KITCO NEWS/Neils Christensen

Gold price jumps after U.S. weekly jobless claims rise to 6.6 million

April 2, 2020

“The gold market continues to make further gains as the U.S. labor market continues to deteriorate as weekly jobless claims see another 3 million-claim rise. First-time U.S. jobless claims skyrocketed during the week to Saturday to a record seasonally adjusted 6.64 million, up 3,341,000 from the previous week’s revised level of 3.307 million. ‘This marks the highest level of seasonally adjusted initial claims in the history of the seasonally adjusted series,’ the report said.

The new record comes after last week’s historic report, as claims rose above 3 million. Economists were expecting to see jobless claims rise to 3.5 million. Gold prices are pushing higher following the record rise. June gold futures last traded at $1,626 an ounce, up more than 2% on the day. Andrew Grantham, senior economist at CIBC markets might not be completely prepared for the latest employment data. ‘While markets would have been prepared for a bad print in today’s claims figures, the sticker shock of just how bad it was could still see some modest market reaction,’ he said. ‘These data certainly suggest that the unemployment rate will peak higher than we previously assumed in the near-term, with a rise above 10% now likely in the coming months.’ ‘The weekly claims report further confirms U.S. economy has been severely crippled by the coronavirus outbreak,’ said Jim Wyckoff, senior analyst at … The U.S. has become the new epicenter for the global pandemic.”

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BLOOMBERG/Elena Mazneva

Gold Dealers Report Big Shortages of Small Bars and Coins

April 1, 2020

hand holding gold bar“When people are worried about the future, they turn to gold to protect their savings. That’s rarely been more true than today. Surging demand and disruptions from the coronavirus pandemic have created a shortage of the small gold bars most popular with consumers. Those who do manage to get their hands on metal have to pay up –- well above the per-ounce prices being quoted on financial markets in London and New York.

Some dealers are desperately contacting clients to see if anyone is willing to sell their gold bars and coins, and offering a rare premium over spot prices. Others have given up trying to trade altogether.

‘People want to buy, not to sell gold,’ said Mark O’Byrne, the founder of GoldCore, a dealer based in Dublin. ‘We have a buyers’ waiting list and we emailed our clients seeing who wished to sell their gold. At this time there is roughly only one or two sellers for every 99 buyers.”

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THE WALL STREET JOURNAL/Phred Dvorak and Amira El-Fekki

Global Cases Approach One Million, as Economic Toll Mounts

April 2, 2020

people wating and filling out forms“The economic toll of the coronavirus pandemic continued to mount in the U.S. as a record 6.6 million workers applied for unemployment benefits last week, while the number of reported cases of the new virus world-wide approaches one million.  With large segments of the economy shut down, jobless claims, a proxy for layoffs, far exceeded estimates.  The bleak report came as some of the last remaining open borders start to close.

President Trump said Wednesday that he was considering grounding flights to and from U.S. cities that are virus hot spots. As of Thursday, the U.S. had 216,722 reported cases of the coronavirus, which has spread with ferocious speed across the world, driven initially by global travel. The U.S. number is just under a quarter of the global total of 951,901 cases, and nearly twice that of the next-highest country, Italy, according to data compiled by Johns Hopkins University—although the toll of death and illness might be underreported there and in other countries. About 75,000 new coronavirus cases were recorded Wednesday, the same as the day before, according to Johns Hopkins data, setting the stage for the global count to break one million by Friday. The world-wide count of deaths from the Covid-19 respiratory disease caused by the virus exceeded 48,000, according to Johns Hopkins. Spain on Wednesday reported 950 deaths, the country’s biggest one-day toll.”

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MARKET WATCH/Barbara Kollmeyer

Bear-market survival tips from an analyst who spent years warning of a bubble

April 2, 2020

tweets with survival tips“A rally for oil prices is helping spark stock gains on Thursday, as investors struggle through what they hope is the eye of the coronavirus storm right now. There is the grim health front, then the economy. Weekly jobless claims showed 4 million people filed for unemployment benefits, beating last week’s record 3.3 million jump as the virus continues to hack away at the global economy. Our call of the day comes from Jesse Colombo, an independent economic analyst who predicted the 2008 crash, and has been warning of an ‘everything bubble’ for years as underlying issues from that crisis were never fixed.

Colombo says the virus is the pin that just happened to prick the bubble, and as a ‘prepper’ he has tucked away a year’s worth of food as he foresees social unrest and economic strife ahead. As for markets, he tells MarketWatch the selloff for equities and many other assets will continue until speculative excesses get corrected first. He’s not buying stocks bonds, or any paper assets ‘inflated’ by central banks, or residential or commercial real estate. ‘What I believe in this point is hard assets and alternative assets…physical gold, physical silver, some bitcoin and then some survival-type investments…homestead out the country, ranch, farmland,’ he says.  … He warned that household wealth had been dangerously outpacing the economic expansion.”

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CNBC/Natasha Turak

Whiting Petroleum is the ‘first domino’ to fall in US shale wipeout, strategist says

April 2, 2020

crane at night“Wednesday’s Chapter 11 bankruptcy filing for Colorado-based Whiting Petroleum is a grim omen of things to come, experts say, as oil prices face historic collapse amid the coronavirus crisis and the Saudi-Russia oil price war.   The company is the first U.S. shale producer to go under since the start of the year, when oil prices began to fall. ‘I don’t want to be a doomsayer, but I think Whiting is just simply the first domino that’s going to fall,’ John Driscoll, chief strategist at JTD Energy Services, told CNBC’s Capital Connection on Thursday. ‘It’s a fairly substantial company, but the smaller producers, if they don’t have the hedging in place, it’s going to be a tough route — Chapter 11 might be the only way to go.’

The shale industry, responsible for America’s vault to become the world’s largest oil producer in 2018, already faced problems generating cash and holding investor support. In 2019, 42 oil companies with more than $25 billion in cumulative debt filed for U.S. bankruptcy protection, according to restructuring law firm Haynes & Boone.  The U.S. shale patch also bears some of the highest production costs in the world, requiring a breakeven price of between $50 and $55 per barrel.  Now, with Saudi Arabia and Russia’s planned production increases to battle for market share exacerbating the price crash brought on by the coronavirus pandemic, the sector faces what may well be a bloodbath: U.S. benchmark West Texas Intermediate is now trading at around $22 per barrel, down more than 60% year-to-date, and forecasters expect it to fall further. ‘U.S. shale is now economically unviable,’ Chris Midgley, global head of analytics at S&P Global Platts, told CNBC. ‘Some areas will come back as prices return. First hit will be the more capital-intensive crudes.’”

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Brace for the ‘deepest recession on record,’ says BofA analysts

April 2, 2020

downward moving graph“There are no parallels for the pandemic fueled slowdown that the U.S. economy is currently contending with, and that is forcing economists like those of Bank of America Global Research to forecast a decidedly grimmer outlook for the American economy than they offered just two weeks ago.  The BofA researchers on Thursday said the coming recession ‘appears to be deeper and more prolonged than we were led to believe just 14 days ago when we last updated our forecasts, not just in the US but globally as well.’

The April 2 report comes as the number of Americans who applied for unemployment benefits last week soared by a record 6.6 million, bringing the increase in new jobless claims in the last two weeks to 10 million. The scale of the shutdowns intended to help mitigate the spread of the deadly pathogen, is having a substantial negative impact on the labor market and the broader economy. To that end, BofA sees between 16 and 20 million job losses, which could send the unemployment rate, which stands at 3.5% as of February’s report, surging within a few months to 15.6%, which would far outstrip the unemployment rate during the 2007-09 recession …The BofA team forecast three consecutive quarters of contraction in gross domestic product.”

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