private mints and refiners, are not responding to weaker sales by reducing minting charges. Based on our experience, we do not expect them to change course. That likely means coin premiums aren’t headed much lower than they are right now.

People who prefer buying official, legal-tender coins for their recognizability and popularity should consider grabbing some now.

Customers who want to speculate on coin premiums, might also want to exploit today’s conditions.

In recent years, we’ve seen premiums on the silver American Eagle at more than twice the current level. Chances are that will happen again the next time demand spikes, giving returns on those items an extra boost.

Source: (
https://www.moneymetals.com/news/2018/06/13/gold-bars-or-sovereign-coins-001551
​)​

June 12 2018

moneymetals

The Dangers of Investing Based on Phony Government Statistics

President Donald Trump recently took to Twitter to boast, “The U.S. has an increased economic value of more than 7 Trillion Dollars since the Election. May be the best economy in the history of our country. Record Jobs numbers. Nice!”

“We ran out of words to describe how good the jobs numbers are,” reported Neil Irwin of the New York Times, amplified in a Trump retweet.

Increase

If you believe the headline numbers, joblessness is at a generational low with the economy booming.

Trillions in nominal value added to the stock market since Trump’s election. GDP up over 3% in the second quarter. 223,000 jobs added in May. Unemployment at an 18-year low of 3.8%.

On the surface, this all paints a beautiful picture for the economy and stock market. But dig a little deeper, and the numbers aren’t quite as bright they appear. All that glitters is not gold.

Headline Unemployment Number Is Fake News

Donald Trump himself put his finger on one of the main flaws with the unemployment number back when he was a private citizen.

“Unemployment rate only dropped because more people are out of labor force & have stopped looking for work. Not a real recovery, phony numbers,” he posted on September 7th, 2012.

The headline unemployment number isn’t any less phony in 2018. Though it has improved under Trump’s presidency – in large part because of his pro-growth tax cuts and deregulation – the statistic is still derived from a dubious formula.

Back in 2012, Trump rightly pointed to the large numbers of workers who had dropped out of the labor force but weren’t counted among the ranks of the unemployed.

You can find the article here:(https://www.moneymetals.com/news/2018/06/11/the-dangers-of-investing-based-on-phony-governments-statistics-001550)

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