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8.20.19 - "Gold's Going Up, Up, Up"

Gold last traded at $1,514 an ounce. Silver at $17.13 an ounce.

NEWS SUMMARY: Precious metals prices rose Tuesday on bargain-hunting and a weaker dollar. U.S. stocks slipped as investors digested the sustainability of a rebound from last week's sharp sell-off.

Billionaire Hedge Fund Owner Mark Mobius Says Gold Is Going Up, Up, Up -Kitco
"Gold’s drop from last week's six-year high is attracting some bargain hunters, but one hedge fund manager is advising investors to ignore the price and buy the precious metal at any level. In an interview with Bloomberg TV Tuesday, veteran investor Mark Mobius, who created Mobius Capital Partners LLP last year, reaffirmed his bullish outlook for the yellow metal. 'Gold's long-term prospect is up, up and up, and the reason why I say that is money supply is up, up and up,' he said. 'I think you have to be buying at any level, frankly.' Mobius also reiterated his recommendation that investors should hold about 10% of physical gold in their portfolios....In an environment of global monetary easing, Mobius said that there will be a strong demand for hard assets, which he expects will leave cryptocurrencies out in the cold."

bull Trump Calls for a Big Fed Rate Cut, Again Criticizes Central Bank Chairman -Wall Street Journal
"President Trump on Monday called for the Federal Reserve to sharply cut interest rates and again criticized the central bank's chairman for a 'horrendous lack of vision,' while reiterating his belief that the U.S. economy is strong. The president said in a pair of tweets Monday morning that the Fed should cut its benchmark interest rate by at least a full percentage point and resume its crisis-era program of buying bonds to lower long-term borrowing costs. Such moves would typically be considered only when the economy faces serious peril, which Fed officials don't believe to be the case....White House aides said Monday they are examining other proposals to bolster the economy. Among the ideas being discussed is a cut in the payroll tax....If the Fed cut its benchmark rate by at least a percentage point and perhaps launched a new bond-buying program, the president tweeted, 'our Economy would be even better, and the World Economy would be greatly and quickly enhanced.'....Interest-rate futures are pricing in a 95% chance that the Fed will reduce rates by a quarter percentage point at its Sept. 17-18 meeting."

Think of this economy as an elderly friend: Old age means coming death -The Hill
"I'm teaching macroeconomics to MBA students this summer and thinking about asking this question on the final: 'We set a record in July. The U.S. economy has now gone longer without experiencing a recession - 121 months - than in any other time in modern history. This means: a) We've learned our lesson and have solved the problem of business cycles. There will never be another recession. b) We're overdue for another recession. People should expect one soon.'...There are lots of wrong answers, and both of these options are just wrong....Sooner or later, there is another recession. Nothing has happened in the past 10 years to change that....No one knows when it will happen. But the accumulation of debt, along with lots of bad stuff that’s happened - higher tariffs and all the rest - have left the economy more vulnerable to failure than it was a few years ago. You should think about this economy the way we are thinking about an elderly friend. We're all looking forward to the big party on his 100th birthday. But we're keeping our dark suits cleaned and pressed."

The Bond Market's All-In On Its Recession Forecast -Capital Spectator
"Mounting recession worries of late have taken a bite out of stocks, but heightened fears that an economic contraction may be near has lit a fire of buying for US bonds. Long bonds in particular have soared recently....The source of the bond market's striking gains: elevated recession fears. Right or wrong, the crowd has piled into Treasuries and investment-grade credits on the assumption that the US economy is caught in downward spiral....'The bond market is screaming recession,' says Andrew Brenner, head of international fixed income National Alliance. 'Just take a look at what the US market is doing.' Suffice to say, the fixed-income crew is all-in on expecting that the US economy will begin contracting soon, courtesy of the implied forecast via inverted yield curves."

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8.19.19- Silver Could Move Shockingly Higher

Gold last traded at $1,507 an ounce. Silver at $16.91 an ounce.

NEWS SUMMARY: Precious metal prices drifted lower on short-term profit-taking. U.S stocks rose as Treasury yields rebounded and the U.S. agreed to extend a temporary reprieve to Chinese telecom giant Huawei.

Silver Will Soon Move Suddenly & Shockingly Higher - Here's Why -Munknee
"I am convinced that silver will soon explode in price in a manner of unprecedented proportions, both in terms of previous silver rallies and relative to all other commodities. By unprecedented, I mean that the price of silver will move suddenly and shockingly higher in a manner never witnessed previously, including the great price run ups in 1980 and 2011. The highest prior price level of $50 will quickly be exceeded....It will be a price move like no other. It will be the greatest short covering rally in history. For more than 30 years, COMEX silver futures have had the largest short position of any commodity in terms of real world production and inventories....No longer is the largest COMEX silver short subject to extreme financial damage should silver prices explode. Instead, JPMorgan has pulled off the accumulation of the largest silver hoard in world history on declining prices. The bank has never been better positioned for a silver price explosion....When silver prices rise sufficiently, the remaining shorts will panic and begin to try to cover their short positions. This buying will send silver prices skyward and then touch off all sorts of other buying, including investment buying and then industrial user buying, perhaps the most potent buying of all....On a rally where silver prices jump to $20 or $30, it would not be unreasonable to imagine $2 to $3 billion of investment demand coming from investors excited by rising prices."

financial chart Markets Are In A Panic, And This Time There Will Be No Happy Ending -Gave/Zero Hedge
"I always try to be a rules-driven investor. And when the US stock market is down -3% in a day, taking it to -6% from its peak in three weeks, when 10-year US treasury yields have halved in nine months to just 1.55%, and when gold is up 20% in three months, it is a good time to review those rules to see what they can tell me. The answer is: quite a lot....Since May 2019, when the treasury total return/gold ratio fell below its five-year moving average, I have been recommending that investors switch from overvalued bonds to gold as the preferred hedge for their equity exposure. Usually, these two assets - long-dated US treasuries and gold - tend to be negatively correlated. When treasuries are going up, gold tends to go down, and vice versa. But in the last few months, both have powered ahead at the same time. This left me scratching my head, and as usual when puzzled, I reached for the history books to see when in the past both treasuries and gold have looked overbought at the same time...The conclusion is striking: we are in a panic....So what should investors do? My immediate advice would be to do very little right now. Acting in the middle of a panic is seldom a good idea....Concentrate equity holdings in high quality stocks relatively immune from the vagaries of governments, and hedge them with gold."

How a Recession Could Hit This Year -New York Times
"The chances that the U.S. will fall into recession have increased sharply in the last two weeks. Here's how it could happen, according to Neil Irwin of The Upshot: 'The trade wars and a breakdown in international economic diplomacy cause businesses around the world to pull back. This leads to further tumbles in markets and job losses, prompting American consumers to become more cautious. High corporate debt loads create a wave of bankruptcies. And central bank policy proves impotent, combined with fiscal policy that is nonexistent.' And what would it look like on the ground? Besides the hardships for businesses and individuals, Ross Douthat of the NYT makes a few predictions in his latest column: 'President Trump could lose re-election, as he would be unlikely to muster enough votes if his boom evaporates. Venture-capital funding could start to dry up, which might make business like Uber and WeWork unsustainable. The immigration crisis could diminish, as the U.S. becomes less attractive to those in other countries, while domestic social problems like suicide rates and drug overdoses could get worse.'"

Trump and the Greenland New Deal -Ponte/WND
"Days ago the Wall Street Journal reported that, 'with varying degrees of seriousness,' President Donald Trump has 'repeatedly expressed interest' in buying from Denmark the world's largest island, Greenland. Likewise, the 'future of the Democratic Party,' socialist Congresswoman Alexandria Ocasio-Cortez, recently proposed a 'Green New Deal' that would save the world from global warming by outlawing the internal combustion engine; prohibiting airline travel; ending cow flatulence, a major source of greenhouse gases, by banishing the eating of beef; and taxing nearly $100 trillion out of businesses and the wealthy. The Green New Deal was a pretext to use climate fears to transform our economy from capitalist to socialist....Today 80 percent of Greenland's 836,330 square miles is covered with ice, which at its center is almost two miles thick. Only 56,000 settlers remain, and 90 percent are not primarily Vikings but descendants of the native Inuit peoples. Greenland has been owned since 1814 by Denmark, which provides its people an annual subsidy of $591 million, about $10,550 per person. This subsidy sustains a socialist society in which nobody owns private property, with all land controlled by five 'kommunes.'....Alexandria Ocasio-Cortez should love socialist Greenland, far better than the proudly capitalistic, free-enterprise, high-tax welfare state of Denmark itself. But as leftist British newspaper the Guardian admits, Greenland is riven by high unemployment, alcoholism, depression and suicide. So why does President Trump want a socialist island whose head of local government says that Greenland is 'open for business but not for sale'?....Today we recognize that Greenland is rich in resources: zinc, lead, copper, iron ore, coal, diamonds and oil. Canadians are already mining gold there, and Chinese are mining rare-earth elements."

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8.16.19 - What's the Deal With Inverted Yield Curve?

Gold last traded at $1,523 an ounce. Silver at $17.12 an ounce.

NEWS SUMMARY: Precious metal prices eased back Friday on short-term profit-taking. U.S. stocks rose as a rebound in bond yields eased some recession fears. The gains closed out a wildly volatile week on Wall Street.

Why gold's 'strong undercurrent' has some analysts eyeing $2,000 an ounce -Yahoo Finance
"Gold has benefited from a spate of supportive factors over the past few months, and some bulls now see the precious metal making a climb to a record high of $2,000 an ounce....'There has been a strong undercurrent of demand for gold,' said Brien Lundin, editor of Gold Newsletter. 'Even as short term factors like the China trade dispute may come and go, longer-term investors are confident that the issues of monetary debasement and other geopolitical factors will continue to impact the market.'....Concerns over a possible recession, sparked by the recent inversion of the yield curve for the 2-year and 10-year Treasury yields, some weak global economic data, and the U.S. Federal Reserve's first interest-rate cut since 2008, have dressed up gold's appeal as a haven. But Stan Bharti, chief executive officer of private merchant bank Forbes & Manhattan, doesn't believe that gold is moving up because of short-term market fears. It's a move that's been a long time coming...He expects gold prices to top $2,000 by the end of next year...More near term, Bharti sees gold jumping from $1,480 to $1,600 in the next quarter."

What's the Deal With That Inverted Yield Curve? -Irwin/New York Times
"The financial world has been atwitter about the inversion of the yield curve. It is a phenomenon in the bond market in which longer-term interest rates fall below shorter-term interest rates, and has historically been a warning sign that a recession could be on the way....Bonds that mature at different times are always trading on global markets, and with some fairly simple math you can figure out what the price of different bonds implies about how interest rates are expected to change over the coming years....If you buy, say, a 90-day Treasury bill, you are likely to receive an interest rate that is closely tied to whatever the Federal Reserve has currently set as its main target for interest rates in the banking system and any changes the Fed might make in the near future. It's like betting on next week's football game: We know a lot about what opponent your team is facing, how well they've been playing, whether there are injuries likely to affect the outcome."

inverted yield curve

"But if you buy a 10-year Treasury note, you're making a bet on the more distant future. The economy will probably change a lot over the next decade. You can't predict exactly what will happen, but you are betting on the general direction of things: Do you expect the economy to heat up, creating inflation pressures and causing the Fed to raise rates? Or do you expect it cool down? So purchase of a longer-term Treasury bond is like making one of those long-term bets on how a team will perform for many years to come....Longer-term rates below shorter term rates are a clear signal from bond investors that they think the United States economy is on the downswing - that its future looks worse than its present."

Note: As the above chart illustrates, roughly every ten years an inverted yield curve often precedes a economic recession. As we discuss in our Crisis Timeline report, this once-a-decade correction/recession has been consistent over the last 100 years. This explains why every day more and more experts are warning investors to prepare for a major market correction - or even a cyclical market crash. Owning gold is part of that wise preparation.

The U.S. Treasury is about to flood the market with debt to fund a $1 trillion deficit. Here's why that is a worry - MarketWatch
"An anticipated surge of U.S. borrowing in the global debt markets in the second half of this year is starting to create concern as Treasury is expected to ramp up its issuance of bills, notes and bonds to fund a soaring $1 trillion budget deficit....Last month the U.S. Treasury laid out its plans to borrow $814 billion between July and December, after the Trump administration and Congress agreed to a two-year postponement of the U.S. debt ceiling, ensuring no government shutdown or a federal default. Not only does the Treasury needs to borrow to cover the fiscal deficit created by Trump's 2017 tax cuts and the inability of Congress to agree on spending cuts, but Treasury needs to rebuild its cash balance which was run down to pay the governments bills when the debt ceiling was hit in May. The coming deluge of Treasury issuance has stoked worries on Wall Street about whether there is enough liquidity in the system in the short term to meet the supply without pushing up short-term borrowing costs and inverting the yield curve even further. U.S. dollar liquidity is deteriorating and 'is reaching a point where it may require drastic action if measures aren't taken to address it soon,' warned Gaurav Saroliya, director of macro strategy at Oxford Economics, in a note on Wednesday....'We are concerned that the U.S. banking system is nearing reserve scarcity,' Bank of America Merrill Lynch analyst Mark Cabana wrote in a note to clients. Ultimately, he said opening the Treasury 'floodgates' would likely 'force the Fed to start expanding its balance sheet by year-end.'"

Time to review your portfolio -Moneyweek
"More global fund managers now expect a recession than at any time since 2011 (which you'll remember, was a tough year and a time when every other headline was fretting about the solvency of Greece). More global fund managers are bullish on bonds than at any time since 2008 - only 9% of them expect to see higher bond yields in the next 12 months which, given that bond yields are at record low levels in most parts of the world, is quite something. And an overall majority of fund managers expect value stocks to underperform growth over the next 12 months, the most bearish managers have been on value's relative prospects since the financial crisis. All of this data comes from the latest Bank of America Merrill Lynch monthly survey of global asset managers, and more than anything else, it shows one thing - investors are currently positioned for extremes. A key part of the US yield curve has finally inverted, a pretty reliable recession signal....Perhaps the best bet at extremes is to take a chance to review your portfolio (if you haven’t done so in a while). Are there any sectors where you've made a lot of money and feel you are now over-exposed? Do you have enough gold (for insurance) and cash (for quickly jumping on opportunities)? And most importantly - do you have a clear financial plan at all? Because if you don't, the midst of a market panic is not the time to be caught without one."

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8.15.19 - Why Gold Prices Are About To Skyrocket

Gold last traded at $1,531 an ounce. Silver at $17.21 an ounce.

NEWS SUMMARY: Precious metal prices rose Thursday on safe-haven buying despite a firmer dollar. U.S. stocks attempted a rebound from the worst sell-off of the year, as retail giant Walmart rose and positive economic data lifted downbeat investor sentiment.

Why Gold Prices Are About To Skyrocket Even Higher -Yahoo Finance
"The gold bears have finally caved under the deafening barrage of fiscal and geopolitical catalysts, from Fed hints to intensely brewing conflict with Iran. But there is one key trend that stands to push gold up beyond $1,700 - regardless of the day's news....In this perfect storm for gold prices, EuroSun Mining CEO Scott Moore says we're overlooking a significant trend that will outlast the current geopolitical meltdown and even the Fed's policies: It's a global push for de-dollarization. 'Government's around the world are becoming increasingly wary of the dollar's hegemony in international trade,' says Moore. 'And they're doing their best to distance themselves from it by using their gold reserves to buy more gold instead.' This process is already underway mainly in nations with strong anti-U.S. sentiment including Russia, China, Iran, Venezuela, Syria, Turkey, Qatar, India, Pakistan, Libya, Egypt and the Philippines among others....According to the World Gold Council, central banks purchased nearly 70 percent more gold during the first quarter of the year than they did during the previous year's corresponding period. Billionaire Paul Tudor Jones says that gold 'has everything going for it', and sees it pushing to $1,700 an ounce 'rather quickly', as he noted in an interview with Bloomberg."

yields Ex-Fed boss Greenspan says ‘there is no barrier’ to Treasury yields falling below zero -Marketwatch
"There is some $15 trillion in government debt that now yields less than zero, and former Federal Reserve Chairman Alan Greenspan believes there's no reason why U.S. government bond yields couldn't join much of the developed world in the subzero world. Greenspan, during a phone interview with Bloomberg News on Tuesday, said 'zero' has no real meaning for the U.S. bond market and that a slide below that psychological level, already traversed by many others countries, wouldn't be inconceivable for U.S. paper. The 93-year-old economist's comments come as more Wall Street participants contemplate the very real possibility of negative Treasury rates....Current estimates hold that some $15 trillion in debt bears a negative yield, which means that investors get back less than their original investments for the privilege and perceived safety of owning government-backed debt. The negative-yield dynamic in the market has proliferated after more than a decade of monetary-policy unorthodoxy intended to juice stubbornly low inflation and anemic growth in Europe and parts of Asia....As of late Tuesday, 10-year U.S. benchmark debt was yielding 1.678%, not far from its lowest levels since 2016, with Wall Street anticipating nearly a 100% chance of a 25-basis-point cut in September."

Craig Smith Comment: Zero interest rates means that a currency becomes worthless as an "investment", except to pay bills. Owning gold may be the only way to preserve wealth, maintain buying power and offset currency depreciation. Zero, or negative rates, essentially guarantee a loss - if you invest $100,000, you will get back only $99,000 at a 1% negative rate. Invest the same $100,000 in gold and it holds its value in all currencies. If the U.S. sinks underwater into zero interest rates, investors could find themselves in deep trouble. Now is the time to convert some of your zero-bound dollars into physical gold.

U.S. Mortgage Debt Hits Record, Eclipsing 2008 Peak -Wall Street Journal
"U.S. mortgage debt reached a record in the second quarter, exceeding its 2008 peak as the financial crisis unfolded. Mortgage balances rose by $162 billion in the second quarter to $9.406 trillion, surpassing the high of $9.294 trillion in the third quarter of 2008, the Federal Reserve Bank of New York said Tuesday. Mortgages are the largest component of household debt....Total household debt has been on the rise since mid-2013. It rose by 1.4% from the first quarter to $13.86 trillion, the 20th consecutive quarter of increase....Alongside higher home prices, a factor behind rising mortgage debt balances in the second quarter could be homeowners tapping into home equity for cash when they refinance. Refinancing accounted for about half of new mortgages in the second quarter, according to Guy Cecala, chief executive at Inside Mortgage Finance, an industry research group. That represents a 'mini refinancing boom.'"

Hong Kong Activist Leader Calls For A Run On Chinese Banks Tomorrow -Zero Hedge
"Prominent Hong Kong pro-independence political activist Chen Haotian has called for a run on Chinese banks, asking that everyone withdraw their money on the same day. Haotian is a founding member and the convenor of the Hong Kong National Party. Arguing that large scale protests have only led to injuries and escalating police brutality, Haotian believes another method could be used to severely undermine China's influence - a good old fashioned run on the bank. He suggested that another method could be used, namely, impacting the financial system,' reports China Press. 'He called on Friday (August 16) that Hong Kong citizens take out all bank deposits. The primary goal is Chinese banks, but he said other banks should also be targeted, otherwise Chinese banks can borrow money from other banks to solve problems.' Hong Kong has been rocked by weeks of violent protests by pro-independence campaigners. Earlier this week, riot police stormed Hong Kong International Airport to clear them out...While China is unlikely to invade using PLA troops, experts have suggested that soldiers could be disguised as Hong Kong police."

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