End-of-week top gold stories

Friday, 10-Jun-2016

Annie Pei (CNBC) US economy’s job pain is ‘gold’s gain’ The precious metal rallied nearly 3 percent back above $1,245 after a soft jobs number had traders fleeing equities and running toward safe haven assets. The jump has Evercore ISI technical analyst Rich Ross betting that the yellow metal will head even higher for a number of reasons.

MK Note: Interesting how quickly things can change.

Myra P. Saefong & Rachel Koning Beals (MarketWatch) Gold futures extend gains in weak jobs-report fallout Gold futures climbed Monday, adding to a Friday surge that handed the precious metal its sharpest single-day gain in nearly three months as investors rolled back expectations for interest-rate hikes this year.

…“Rate hike expectations are essentially back at their mid-May level before the publication of the Fed meeting minutes caused them to rise,” said Commerzbank commodities analysts in a note. “At that time, [spot] gold was trading at $1,280 per troy ounce. Against this backdrop, gold thus has further upside potential.”

PG Note: Gold nearly did reach that $1280 target at the end the week, trading as high as $1278.13.

Michael J. Kosares (USAGOLD) Stuff that just kind of sneaks up on you. . . Through May 31, 2016 (the first eight months of its fiscal year, which ends September 30th), the U.S. federal government has added a cool $1.115 trillion to the national debt.

It now stands at $19.265 trillion.

…All in all, that’s a lot of red. Just wanted to make sure you were all awake. . . .It is getting to be summer-time (and the living is easy). . . . . .

PG Note: There is indeed a lot of red (negative) numbers. Lots of debt. Lots of interest owed, even with ridiculously low rates. It’s good to keep the growing bond bubble in mind because if it where to pop, things could get really ugly in a hurry.

Michael J. Kosares (USAGOLD) Former Bank of England head Mervyn King joins Alan Greenspan in advocating gold ownership King’s use of the word alchemy in connection with central banks’ policies conjures all sorts of allusions. As we all know, the purpose of alchemy was to transform base metals to gold. Likewise, the contemporary central bank is alchemic in nature in that it professes to replace gold-backed money with sound and effective monetary policies. Those who believe that the central banks are capable of delivering consistently on that promise are not likely to become gold owners. Those who question it will continue to own gold and silver in their investment portfolios as a countermeasure, and in fact add to those holdings as circumstances require.

MK Note: No sooner had the ink dried on the June issue of our newsletter (of which this article was a part) than Mervyn King was quoted in the World Gold Council’s Gold Investor magazine as advocating gold ownership at a time of what he calls “radical uncertainty.” Some might think that we had an inside track on the World Gold Council interview released this morning, but we did not. Though we have a relationship with the World Gold Council that goes back decades, it does not send us advance copies of its publications. The similarities between King’s views and those of his old friend, Mr. Greenspan, were striking thus the conclusion that logically the former BoE governor might be headed in gold’s direction.

Brian Milligan (BBC) Royal Mint to sell gold bars for pensions The Royal Mint is to offer savers the chance to own gold bars within their pension funds for the first time.

Investors will be able to buy 100g or 1kg bars – or even a fractional amount of a larger 400oz bar – and have it stored at the Royal Mint.

PG Note: If owning gold within a retirement plan sounds like a good idea, be aware that U.S. investors can hold physical gold in a self directed IRA. Further information can be found here.

Luzi-Ann Javier (Bloomberg) ECB ‘Monetary Amphetamine’ Propels Gold to Best Start Since ’79 Gold has rallied 19 percent this year, the best start since 1979, as low interest rates boost the appeal of the metal, which offers returns only through price gains. A sputtering dollar and economic-growth concerns have also spurred demand for bullion as a store of value. Bets that rates in the U.S. will stay lower for longer have given the yellow metal an added lift the past few days.

PG Note: From the accompanying video:

Bloomberg: Is [gold] turning into kind of a currency proxy for a lot of people?

Joseph Cusick: Yes. That’s exactly right. I think it is.

“Turning into”? I would point out that gold has been money for thousands of years, and while governments and central bankers have made every effort to replace it with fiat, it has never really gone away. In fact, at this very moment, reasserting itself in the global monetary system.

Szu Ping Chan (Telegraph) George Soros opts for gold haven saying Brexit would spell end of EU George Soros has piled more of his £30bn fund into gold amid growing concerns about the global economy.

The billionaire investor also warned that if Britain voted to leave the EU on June 23 it would mark the end of the European project.

PG Note: Soros is buying gold because he thinks inflation rates are likely to remain dangerously low. Once again proving that the yellow metal is a hedge for all the various ‘-ations.’ See Black Swans, Yellow Gold: How gold performs during periods of deflation, chronic disinflation, runaway stagflation and hyperinflation

Jan Harvey (Reuters) London appetite for gold bars, coins rises on Brexit nerves At Sharps Pixley, a gold showroom in London’s smart Mayfair district, demand for bullion bars and coins is rising, with men and women of all ages buying up the safe-haven metal in case of a British exit from the European Union.

PG Note: I have heard reports that margins on leveraged metals (and FX) are going up dramatically in advance of the referendum, amid expectations of heightened market volatility. Word has it that margins on metals will double and margins on GBP and EUR currency pairs will triple. Those buying actual physical gold in London and elsewhere are on the right path! Those holding leveraged paper are likely to have to put up more margin, or exit their positions.