KITCO NEWS/Jim Wyckoff

Gold prices solidly up as bulls again hit the accelerator

April 16, 2020

golden bull“Gold futures prices are trading solidly higher in early U.S. trading Thursday, following a corrective pullback in a strong uptrend that was seen Wednesday. Gold market bulls are presently seeing every downside price correction as a buying opportunity, which is typical in a market that is trending strongly higher. Silver prices are also posting gains on the day. June gold futures were last up $19.20 an ounce at $1,759.60. May Comex silver prices were last up $0.30 at $15.805 an ounce.

The key U.S. data point today is be the weekly jobless claims report, which came in at up 5.2 million–just above the expected million in new claims in the latest week. The Covid-19 pandemic that has mostly shuttered the U.S. economy has seen over 20 million American workers lose their jobs up to this point. Just recently, U.S. economic data covering the past few weeks is showing just how much damage has been inflicted on U.S. businesses. U.S. retail sales in March were down over 8 percent, it was reported Wednesday. Global stock markets were mixed in overnight trading. Asian stocks were mostly down and European stock indexes were mostly up. U.S. stock indexes are pointed toward modestly higher openings when the New York day session begins.”

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ASSOCIATED PRESS/TASSANEE VEJPONGSA

With price high, Thais with dwindling incomes sell off gold

April 16, 2020

“With gold prices rising to a seven-year high, many Thais have been flocking to gold shops to trade in their necklaces, bracelets, rings and gold bars for cash, eager to reap profits during an economic downturn.  In Thailand, where measures against the spread of COVID-19 have been less severe than in other countries, gold shops are de facto financial institutions, and generally remain open. Long lines formed all week outside major gold shops in Chinatown in the capital Bangkok.

The sell-off has some gold shop owners claiming they are facing a liquidity crunch, leaving them short on cash to continue purchasing. They are unable to carry out their normal practice of quickly reselling the gold abroad because of the greatly reduced number of flights to ship the gold and a shortage of buyers in other countries, restricted by lockdown orders … The price of gold has been rising since the coronavirus crisis began. That’s typical of times of uncertainty as people shift their wealth into what they believe is a hedge against uncertain financial markets … Many Asians hold gold as savings and investments. In Bangkok, gold shops are clustered in Chinatown, where long lines were stretched even further by social distancing.”

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CNBC/Thomas Franck

The US economy has erased nearly all the job gains since the Great Recession

April 16, 2020

job losses surge“It took only four weeks for the U.S. economy to wipe out nearly all the job gains in the last 11 years. The coronavirus and the forced closure of business throughout the country again fueled the number of Americans applying for state unemployment benefits, which last week totaled 5.245 million. Combined with the three prior jobless claims reports, the number of Americans who have filed for unemployment over the previous four weeks is 22.025 million. That number is just below the 22.442 million jobs added to nonfarm payrolls since November 2009 after the Great Recession. Only 417,000 more U.S. workers need to file for unemployment benefits to erase all nonfarm gains since 2009, a figure likely to be easily surpassed this week.

The rapid nature of the job losses will be unprecedented, wiping out more than a decade’s worth of job gains in five weeks. ‘While today’s jobless numbers are down on last week, they still mean that all the job gains since the financial crisis have been erased,’ wrote Seema Shah, chief strategist at Principal Global Investors. ‘What’s more, with many workers, including those in the gig economy, not included in these numbers, labor market pains may be even worse than these numbers suggest.’

‘Concerns for the second half of the year may be underestimated,’ she added. ‘Although governments are looking to lift lockdowns, the re-opening of economies will be only gradual, compounding financial strains for businesses and households, suppressing demand and suggesting a slower recovery.’”

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MARKET WATCH/Mark DeCambre

The next 45 days are the ‘most critical period in U.S. financial history,’

April 16, 2020

stocks“After recovering a chunk of the losses racked up during the worst of the coronavirus-induced selloff last month, the stock market finds itself at a crucial inflection point, writes Alan B. Lancz. ‘The next 45 days may just become the most critical period in U.S. financial history … While on average we may face a bear market every 10 years, this one is like no other,’ he said. The contrarian money manager, a disciple of Sir John Templeton, said that the timing and execution of the reawakening of the U.S. economy could be one of the biggest factors in determining how the market recovers as swaths of businesses have been shut down to help stem the spread of the deadly contagion that has infected more than 2 million and claimed 137,000 lives.

And even if the economic revival is flawless, the founder of the Ohio-based investment advisory firm said the result will be will be long and slow. ‘Even if we execute properly, the recovery will take time and a best-case scenario is a U-shaped recovery,’ he wrote. ‘The much talked about ‘V’ shaped recovery is no longer in the equation because of the unprecedented combination of negatives with this crisis,’ he said, referring to hope for a recovery that is sharp and fast.”

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THE NEW YORK TIMES/Neil Irwin

It’s the End of the World Economy as We Know It

April 16, 2020

big ship with men in hazmat suits“Experts suggest there will be ‘a rethink of how much any country wants to be reliant on any other country.’ When big convulsive economic events happen, the implications tend to take years to play out, and spiral in unpredictable directions. Who would have thought that a crisis that began with mortgage defaults in American suburbs in 2007 would lead to a fiscal crisis in Greece in 2010? Or that a market crash in New York in 1929 would contribute to the rise of fascists in Europe in the 1930s? The world economy is a complicated web of interconnections. We each have a series of direct economic relationships: the stores we buy from, the employer that pays our salary, the bank that makes us a home loan. But once you get two or three levels out, it’s impossible to know with any confidence how those connections work. And that, in turn, shows what is unnerving about the economic calamity accompanying the spread of the novel coronavirus.

In the years ahead, we will learn what happens when that web is torn apart, when millions of those links are destroyed. And it opens the possibility of a global economy completely different from the one that has prevailed in recent decades. ‘As much as I hope we are able to get ordinary economic activity back up, that’s just the beginning of our problem,’ said Adam Tooze, a historian at Columbia University and author of Crashed, a study of the global ripple effects of the 2008 financial crisis. ‘This is a period of radical uncertainty, an order of magnitude greater than anything we’re used to.’ It would be foolish, amid such uncertainty, to make overly confident predictions about how the world economic order will look in five years, or even in five months.”

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BLOOMBERG/Bloomberg News

Wuhan’s 11 Million People Are Free to Dine Out. But They Aren’t

April 16, 2020

man with head on desk“After more than two months of being confined to their homes, most of Wuhan’s 11 million residents are now free to venture out, with infections dwindling. But for restaurant owner Xiong Fei, the end of the lockdown in the Chinese city where the coronavirus pandemic began hasn’t brought relief, just a new set of challenges. While factories around Wuhan are working to get back up to speed, the recovery of consumer-focused businesses such as Xiong’s won’t be so straightforward. Although people are cautiously taking to the streets again, they remain subject to curbs on their movements aimed at keeping the virus at bay.

Residents are encouraged to stay home and still must have their temperatures checked before entering any building. It’s far from business as usual, stoking fears among small businesspeople that the lockdown has changed customers’ behavior for good. ‘People in the past dined out with their colleagues in their lunch hour, now they’re all getting lunchboxes,’ he says, at an empty Sichuan restaurant he operates. ‘They’re more likely to cook at home than go out.’ Of the 10 restaurants of Xiong’s company none have reopened for dining in. And while three have resumed making food deliveries, Xiong has already decided to shutter three other locations for good.”

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