Gold’s Compression, Institutional Buying, US Dollar Ready For A Bounce Up?

This week we review the price movements of gold, silver, platinum, palladium, and the US Dollar index as well as diving into the gold to silver ratio, platinum to palladium ratio, and more.

- Source, Golden Rule Radio

How the UK Election Could Pull the Fiscal Trigger for Markets Worldwide

This week Real Vision uses Refinitiv's best-in-class data to let you in on the big conversation about the global knock-on effects of the UK election - including implications for the dollar and bond yields. 

The market chatter explores a potential surprise inflationary boost towards year-end and whether gold will pop again. And the whisper is around what Sweden might be telling us about the economic future for Europe.

- Source, Real Vision Finance

The Fed's Artificial Fourth Quarter Stock Market Boom

Quantitative easing in the United States is alive and well, the markets know this and they are surging higher in the fourth quarter as a result of it, creating an artificial move higher in the S&P 500 as it steadily ticks higher.

This move higher in prices comes in spite of the fact that the global economy, including within the United States is actually beginning to slow down, as the stress of the ongoing trade wars continues to weigh heavily on the system.

One of the major warning signs comes from the US manufacturing sector, which in recent months has taken a sharp turn lower, as recent reports indicate;

Truck and trailer order rates are down between 50% and 70%. General distribution, a proxy for smaller machine shops and fabricators, is off by 4% to 7%. Automotive is down by 4%.

Typically a slowdown in US manufacturing is then followed by a slowdown in US non manufacturing sectors, which then leads to a cascading effect as a full blown recession sets in and takes hold of the economy.

Yet, despite these warnings and the risks that the world faces in the fourth quarter of 2019, the markets steadily and happily truck along, moving higher in price month after month.

This can largely be attributed to the direct, blatant manipulation that the Federal Reserve has been engaging in since the September scare in the overnight lending repo markets, in which the Fed had to intervene and come to rescue, preventing a crash within the banking sector.

Since this time, the Federal Reserve has continued to pump a monstrous amount of money into the system, doing what the Fed does best, throwing money at the problem and hoping to plug all leaks that appear with massive wads of cash.

Financial and geopolitical guru Jim Rickards recently tweeted out the following chart, which highlights just how rapidly the Fed's balance sheet has exploded higher;

This straight up move higher is due to the Federal Reserve injecting a stunning $175 billion in cash directly into the markets, pushing their balance sheet back up to $4.07 trillion, undoing much of their recent work in "exiting" the markets and proving my prediction correct, that once they tried to get out, the system would begin to fall apart and they would be forced back in.

This injection into the system coincidentally just happens to almost exactly match the 4% rise higher in the S&P 500, as the Fed's balance sheet has expanded by 4.5% since the Fed began once again to engage in "Not QE".

There is no getting out for the Fed, this is the system they have created and QE to infinity is here to stay. They are trapped.

This is the system we now find ourselves in. One that is completely broken and rotten just underneath the surface, papered over with ungodly amounts of fiat currency.

Ray Dalio, Co-Chief Investment Officer & Co-Chairman of Bridgewater Associates also vented his frustration with the current state of the system, penning a great article explaining the mess the world now finds itself in, titled "The World Has Gone Mad and the System Is Broken".

Ray Dalio isn't wrong. The world truly has gone mad and it is only a matter of time before the day of reckoning arrives, sending inflation soaring higher, markets reeling and precious metals rocketing higher.

Until that day, enjoy the discounts, keep stacking and keep preparing.

- As first seen on the Sprott Money Blog

NY Fed Discloses Repo Madness Averages $190 Billion Per Day!

Despite the NY Fed disclosing recently that Repo Madness averages (means that some days it's a lot higher) $190 billion dollars per day and not $120 billion dollars per day, the US Dollar Index is rallying and back over 98. 

The Fed's official balance sheet increased another $20 billion dollars in the last week. 

It's now increased $72 billion dollars in just the last 2 weeks and $279.5 billion dollars since the end of August 2019! About 5 months of Fed QT (balance sheet reduction) has now been reversed in barely 2 months!

- Source, Wall St for Main St

Ron Paul: Breaking Washington's Addiction to War

Ron Paul delivers the keynote speech at this year's Ron Paul Institute Washington Conference on "Breaking Washington's Addiction to War."

- Source, Ron Paul

The US Only Pretends to Have Free Markets?

When I arrived in the United States from France in 1999, I felt like I was entering the land of free markets. Nearly everything—from laptops to internet service to plane tickets—was cheaper here than in Europe.

Twenty years later, this is no longer the case. Internet service, cellphone plans, and plane tickets are now much cheaper in Europe and Asia than in the United States, and the price differences are staggering. In 2018, according to data gathered by the comparison site Cable, the average monthly cost of a broadband internet connection was $29 in Italy, $31 in France, $32 in South Korea, and $37 in Germany and Japan. 

The same connection cost $68 in the United States, putting the country on par with Madagascar, Honduras, and Swaziland. American households spend about $100 a month on cellphone services, the Consumer Expenditure Survey from the U.S. Bureau of Labor Statistics indicates. Households in France and Germany pay less than half of that, according to the economists Mara Faccio and Luigi Zingales.

None of this has happened by chance. In 1999, the United States had free and competitive markets in many industries that, in Europe, were dominated by oligopolies. Today the opposite is true. French households can typically choose among five or more internet-service providers; American households are lucky if they have a choice between two, and many have only one. The American airline industry has become fully oligopolistic; profits per passenger mile are now about twice as high as in Europe, where low-cost airlines compete aggressively with incumbents.

This is in part because the rest of the world was inspired by the United States and caught up, and in part because the United States became complacent and fell behind. In the late 1990s, legally incorporating a business in France took 15 administrative steps and 53 days; in 2016, it took only four days. Over the same period, however, the entry delay in the United States went up from four days to six days. In other words, opening a business used to be much faster in the United States than in France, but it is now somewhat slower...

- Source, The Atlantic, read the full article here

The Power of Gold in Times of Crisis

While physical gold is a well-known safe haven asset which investors flock to in times of market turbulence as a way of protecting their wealth, gold is also the ultimate asset to own and possess in times of crisis and emergency. These crisis situations can range from episodes in which fiat currencies collapse, to times in which gold buys safe passage across international borders, and even to periods in which only gold can bail out and rescue an entire nation. Sometimes gold even ensures self-survival and can literally be the difference between life and death.

History is replete with examples of gold being the ultimate asset in times of crisis and desperation, where time and time again, gold comes to the rescue and provides its holders with choice and freedom, choice and freedom that are not available to those who do not hold gold. This is not ancient but recent history, history in our lifetimes and in some cases even events ongoing now.

In this article we will look at some examples of gold in crisis, which while distinct to their times and places, contain commonalities, and which illustrate why gold is the only monetary asset that is universally trusted and recognised in crises, why gold is the only asset with universal liquidity and purchasing power during emergencies, and in short why physical gold is the only asset that can truly provide economic freedom and liberty when confidence in all else fails.

Distinctive slim gold bars from Vietnam’s Kim Thanh refinery, 1 tael

Gold as a safe passage for refugees from Vietnam

Following the Vietnam War, the Fall of Saigon, and Vietnam’s reunification in 1976, the southern part of Vietnam experienced a mass exodus of people, driven by a crippled economy, government discrimination and forced departures. Hundreds of thousands of ethnic Chinese and Vietnamese fled to other parts of Asia over both land and sea, an exodus which peaked in 1978-1979.

Those refugees fleeing by sea sometimes did so in large ships organised by people smugglers and often with the support of the Vietnamese communist government. An exit route on these ships was only assured for those who could pay these government officials and people smugglers what they demanded. The price for safe passage? Between 10 and 12 taels of 24 karat gold for an adult and half that for a child (1 tael = 1.2 troy ounces).

This gold payment was often in the form of traditional Kim Thanh gold bars, two slim large bars and one small bar wrapped together in rice paper, making a total weight of 1 tael. While these bars were popular in Vietnam, they were also recognised and accepted across all of South East Asia as portable wealth and so were monetary liquidity for the region.

From Vietnam to Hong Kong – Skyluck, the ship that smuggled 2,600 refugees. Source: SCMP

Although some Vietnamese and Vietnamese Chinese had their stored wealth in the form of these bars, many didn’t and so an entire gold tael banking system arose in Saigon in the 1970s allowing those fleeing the crisis to convert their belongings into gold. Those without tael gold bars paid for their passage in gold ornaments.

Refugees also took with them emergency money in the form of gold tael bars as well as jewelry such as small gold rings and gold wedding bands, all of which could be sold in emergencies. For example, after one giant ship of refugees, the Skyluck, arrived in Hong Kong in 1979, Vietnamese gold tael bars began popping up in the Hong Kong gold market.

Refugees from Vietnam who took huge risks sailing into the unknown to a better life could only do so because they had physical gold to buy safe passage, and because gold is a universal money that can be sold almost anywhere to help finance a new life abroad.
South Korea – Gold mobilization to pay external debt

As the Asian financial crisis spread to South Korea in late 1997 and torpedoed the country’s financial markets, it triggered a currency and banking crisis that decimated the Korean won and pushed the country to the verge of bankruptcy. Rapidly burning through its foreign exchange reserves and with international lenders circling, the government called in the International Monetary Fund (IMF) in December 1997 with a multi billion rescue package to bail-out the country’s spiralling external debt. At that time the largest ever IMF bail-out, the rescue came as a massive blow to the Korean nation both economically and psychologically.

Embarrassed and at a loss to understand how a star Asian tiger economy could implode so quickly, the South Korean nation then did something quite extraordinary and spontaneous by collectively confronting the adversity via the mobilisation of a patriotic gold collection campaign to help pay off South Korea’s foreign debts.

Initiated by the Korean broadcast networks and the large Korean banks, and coordinated by the industrial conglomerates such as Hyundai, Daewoo and Samsung, the ‘love of nation’ and ‘national debt repayment’ campaign saw Korean citizens selling their gold, but at prices far lower than market value. The gold collected was then melted into gold bars and sold on the international gold market.

With gold held widely by Korean households in many shapes and forms, long lines formed outside the nation’s banks and collection points of Samsung, Daewoo and Hyundai as Koreans swarmed to sell everything from investment gold coins and bars to gold rings and gold bracelets, and from gold medals to gold trinkets. All to fix their ‘broken economy’. The items sold even included brides’ gold jewelry, gold doljanchi presented to babies on their one-year birthdays, retirees’ gold keychains and gold watches, and the solid gold buttons found on traditional Korean clothing.

Kim Daejung, then president elect, donated his gold in Sotuh Korea’s gold campaign

And it wasn’t just ordinary citizens who took part in the campaign. Celebrities and politicians led by example. Korean baseball star Lee Chong-bum brought in 31 ounces of gold to his local bank in the form of gold trophies and medals. President-elect at the time Kim Daejung walked into a bank in Seoul donating a miniature golden tortoise and four golden good luck keys. Said Daejung:

”When I think of the patriotism, my eyes almost become wet with tears of appreciation. I promise that my new government will do its best to pull the country out of its current crisis.”

Running over four months from January to April 1998, the gold collection campaign collected 227 tonnes of gold worth $2.13 billion, with 165 tonnes alone collected in the first month January. The collection involved 3.5 million households, representing 23% of the nation’s 15 million households and 10% of the gold held in South Korea at that time, and the gold collection drive helped restore the nation’s credibility abroad, thereby allowing South Korea to fully repaid the IMF-backed debt in August 2001, three years ahead of schedule.

With gold playing a strong role in Korean society, South Korea’s population knew instinctively that in the midst of a dark economic crisis, only physical gold could help rescue their economy. And so they collectively mobilised to donate and sell the one true asset that had retained its value in Korea’s financial crisis, their gold.

- Source, Bullionstar

Gold a Go Go or a No Go?

There've been quite the array of excitable headlines running across the spectrum by our great and good Gold writing colleagues these many weeks -- and rightly so -- the yellow metal (were we are year's-end today) having put in its best performance (+18.1%) since 2010 (+29.5%).

And yet from the "Au Contraire, Mon Frère Dept." in looking at the above Gold Scoreboard, price in the broad sense has the appearance of merely flatlining across the last 13 weeks (should you be so inclined to count the weekly dots on the line).

Moreover, we've penned ad nausea -- since Gold achieved our aggressive forecast high for this year back on 12 August at 1526 -- that such price has become Gold's trading centerpiece. Or some might more negatively couch it as trading resistance, because for the 58 trading days since then, Gold has settled above 1526 but 13 times and below that level 45 times, including yesterday (Friday) with price closing out the week at 1517.

Still, with 10 months plus one trading day now in the books for 2019, one can't complain about Gold's performance this year, in spite of (also per the above Gold Scoreboard) the supply-adjusted, currency-debased valuation now being 2981, nearly double present price ... and exclusive of the usual overshoot upon the inevitable regression to that "mean". But until the wee percentage of Gold owners expands, we ought accept a year like this one as pretty darn good.

To be sure, there've been ruminations of Gold tapping 1600 by this year's-end -- that'd be another +5.5% run from here -- yet there are but eight full trading weeks remaining in 2019, the technical resistance of 1526 seemingly keeping the lid on price and further fundamental impetus (beyond now being the so-called start of the "Gold buying season", let alone Gold being excessively undervalued as noted) not as yet driving new buyers to the fore. That stated, from this time a year ago into 2018's end, Gold ran up nearly 100 points (from 1192 to 1285, i.e. +7.8%); but hardly was that on the heels of a robust year to such point. Then fast-forward to just two weeks ago when we cited price as perhaps coiling to spring higher. And yet Gold's journey since then has been only from 1493 to today's 1517: not much impressive boing in that spring.

So given all of that, plus it being month's-end and one trading day, we find the order of the BEGOS Markets by their standings essentially unaltered since their end-of-September rankings, (only Copper and the Swiss Franc having meekly swapped positions). Thus again there is Gold in third place on the podium with Silver on the steps thereto. And "Oh, that Dollar strength!" which is so bandied about: what are they tawkin' about? Look at the standings, chump:



To Gold's weekly bars we go. And from one year ago-to-date, obviously the two blue-dotted parabolic Long trends have been the power moves, whilst the two red-dotted parabolic Short trends rather appear as shallow pauses. And Long or Short, they've all been lengthy, which -- should such typical duration continue for this current Short trend -- Gold ain't goin' nowhere for awhile, barring the kicking in of seasonal buying and/or coily-springy-boingy and/or "The World Ends; Dow Up 2":

What does appear on track to ending is the economy, if solely by the track of the Economic Barometer. Now obviously the StateSide headline numbers are fairly sound stuff given "much-better-than-expected" readings of +1.9% for Q3's first read on Gross Domestic Product and October's payroll data, plus prior months' upside revisions thereto. Also, September's Construction Spending improved. 

But the "inside-the-numbers" data isn't as pretty. For October, readings from both the Institute for Supply Management on manufacturing and the Chicago Purchasing Managers Index continued in contraction mode; the Federal Open Market Committee's favourite read of inflation -- Core Personal Consumption Expenditures -- was one big zero; and September's growth in Personal Income slowed whilst Personal Spending didn't increase its pace. 

As well, a fresh survey by the National Association for Business Economics indicates that business hiring is at a seven-year low ... although a key phenomenon therein is that essentially full employment is making it difficult to find folks not already working.

- Source, deMeadville, read the full article here

Fed Cuts Rates Again, Indicates a More Hawkish Approach Moving Forward? Unlikely

Once again, just as expected they would, the Federal Reserve cut interest rates by 25 basis points on Wednesday, marking their third cut within 2019 alone.

However, eyebrows were raised by some of the changes in language that the Federal Reserve used during Wednesdays meeting, indicating that the rate cuts that we have recently come to expect, may be going by the wayside for the foreseeable future.

Interest rates now stand in the 1.5% to 1.75%, which is incredibly low, although still well above the negative rates that some of the United States major trading partners have adopted, such as the European Union who reside in negative territory.

Unfortunately for advocates of an easy monetary policy, the Federal Reserve made some notable changes in their language during Wednesday's meeting, removing the following talking point that appeared during the last few Fed meetings;

“act as appropriate to sustain the expansion.”
In its place, the Federal Open Market Committee has instead inserted the following line;

“The Committee will continue to monitor the implications of incoming information for the economic outlook as it assesses the appropriate path of the target range for the federal funds rate,”

This is being taken by some as a much softer approach and an indication that rates will remain at this level, at least for the next few Fed meetings.

Going on to clarify, Federal Reserve Chairman Powell went even further, stating that central bank officials;

“see the current stance of monetary policy as likely to remain appropriate.”

Of course, these hawkish lines of text infuriated President Trump, who has been on record stating that he believes the United States should be more competitive on the global stage and slash rates to the negative territory, just as the European Union has done.

The markets as a whole seem largely unconcerned with Powell's statements, likely indicating that they don't believe that the Federal Reserve is truly done with cutting rates, as both the DOW Jones and S&P 500 have had no significant movements since Wednesdays meeting in which the Fed took a more hardened stance on cutting rates in the future.

Gold and silver, however, have begun once again to rally, with the former retaking its $1500 USD per oz level and surpassing it, currently trading at $1512.11 USD per oz.

Silver, meanwhile has also moved significantly higher in today's trading session, breaking through the $18 USD per oz mark, which is a major win for advocates of precious metals if it can hold above that critical price point.

Perhaps these moves are more reflective of another key piece of concerning news that was released by the Federal Reserve on Wednesday, in which they indicated that they would be exploring a 50 year bond for the first time ever.

This is very concerning and comes at a time when the Federal Reserve is actively engaging in the debt markets, propping up and keeping things running "smoothly", while the budget deficit also continues to widen, reaching $1 trillion.

I personally see the warning signs that are all around and the flashing red lights on the geopolitical global stage, that are indicating that not only is turbulence likely to remain, but worsen in the coming 1-2 years.

Therefore, I believe that the Fed, as it has been so many times in the past, is all talk. Interest rates will be cut again in this race to the bottom, they simply cannot afford to not compete in the ongoing race to the bottom, as countries around the world keep their rates historically low.

This is good news for long term, steady accumulators of precious metals, but bad for the world economy as a whole and savers of fiat money, as paper savings are going to continue to depreciate as more and more funny money is created out of thin air.

Central bankers cannot stop, they won't stop, this is all they know and when the next recession inevitably rears its ugly head, you can bet your bottom dollar that they are going to send the printing presses into hyper drive once again.

- Source, As first seen on the Sprott Money Blog

Should You Buy GOLD in 2020?

Should you buy Gold in 2020? After watching today’s release of Part 2 of Mike Maloney’s new series with Incrementum’s Ronnie Stoeferle, you’ll see why Mike has been ‘backing up the truck’ and continues to accumulate precious metals. 

This segment covers a mountain of topics including real interest rates, recession indicators, declining industrial production, and even a part of Mike’s book that was cut from the final edit. 

But most importantly - Part 2 answers the question “What will the Fed and the government do to try and keep these bubbles inflated?” Strap in because all options are not only on the table, they are highly likely. 

QE4, negative interest rates, currency wars, and plain old jawboning - they’re all here, right now. 

So, should you buy gold in 2020?

- Source, Gold Silver

What Will Stocks Do When Consensual Hallucination Ends

Mike Maloney & Ronni Stoeferle: In Gold We Trust

Mike Maloney recently spoke with Ronni Stoeferle of the ‘In Gold We Trust’ report and had a very in-depth discussion about the global economy, gold, and investing in general. 

As you know, Mike Maloney loves charts, and Ronni’s team has just published a ‘Chart Book’ to accompany their extensive annual report. In this new series of videos, Mike picks out his favorite charts from this summary and dives into the data. 

As the series unfolds, you’ll gain new insights into everything from gold production, the gold/silver ratio, mining stocks and more.

- Source, Gold Silver

What is Needed for a True Silver Breakout?

Although unable to hold a 3% rally late last week, the silver price is still in good shape and investors just have to be patent, according to one market analyst. 

David Smith, senior analyst at the Morgan Report, said that although silver fell sharply from its highs Friday, the price is still holding support at $18 an ounce. 

“It’s very common for attempts to push up through to resistance to fail the first time,” he said. “The silver price still managed to close above $18, which is a breakout on the descending triangle chart.”

- Source, Kitco News

Michael Pento: The Coming Market Meltdown is Going to be Brutal

Economist and money manager Michael Pento predicts the debt bubble will implode at some point, and it will be felt everywhere on the planet. Pento says, “When this thing implodes, we are all screwed. 

On a global scale, we have never before created such a magnificent bubble. These central bankers are clueless, and they have proven that beyond a doubt. All they can do is to try to keep the bubble going.

I am going to make sure my clients are going to be protected and may have a chance to profit from this chaos because it is coming, and it is going to be brutal.”

- Source, USA Watchdog

Charles Hugh Smith: Will You Be Richer or Poorer?

Prolific and exceptionally perceptive author Charles Hugh Smith returns to discuss the insights in his just-launched book Will You Be Richer Or Poorer? Profit, Power & AI in a Traumatized World (the first chapter of which can be read for free here).

The current narrative that our standard of living is not only the best it has been in human history, but thanks to modern technology, is now improving at an accelerating rate. 

Smith turns this belief on its head, pointing out the many and various ways — many of them “intangible” and not currently measured in dollars — the human condition is fast worsening. Health, purpose, social connection, civil liberties, access to natural resources, career mobility; these are but a few examples. 

And technology is actually fast sending us down a darker path. One that empowers the central state, decimates jobs, destroys privacy, and has created today’s “landfill economy”.

- Source, Peak Prosperity