KITCO NEWS/Jim Wyckoff

Gold, silver prices a bit weaker amid low risk aversion

February 12, 2020

Gold and silver prices are modestly down in early U.S. futures trading Wednesday. So far this week the global marketplace is upbeat, as traders and investors at present are reckoning the worst of the coronavirus outbreak has passed. February gold futures were last down $1.80 an ounce at 1,569.20. March Comex silver prices were last down $0.062 at $17.53 an ounce.  Asian and European shares were mostly higher overnight. U.S. stock indexes are also pointed toward higher openings.

Trader and investor risk appetite is keener around the globe at midweek. While the coronavirus outbreak continues to spread, the rate of growth of new cases is slowing. There are now over 1,000 reported dead in China and over 44,000 afflicted. Still, there are reports in Asian countries of supply chains and local commerce being significantly interrupted by the outbreak. OPEC has just lowered its global demand outlook for crude oil, based on the outbreak. In other overnight news, Euro zone industrial output for December was down 2.1% from November and down 4.1%, year-on-year. Those numbers were worse than expected. The key outside markets today see crude oil prices higher and trading around $50.75 a barrel … Technically, the gold bulls have the overall near-term technical advantage and have stabilized the market.”

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Coronavirus outbreak infections ease in China but death toll keeps climbing

February 12, 2020

Coronavirus outbreak infections ease in China but death toll keeps climbing“Global health officials have warned the coronavirus outbreak that has killed more than 1,100 people and sickened about 45,500 could get worse before it gets better. As of Tuesday, there were only two clusters of the virus outside of China; a significant one on a cruise ship docked in Japan and a handful of cases in southern England. At least 174 people from the cruise have been diagnosed with the disease, and hundreds more were being tested. But while those foreign disease clusters grew this week, China said the number of new cases confirmed inside the country had declined for two days in a row.

While the declining infection rate in China could indicate that draconian control measures implemented by the country are helping, the chief scientist for the World Health Organization has warned it’s still possible that many cases are lurking around the world undetected, so more localized outbreaks could emerge. If that happens, what is still considered a Chinese epidemic could grow into a global pandemic.”

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MARKET WATCH/Shawn Langlois

Investors face much bigger concerns than the coronavirus, warns the man behind the world’s biggest hedge fund

February 11, 2020

Investors face much bigger concerns than the coronavirus, warns the man behind the world’s biggest hedge fund“Ray Dalio, who oversees $160 billion in assets for Bridgewater Associates, acknowledged last month that he’s a ‘dumbshit when it comes to pandemics,’ but that’s not stopping him from pressing pause on the coronavirus panic button. ‘What concerns me most if you did have a downturn — we are now 11 years in expansion — whether that’s one, two, three years forward, with the larger polarity that exists, the wealth gap and the political gap. I would be more concerned about that.’

Investor fears over the epidemic ‘probably had a bit of an exaggerated effect on the pricing of assets because of the temporary nature of that, so I would expect more of a rebound,’ the billionaire said. ‘It most likely will be something that in another year or two will be well beyond what everyone will be talking about.’ The latest tally shows that the death toll has now moved to about 1,000 globally, and the Dow Jones Industrial Average while hovering around record levels, ended Tuesday’s session at the breakeven line. Meanwhile, Dalio, who’s made more money for his clients since 1975 than any other hedge fund, according to Bloomberg, plans to hedge risk at this point.  ‘When you don’t know, the best investment strategy is to be smartly diversified across geographic locations, across asset classes, and across currencies,’ Dalio recently wrote in a LinkedIn post.”

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FOX NEWS/Edmund DeMarche

Ex-Goldman CEO Blankfein issues warning about Bernie Sanders

February 12, 2020

Ex-Goldman CEO Blankfein issues warning about Bernie Sanders“Lloyd Blankfein, the former chief executive officer at finance giant Goldman Sachs, took to Twitter late Tuesday to warn Democrats about the perils of nominating Sen. Bernie Sanders as their 2020 standard-bearer.  The tweet came shortly after Sanders, a self-described democratic socialist, won the New Hampshire, edging Blankfein, who supported Hillary Clinton back in 2016, echoed the concerns of many moderate Democrats about the 78-year-old’s electability and how the country’s economy would react to some of his policies.

‘If Dems go on to nominate Sanders, the Russians will have to reconsider who to work for to best screw up the US,’ he tweeted, referencing the Russian interference in 2016. ‘Sanders is just as polarizing as Trump AND he’ll ruin our economy and doesn’t care about our military. If I’m Russian, I go with Sanders this time around.’ The Brooklyn-born businessman, who rose through the ranks at the famed company, criticized Trump in the past, but he has also given the president credit. On one occasion he called Trump’s tariff hikes aimed at China an ‘effective negotiating tool.’ The ex-banker appears to be far from a Trump supporter. In 2018, there was a solar eclipse and Blankfein tweeted that he wished the moon ‘wasn’t the only thing casting a shadow across the country.’ Blankfein joins a list of well-known Democrats who’ve expressed reservations about a Sanders candidacy. Perhaps no Sanders detractor summed up the concern better than political strategist James Carville. Carville likened Sanders to Jeremy Corbyn, the left-wing leader of Britain’s Labour Party who was soundly defeated in December.”

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BLOOMBERG/Rich Miller and Craig Torres

Powell Suggests the Fed May Lack Ammo to Combat Next Recession

February 12, 2020

Powell Suggests the Fed May Lack Ammo to Combat Next Recession“Federal Reserve Chairman Jerome Powell came close to acknowledging that the central bank may not have the firepower to fight the next recession and called on Congress to get ready to help. The current low level of interest rates “means that it would be important for fiscal policy to support the economy if it weakens,” he told the House Financial Services Committee on Tuesday. The remark, which came in opening testimony that Powell is due to repeat to a Senate panel on Wednesday, was an unusual appeal by the head of a politically independent institution that is used to combating economic contractions on its own. But it highlights the difficulties that the Fed and other major central banks face in a world of historically low interest rates and why tax cuts and government spending increases may also be needed to fight future downturns.

‘There is very little central banks can do’ when both short- and longer-term rates are near zero, said Mark Spindel, a co-author of a book about the Fed’s relations with Congress. ‘We are much closer to a fiscal-monetary collaboration. They are out of optimal monetary policy tools.’ Speaking in Strasbourg on Tuesday, European Central Bank President Christine Lagarde was more explicit than Powell about the limits to central bank power. ‘Monetary policy cannot, and should not, be the only game in town,’ she told European lawmakers. Admitting he was ‘straying a bit’ from his remit, Bank of England Governor Mark Carney also backed the U.K. government’s new spending program.”

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ING/Bert Colijin

Eurozone: Industrial production plummeted in December

February 12, 2020

Eurozone: Industrial production plummeted in December“As expected, the industrial decline continued at the end of the year although this decline was much worse than expected. A mixed picture has emerged for the start of 2020, but a fast recovery of growth seems unlikely.  Eurozone industry ended the year on a miserable note as production fell by 2.1% in December. The contraction in production, which has now completed its second full year, has left production 6.9% lower than it was at its December 2017 peak. November production had shown a slight uptick, but December indicates that it is too soon to call an end to the eurozone industrial recession.

Declines were found across the monetary union as Germany, France, Italy and Spain all experienced a contraction in production that was larger than 2%. In part thanks to this deep decline, eurozone GDP growth slowed markedly to just 0.1% in the fourth quarter. While some had expected a bottoming out to happen towards the end of the year, these December numbers actually show a deepening of the industrial recession … uncertainty about the impact of the coronavirus on the global supply chain has put a spanner in the works. While it is very difficult to estimate the impact of the virus on European production, it is likely to delay and subdue the recovery of industrial production somewhat more.”

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