Gold weathered the Federal Reserve’s 7th rate hike of this cycle this week. Gold-futures speculators and to a lesser extent gold investors have long feared Fed rate hikes, selling ahead of them. Higher rates are viewed as the nemesis of zero-yielding gold. But contrary to this popular belief, past Fed rate hikes have proven very bullish for gold. This latest hike once again leaves gold set up for a major rally in coming months. Full Story
Since Hayek’s time, monetary policy, particularly in America, has evolved away from targeting production and discouraging savings by suppressing interest rates, towards encouraging consumption through expanding consumer finance. American consumers are living beyond their means and have commonly depleted all their liquid savings. But given the variations in the cost of consumer finance (between 0% car loans and 20% credit card and overdraft rates), consumers are generally insensitive to changes in interest rates. Full Story
Professor Laurence Kotlikoff, author of the FREE book: You're Hired! says gold and silver investors could emerge victorious. What could drive PMs prices higher? Our trading "partners" are already starting to make it clear that they don't need us. Tensions between the US and key nations continues to ratchet up on the heels of Group of Seven nations talks in Canada this past weekend. Full Story
When currency was backed by gold, a central bank’s main function was to maintain the value of the issued currency in terms of gold. For example, if a central bank created too much money against the gold reserves in the banking system, an increasing number of people would begin to exchange their currency for gold. To combat this, a central bank would be forced to raise interest rates and decrease the money supply. The higher interest rates would incentivize people to exchange gold for larger savings on deposit that earn interest. Full Story
Powell delivered and hiked again. Draghi halved the amount of purchased assets, but did not have the courage to end the quantitative easing program. Does the former have bigger cojones than the latter? And what does it mean for the gold market? Full Story
Interest rates are now a key simulator for growth in most nations. Interest rates have been used as a short-term tool as well as a medium-term tool by central banks to control growth in their nations and also control inflation. After the second world war, interest rates and interest rate futures have been the key to the direction of global financial markets be it stocks, bonds, currencies or even precious metals. Full Story
I am sure you remember the lead up to Q1 2016. The US economy and stock market were transitioning from a Goldilocks environment and narrowly avoiding a bear market while the rest of the world was still battling deflation. Precious metals and commodities were in the dumper and try though US and global central banks might, they seemed to fail to woo the inflation genie out of its bottle at every turn. Full Story
At the end of Fed chairman Jerome Powell’s opening statement for his press conference yesterday he dropped a major surprise on the markets that immediately sent the dollar and stocks tumbling and gold, silver and bonds vaulting higher. All the markets mentioned experienced sudden sharp reversals at the time of the “surprise.” Those trends have carried over to today’s market action. Full Story
For an SEC official to be surprised that corporate share repurchases enrich executives is, well, surprising, since share repurchases tend to push up share prices and executives are compensated at least in part based on that metric. So the executives doing the repurchasing benefit one way or another – otherwise why would they bother? Full Story
GATA is not an investment adviser, but we think the basics for gold are very much as you understand them and thus incredibly bullish except for central bank price-suppression policy. Yes, there are increasing indications of stress in the gold banking system, but the central banks haven't lost control yet. My guess is that as the metal the central banks are prepared to lose runs out, they will revalue gold substantially upward, repurchase the metal they have been selling and leasing, and restart the price-suppression scheme at a more sustainable level for another half century. Full Story
The recent growth acceleration in the EU could distract attention from problems of the common bloc. Fortunately, you can always count on Italy. Whenever you start thinking that only bright future is ahead of the union, the descendants of the proud Romans remind about themselves. Indeed, Italy focuses three major EU’s problems like in a lens. What are they and how could they affect the gold market? Full Story
Bill Murphy of GATA.org notes the risk / reward scenario for precious metals investors may have never been this favorable. The massive JP Morgan silver short position and it's potential to cause an epic short-squeeze, sending the price of silver skyward. Full Story
As part of Merk's in-house research we regularly evaluate a consistent set of charts covering the economy, equities, fixed income, commodities and currencies. The aim is to keep our eyes open and to look through the noise of the headlines, avoiding the distractions of sensationalized click-bait. In sharing this content, we offer a cross-check to your own thinking and aim to add value to your own process. Full Story
Devaluation of currencies is necessary in our debt based fiat currency financial system. When leaders are caught lying the populace is more inclined to see corporate and banking control over government policies. This leads to loss of confidence in the nation and its institutions, and accelerates the decline of the currency. Full Story
The devaluing of the dollar is on purpose. The Federal Reserve wants an “inflation rate” of 2%. Central bankers think it’s good when the purchasing power of the dollar falls. And it is good – for the bankers and the political class who get new dollars pumped into the system first. For the rest of us, not so much, as the Tooth Fairy aptly demonstrates. Full Story
As part of Merk's in-house research we regularly evaluate a consistent set of charts covering the economy, equities, fixed income, commodities and currencies. The aim is to keep our eyes open and to look through the noise of the headlines, avoiding the distractions of sensationalized click-bait. In sharing this content, we offer a cross-check to your own thinking and aim to add value to your own process. Full Story
Recently, it was reported that Chris Powell of the Gold Anti-Trust Action Committee (GATA) had requested action and an investigation into this process from the U.S. Comptroller of the Currency, Joseph Otting. Below is a link to Chris' letter, but note that Chris reports he has yet to receive any acknowledgment from the Comptroller's office. This, despite the fact that the letter was dated five weeks ago! Full Story
As most readers probably know, the CPI is widely believed to understate the true rate of inflation because of statistical tricks like hedonic adjustment and substitution. So when this index starts rising you know the real action is even more extreme. The past 12-month increase was 2.8%, which is the highest in six years and continues a general uptrend that began in 2015. What’s moving it? Full Story
As seen in the chart below, China takes the number one spot of global gold producers by a wide margin, extracting 131 tonnes more than second place Australia. The top 10 rankings remained unchanged from 2016 to 2017, with the exception of Canada and Indonesia switching between fifth and seventh place, respectively. Of the top producers, Russia posted the largest annual gain, boosting output by 17 tonnes. Full Story
Almost nothing happened on the precious metals market yesterday, or at least that may seem to be the case as the first sight. And that’s true if one doesn’t count the spike in GLD’s volume, but there was something else that actually should have caught one’s attention and it probably wasn’t the case for many gold traders. Silver stocks just broke to new monthly low. What does this tell us? Full Story
The stock market was already brain-dead, but it’s no longer even twitching sporadically as traders prepare for what promises to be a less-than-momentous announcement from the FOMC on Wednesday. Wall Street is expecting a rate hike of 25 basis points, which would put the fed funds rate at 1.875% That’s the exact midpoint of the target range of 1.75 to 2.00 percent, making it even less likely that the markets will react much. Full Story
The precious metals sector is on a long-term buy signal. Short term is on mixed signals. The cycle is up. COT data is supportive for overall higher metal prices. We are holding gold-related ETFs for long-term gain. Full Story
Regardless of the upside potential for inflation-oriented investments, gold and silver stock investors should be totally comfortable with the current price action. A Chindian income growth wind is gently blowing the sails of the Western gold community’s boats. Enjoy the breeze, because it’s not going away! Full Story
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. Full Story
Over the weekend, the Swiss voters rejected the campaign to radically alter banking system, while President Trump withdrew his support for the joint statement of G7 and arrived in Singapore for a historic summit with North Korean leader Kim Jong Un. The Fed and the ECB are expected to tighten their monetary policy in tandem. It will be a hot period for the markets. Will gold blaze? Full Story
On Sunday 10 June 2018, Switzerland’s electorate voted on a referendum calling for the country’s commercial banks to be banned from creating money. In a country world-famous for its banking industry, this was quite an interesting turn of events. Full Story
This has been a uniquely boring stretch for gold and silver – especially given all the things going on in the world that ought to light a fire under precious metals. In just the past few weeks, the US started a global trade war, Italy elected a populist government, emerging markets descended into yet another crisis, and inflation has risen from the dead – all of which would be expected to spook normal financial markets and send capital pouring into safe havens. But not this time, which leaves precious metals under the control of seasonal factors that have over the years generated the “sell in May and go away” rule-of-thumb. Full Story
If you live in Texas and have any extra gold bars, coins and/or jewelry lying around that need safekeeping, you’re in luck. The Texas Bullion Depository, the first of its kind in the U.S., officially opened to the public in Austin last week, putting a cap on three years of planning and construction. The private firm managing the facility, Lone Star Tangible Assets, calls it the “world’s most advanced depository.” Full Story
Harry Dent has been making the rounds suggesting that for gold to get back to its pre-bubble price, it would need to fall to $400 or $450. If we were to believe Mr. Dent, then it would be bad news for gold investors. However, Harry Dent’s gold price forecast is quite faulty because he fails to consider the most critical factor. Full Story
The first week of June was fairly easy to navigate and trade as the bullish pattern took a couple extra weeks of high level consolidation to finally complete its course. It really started with the breakout on Monday June 4 above the key 2742 level to confirm that the bull train is ready for the immediate breakout to accelerate above the prior two weeks’ worth of consolidation range (2742 vs.2700/2675). On the next day, the bull train grinded up a little and held above the 2742 breakout level to trap in more market participants for the high odds of a trend week. Full Story
The market sentiment toward the precious metals is quite negative. Additionally, gold and silver are fighting both the ongoing official price-management, which seems to have intensified over the last 12 months, and the rising dollar. The rise in the dollar is technical in nature – certainly it’s not based on U.S. systemic fundamentals. The current financial and economic environment, both here and globally, is very similar to the late 2007-mid-2008 environment. Remarkably, the financial roadside bombs planted and getting ready explode are more numerous and contain more powerful explosives than the ones that detonated in 2008. Full Story
While higher tax rates and means tests may serve to push out the insolvency dates, there remains very little political expediency to enact these changes. Thus, as these critical U.S. government entitlement programs begin to falter, the only agreed-to solution from both sides will be debt monetization and currency creation from the Federal Reserve. Borrowing costs will soar, and the devaluation of the dollar will be significant. Markets will be traumatized, and threats to the hegemony of the U.S. dollar as global reserve currency will move to the forefront. Full Story
The best performing metal this week was silver, up 2.24 percent. A majority of gold traders were either bullish or neutral on bullion this week after being mostly bullish last week due to political uncertainty in Europe, according to the weekly Bloomberg survey. India saw a third straight session of high gold prices due to continued buying by local jewelers with prices hovering around $1,300 internationally. Full Story
It is my privilege now to welcome back Michael Pento, president and founder of Pento Portfolio Strategies and author of the book, The Coming Bond Market Collapse: How to Survive the Demise of the U.S. Debt Market. Michael is a well-known money manager and a fantastic market commentator, and over the past few years, has been a wonderful guest and one of our favorites here on the Money Metals Podcast. We always love getting his highly-studied Austrian economist viewpoint. Full Story
One idea—let’s call it common sense physics—is that a force is pushing you outward into the door. If you picture the center of the circle that the car is making in its turn, there is an apparent radial force on you. The direction of this force is outward. It is called centrifugal force. Full Story
Bears seem to be roaming wherever you look, whether it be in the US equity market, the gold market, and especially in the emerging markets as of recently. Whether I read articles, or the comments to those articles, it seems there is a common expectation that “emerging market dominoes are falling” and it will “cause deleveraging and contagion” across portfolios worldwide. Full Story
GATA has appealed to the U.S. comptroller of the currency, who has regulatory authority over banks, to review financial risks certain banks may have incurred through derivatives in the monetary metals markets, particularly through the recent heavy use of the "exchange for physicals" mechanism of settling gold and silver futures contracts on the New York Commodities Exchange. Full Story
The newsworthy volcanoes currently going off remind me a bit about market behaviour. There are a lot of active volcanoes around the world. At any point in time there may be 10–20 active eruptions around the world, most of which you won’t hear of. Today, according to Volcano Discovery, there are at least 33 active volcanos erupting. At least three of them have made the news. Kilauea in Hawaii, Merapi in Indonesia and the latest Fuego in Guatemala. Full Story
Chris Martenson from PeakProsperity.com, author of Prosper! says the global macroeconomic outlook is dire. Given the downturn in the long-running credit cycle, considerable QE efforts will be required via CB monetary policy to maintain the status quo. Global financier, Martin Armstrong of Armstrong Economics rejoins the show with this latest market commentary. Despite the coordinated Herculean efforts of global central banks, low rate policies have failed to revive the economic patient. Full Story
Debt isn’t always a form of slavery, but those old sayings didn’t come from nowhere. You can find hundreds of quotes on the Internet discussing the problems of debt. Debt traps borrowers, lenders, and innocent bystanders, too. If debt were a drug, we would demand it be outlawed. Full Story
I have only one chart to show you tonight which I call the “History Chart of the End of the World,” which I built out in 2013. I usually show this chart a couple of times a year just to keep the big picture in perspective. This long term monthly chart shows all the earth shattering events that felt like the end of the world when they occurred and I can personally attest to that fact because I was in the markets in each one of those events. Full Story
By: Chris Marcus and Maurice Jackson - 10 June, 2018
Arcadia Economics is what I started after leaving Wall Street back in 2012 where I was sitting on the New York Stock Exchange when everything was imploding in 2008 and 2009. Eventually I started reading Austrian economics, realizing that things actually work quite a bit differently than we were told. I really left to share what I saw, which on one hand, I think is incredible, because if you're giving the real version of how interest rates affect the markets and all these things are interconnected, it sometimes may be of a longer perspective. Full Story
The longer an expansion lasts, the crappier its paper becomes. That may seem like a baseless assertion, but it’s actually just simple math. Early in recoveries, borrowers and lenders are both shell-shocked by the last recession, so only high-quality deals get done. But as time passes, all the good borrowers get their loans and if banks want to keep the deals flowing, lower-quality borrowers must be found and financed. Eventually the deals become shockingly speculative and start blowing up en masse, bringing on the next downturn. Full Story
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