KITCO NEWS/Neils Christensn

Gold price spikes higher after Fed announces $2.3 trillion in loan program

April 9, 2020

“The U.S. Federal Reserve continues to throw more money in to the U.S. financial system to support the sputtering economy.  Thursday, the U.S. central bank said that it would provide up to $2.3 trillion dollars in loans for all businesses impacted by the growing COVID-19 pandemic. ‘Our country’s highest priority must be to address this public health crisis, providing care for the ill and limiting the further spread of the virus,’ said Federal Reserve Board Chair Jerome H. Powell. ‘The Fed’s role is to provide as much relief and stability as we can during this period of constrained economic activity, and our actions today will help ensure that the eventual recovery is as vigorous as possible,’ he added.

Gold prices have shot higher in reaction to the latest central bank announcement. Commodity analysts have said previously that they can’t be anything but bullish on gold as governments and central banks around the world flood financial markets with liquidity. Jim Wyckoff, senior analyst at Kitco.com said investors should forget about bazooka analogies to previous stimulus measures. He said this is another atomic bomb of liquidity. ‘The $2.3 trillion stimulus means the Fed is all-in and then some on getting the U.S. economy back in shape as soon as possible,’ he said.  Wyckoff added that he expects the latest announcement to continue to drive gold prices higher.”

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MARKET WATCH/Myra P. Saefong and Mark DeCambre      

Gold rallies to highest since 2012 as dollar declines on Fed’s new lending plans

April 9, 2020

gold coins and dollar bills“Gold futures rallied to reach their highest levels since late 2012 on Thursday, getting a boost as the U.S. dollar declined on the back of the Fed’s new lending plans, which aim to support the hit to the economy from the coronavirus pandemic. The Federal Reserve on Thursday set up new loan programs and bolstered existing ones in an effort to provide $2.3 trillion to boost the economy. The ‘take away for gold is extreme bullish,’ said Jeff Wright, executive vice president of GoldMining Inc. ‘This will lead over long term to a much weaker U.S. dollar.’

The ‘goal is to reopen economy quickly, but the price will be a long-term weak U.S. dollar, which is good for gold as well,’ Wright said. June gold on Comex was up $45.90, or .7%, at $1,730.20 an ounce in Thursday dealings after trading as high as $1,735.50. It marked the highest intraday level since November 2012. For the week, the precious commodity is on track to gain more than 5%.”

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FORBES/Bob Haber

The United States Desperately Needs Inflation and You Need Gold

April 7, 2020

gold bars“The United States fiscal and monetary worlds have entered a paradigm shift. Hard money, the Gold standard, fiscal austerity, the Federal Reserve as liquidity provider at a penalty rate with strong collateral: all of these are now squarely in the rear-view mirror. We have further moved on from ZIRP (Zero Interest rate policy), past Quantitative Easing (QE – AKA money printing), and have entered the world of Modern Monetary Theory (MMT). What is MMT? The federal government, through the Fed, prints as much money as politicians need for whatever purpose, and when you get inflation you tax the rich to slow it down.”

“If the Fed wants more inflation, I want more gold. Our portfolios have had 5-10% for a while and we’re moving up to 15% – 20% is not out of the realm of possibilities. I want it before inflation arrives. Wayne Gretsky said ‘skate to where the puck is going to be, not where it has been’. Gold will be where the money supply (m2) and inflation will take it. CPI is still a distant dream for the Fed, but the M2 money stock is exploding and gold will follow that up. M2 money stock can be followed weekly by visiting the St Louis Fed website. Back in the ‘80’s, macro nerds would wait for the numbers to come out before making allocation decisions. We were fighting inflation and winning. Maybe the releases will get some attention again … Investors are catching on. According to Bloomberg, there are now 91.2M ounces of gold in ETFs worldwide. At gold’s 2012 peak, that number was 82.5M ounces. The price peak that year was in the $1900s. Commercials, (miners and jewelry companies), are net long gold futures which is rare after a rally. Most importantly the CEO of Canadian gold miner Novagold recently said; ‘What we’ve seen in the gold industry is that gold production has effectively peaked’.”

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BLOOMBERG/Reade Pickert

Third Week of Big U.S. Jobless Claims Sees 6.61 Million Filings

April 9, 2020

unemployment rate“Americans applied for unemployment benefits in massive numbers for a 3rd straight week, bringing the total to about 16.8 million during the pandemic’s economic shutdown. A total of 6.61 million people filed jobless claims in the week ended April 4, according to Labor Department, as more states ordered residents to stay home and overwhelmed unemployment offices continue to work through applications. The figure compared with a median forecast of 5.5 million, and the prior week’s upwardly revised 6.87 million.

As wide swaths of the economy shut down, workers have been laid off with unprecedented speed. Filings will likely stay elevated in the coming weeks, after more states issued stay-at-home orders and Americans get through to file claims on jammed websites and phone lines. The 3-week tally implies an unemployment rate approaching 15%, well above the 10% peak reached in the last recession. The rate was 4.4% in March data that covered the early part of the month, up from a half-century low of 3.5% in February. California reported the most initial claims last week, at an unadjusted 925,000.”

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CNBC/Catherine Clifford

Bill Gates: This is how long it may take before Americans ‘can be completely safe’ from COVID-19

April 8, 2020

Bill Gates“It might not be until fall 2021 that Americans ‘can be completely safe’ from COVID-19, Bill Gates said in a Tuesday interview with Judy Woodruff on PBS Newshour. That’s because it will take more than a year before a vaccine can be developed and deployed, according to researchers working to develop a treatment for COVID-19. ‘The vaccine is critical, because, until you have that, things aren’t really going to be normal,’ the billionaire philanthropist told Woodruff. ‘They can open up to some degree, but the risk of a rebound will be there until we have very broad vaccination.’

Social distancing is helping to lower the number of COVID-19 cases. The goal, Gates explained, is to get that number down to a point where ‘contract tracing’ (a process in which those within close contact with an infected person are closely monitored) can be done, in order to maintain necessary quarantines. To understand what life in the U.S. will look like six to 12 months from now, Gates suggested China as a good model. ‘They are sending people back to work, but they’re wearing masks. They’re checking temperatures. They’re not doing large sporting events. And so, they have been able to avoid a large rebound,’ he said … Beyond that, ‘returning to some semblance of normal,’ as Woodruff put it, can be predicted by watching the behaviors of other countries. Sweden, for example, isn’t ‘locking down quite as much,’ so their experience will be informative, Gates explained. Gates has been partnering with The Institute for Health Metrics and Evaluation, a global health research center at the University of Washington.”

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MARKET WATCH/Jeffry Bartash

Consumer sentiment sinks to 9-year low and likely to go even lower as coronavirus slams economy

April 9, 2020

consumer sentiment graph“Millions of coronavirus-related job losses and the shutdown of large parts of the U.S. economy have battered consumers and dragged confidence down to a nine-year low, a new survey shows. The preliminary reading of the consumer sentiment survey sank to 71 in early April from 89.1, marking the biggest-ever one-month decline and putting the index at lowest level since 2011, the University of Michigan. Almost overnight consumers have turned from being optimistic to deeply pessimistic. The spread of COVID-19 has not only destroyed lives, it’s delivered the deepest blow to the economy since the Great Depression. If the crisis drags on for months, the sentiment survey might very well fall below its previous record low of 55.3 in 2008 during the middle of the last recession, one of the worst in modern U.S. history.

Just two month ago consumer sentiment stood close to a 15-year high, but the coronavirus and attempts to curtail its spread has upended the U.S. and world economies … The U.S. economy has already begun a sharp contraction and it’s entering the first recession in 11 years … Barring a sudden cure for the virus, it could take the U.S. economy a long time to return to pre-crisis levels.”

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