Friday, 12-Feb-2016
(Reuters) China
dumps $100 billion in reserves, adds $3.4 billion in gold “Capital
outflows have gained momentum since the yuan’s August devaluation, fanned by
concerns about China’s economic slowdown and expectations of U.S. interest
rate rises. ‘Monetary easing is highly needed amid economic slowdown, but the
capital outflow will naturally tighten the monetary policy,’ Hao Zhou, senior
emerging markets economist at Commerzbank in Singapore, said in a note after
the data. ‘In the meantime, to prevent the currency from a fast depreciation,
the PBOC (People’s Bank of China) will have to sell its FX reserves, which
will tighten the liquidity.’”
MK Note: Meanwhile, on Saturday China announces another big dollar dump to
defend the yuan and stanch capital outflows. The global emerging market
crisis ratchets up another notch. The Fed has had plenty to worry about over
the weekend – as does Shanghai and Wall Street. China continues to steadily
add gold to its coffers. Some might have thought it would put its gold
acquisition plans on hold given the situation there, but tellingly it hasn’t.
Matt Clinch (CNBC) Confusion
and turmoil helps gold to shine Concerns over the global economy
have added an extra shine to safe-haven assets such as gold, according to the
chief executive of a top mining firm, who told CNBC that “solid” demand and
future economic stress could lead to more price gains for the commodity.
…“We have turned neutral and believe that investors should use gold as
insurance in their portfolios.”
PG Note: A lot of investors have gone beyond “neutral” and are flat-out
bullish on gold as evidenced by the additional price gains seen in the latter
part of the week.
Michael J. Kosares (USAGOLD) An
unholy trinity of concerns pushing gold As I suspected might be
the case and posted here yesterday, it has been a big day so far in the
markets – gold and silver included. At this writing the DJIA is down nearly
400 points; the yield is down on the 10-yr a full basis point at 1.738%; gold
is up $40 from Friday’s COMEX close at almost $1199/tr oz, silver is up
almost 70¢. This turmoil is being caused by three events in our opinion:
• Iran’s demand for oil payments in euros, effective immediately
• Continuing liquidity problems in what we used to call the third world (a
now politically incorrect ID but still communicative), most glaringly in
China
• Banking sector problems with a keen eye on what’s going on at Deutschebank
(the next Lehman Brothers??)
An unholy trinity of concerns. . . . .
PG Note: There are unquestionably rising concerns on a host of fronts that
are driving interest in the safest of the safe-haven assets.
Stephanie Yang (CNBC) Gold
is gaining the favor of some long-time skeptics The precious
metal has outperformed other major asset classes this year, rising 12 percent
in 2016. Gold has become increasingly useful to investors as stocks around
the world have fallen, said options trader Dennis Davitt of Harvest
Volatility Advisors.
“If you’re worried about your equity portfolio going lower, you buy gold
as a hedge. If you did that January 1st this year, it’s worked wonderfully,”
he said Tuesday on CNBC’s “Power Lunch.”
…” … if you have to pay money to store your assets somewhere, I’d rather
store a hard asset like gold than something like paper currency.”
PG Note: That’s a good point: As rates turn negative, do you really want
to be paying banks to store paper for you?!
Kyle Caldwell (Telegraph) Market
panic pushes gold buying to highest level since financial crisis “Investors
are returning to gold as a core diversifier and safe haven investment. Given
the increasingly challenging investment and economic environment, we expect
this trend to continue,” Mr Butterfill said.
PG Note: As noted in Friday’s
DMR, the technical evidence suggests the trend in gold may indeed be
turning back to positive.
Matthew J. Belvedere (CNBC) For many these days, it’s now ‘in gold we trust’ With
the meltdown in stocks sending investors scurrying to safety in gold,
JPMorgan Asset Management’s Robert Michele said Thursday it’s a matter of
faith in the metal, or the lack thereof in other assets.
“Gold at $1,200 an ounce, what does that tell you?” he asked rhetorically
in a CNBC “Squawk Box” interview. “It tells you that in a flight to quality
and a safe haven, people have more confidence in gold than in bank deposits
or paper money.
PG Note: At $1240 what does it tell you? Truth be told, the trust in gold
never went out of style; even during the last several years of
corrective/consolidative price action. Gold is and has always been money; for
thousands of years.
