Marketwatch/Shawn Langlois
It’s time for investors to stop buying stocks that are ‘stunningly decoupled’ from reality, economist warns

Mohamed El-Erian“‘The investing challenge may well shift in the months ahead from riding an exceptional wave of liquidity, which lifted virtually all asset prices, to steering through a general correction in prices and complex individual nonpayments.’

That’s Mohamed El-Erian, Allianz’s chief economic adviser, talking about what investors should expect going forward, as “the financial stress caused by COVID-19 is far from over.”

El-Erian, the former Pimco CEO, pointed to several “worrying signs,” including a record-breaking pace for corporate bankruptcies, job losses moving from small and medium-size firms to larger ones, and more households falling behind on rents, to name a few.

“Investors are showing insufficient concern. Some continue to expect a sharp, V-shaped recovery in which a vaccine, or a buildup of immunity in the population, allows for a quick resumption of normal economic activity,” he wrote in the Financial Times. “Others are relying on more backstops from governments, central banks and international organisations.”

He explained in the op-ed that investors still have time to prepare for the tough times ahead and follow the lead of Wall Street pros by adjusting their portfolios accordingly.”

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CNBC/Tyler Clifford
Charts suggest the S&P 500 climb will stall out at the end of July, Jim Cramer warns

Jim Cramer“CNBC’s Jim Cramer warned investors Tuesday that the market uptrend could be running out of fuel near the end of the month.

The S&P 500 has gained 2.5% of value from the start of July, but there are strong odds that a reversal in the index’s trajectory is looming over the backend days, based on analysis from renowned trading expert Larry Williams.

“The charts, as interpreted by the legendary Larry Williams, suggest the S&P could climb another 4% or 5% over the next two weeks, but come July 28, he expects the market to start rolling over,” Cramer said on “Mad Money.” “Given that the expanded unemployment insurance benefits from Washington expire at the end of the month, well, I wouldn’t be surprised” if he’s right.”

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Reuters/Lindsay Dunsmuir, Howard Schneider
Fed officials warn on ‘thick fog’ ahead for U.S. economy as recovery concerns deepen

Federal Reserve“The U.S. economy will recover more slowly than expected amid a surge in novel coronavirus cases across the country, and a broad second wave of the disease could cause economic pain to deepen again, Federal Reserve officials warned on Tuesday.

One by one, Fed policymakers have become more downbeat in recent days, resetting expectations on the recovery and cautioning that recent improvements in economic data such as job gains may be fleeting.

“The pandemic remains the key driver of the economy’s course. A thick fog of uncertainty still surrounds us, and downside risks predominate,” Fed Governor Lael Brainard said in a speech to a virtual event hosted by the National Association for Business Economics.

She called on the U.S. central bank to commit to providing sustained accommodation through forward guidance and large-scale asset purchases, and said additional fiscal support would be “vital” to the strength of the recovery – particularly with the first round of pandemic economic support programs expiring soon.”

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Yahoo Finance/Javier E. David
Wealthy just as worried about post-coronavirus future as everyone else: UBS survey

Wall Street“The coronavirus pandemic has prompted wealthy investors to consider major lifestyle shifts that include less travel, fewer trips to the office, and moves away from big cities, according to newly-released UBS data that revealed 75% think that “life will never be the same again.”

The mounting human and economic costs of the worldwide COVID-19 outbreak have forced dramatic changes to daily life on people across all income levels. Conventional wisdom holds that the wealthy are insulated from the disruption caused by the novel coronavirus, yet UBS’s Investor Watch found that a clear majority of high net worth individuals are at least as worried about the future as average people.

The survey, which polled nearly 3800 investors across 15 different markets, said that many “are already planning to adjust their lifestyle” as the outbreak reshapes public life.

Meanwhile 66% of wealthy investors say COVID-19 has impacted how they think about money.

An independent study released in June found that billionaire wealth skyrocketed by over $500 billion since the onset of the crisis, but UBS found that over half are concerned about having enough saved if there’s another pandemic, and about having to work longer to compensate for damage to their retirement portfolios.

More tellingly, 60% are worried about being a “financial burden” to their families if they fall ill, while 54% are nervous about leaving enough money to their heirs.”

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CNN Business/Matt Egan
‘It’s going to be really ugly.’ Here come the big bank earnings

Citibank“Mass unemployment. Surging bankruptcies. An unprecedented health crisis. And near-zero interest rates. It’s a depressing time for America’s banks — and Wall Street is bracing for huge profit plunges when they report results this week.

JPMorgan Chase (JPM), Bank of America and Citigroup (C) are all expected to reveal their second-quarter profits crashed by 50% or more. Wells Fargo (WFC) is likely to slash its coveted dividend and announce the scandal-ridden bank’s first quarterly loss since the financial crisis.

“2020 has been a disaster,” said Jim Shanahan, who covers banks at Edward Jones. “It wasn’t the banks’ fault. It was like we had an alien invasion in the second quarter.”

The biggest driver of shrinking profits — or outright losses, in Wells Fargo’s case — is the fact that banks are preparing to deal with a pile of toxic loans caused by the pandemic.”

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Forbes/Sarah Hansen
Biden’s Tax Plan Could Cut S&P 500 Earnings By 12%, Goldman Sachs Warns

Biden“If he’s elected in November, Democratic candidate Joe Biden’s tax policies could have a major negative impact on earnings for companies in the S&P 500, according to Goldman Sachs analysts.

Goldman’s researchers, led by David Kostin, expect Biden’s tax plan to reduce their S&P earnings estimates by 12%, from $170 per share to $150 per share.

That estimate is based on several likely Biden policies including raising the statutory federal tax rate on domestic income by 7%, doubling the tax rate on certain foreign income, imposing a minimum tax rate of 15%, and creating an additional payroll tax on high earners.

The researchers also expect Biden’s tax policy to create a drag on earnings that’s comparable to the boost companies saw after the 2017 Tax Cuts and Jobs Act (and the corporate tax benefits that came with it).”

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Los Angeles Times/Associated Press
Stocks slam into reverse as California dials back reopening

Family in Los Angeles“Wall Street got a painful reminder of the threat the coronavirus pandemic poses to the economy Monday, and a big early gain for stocks suddenly flipped to losses after California rolled back its reopening plans amid a spike in cases.

The Standard & Poor’s 500 index fell 0.9%, with all the losses accumulating in the last hour of trading, after California said it will extend closures of bars and indoor dining across the state, among other restrictions. It’s one of many states across the U.S. West and South where coronavirus counts are accelerating and threatening the budding recovery that just got underway for the economy.

The announcement from California, which accounts for nearly 15% of the country’s economy, combined with an escalation by the White House in its tensions with China to knock the market down from its earlier gain of 1.6%.”

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Marketwatch/Myra P. Saefong
Why silver is trading at a nearly 4-year high

Silver Bar“Silver futures on Monday marked their highest settlement in nearly four years, buoyed by a sharp climb in investment demand as the metal continues to play catch up to gains by sister metal gold.

“Trading in the gray metal is worth barely 10% of what gold sees each day, so hedge funds and other money managers wanting to catch up with the yellow metal’s jump towards new all-time highs might expect to get more bang for their buck in silver,” said Adrian Ash, director of research at BullionVault.

The September silver contract SIU20, -1.71% rose 73 cents, or 3.9%, to settle at $19.788 an ounce Monday. That was the highest finish for a most-active contract since September 2016, according to Dow Jones Market Data. Gold on Monday, meanwhile, saw its August contract GCQ20, -0.77% settle at $1,814.10 an ounce, close to the $1,820.60 it settled at on July 8, which was the highest since September 2011.

There has been a historically high purchase of physical silver via silver exchange-traded funds in the past few months alone, said Peter Spina, president and chief executive officer at GoldSeek.com. “Never in the history of silver have we seen such demand for [the metal] in such a short period of time.””

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Reuters/Marc Jones
Coronavirus bringing record $1 trillion of new global corporate debt in 2020: report

New York Stock Exchange“Companies around the world will take on as much as $1 trillion of new debt in 2020, as they try to shore up their finances against the coronavirus, a new study of 900 top firms has estimated.

The unprecedented increase will see total global corporate debt jump by 12% to around $9.3 trillion, adding to years of accumulation that has left the world’s most indebted firms owing as much as many medium-sized countries.

Last year also saw a sharp 8% rise, driven by mergers and acquisitions, and by firms borrowing to fund share buybacks and dividends. But this year’s jump will be for an entirely different reason – preservation as the virus saps profits.

“COVID has changed everything,” said Seth Meyer, a portfolio manager at Janus Henderson, the firm that compiled the analysis for a new corporate debt index. “Now it is about conserving capital and building a fortified balance sheet”.”

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CNBC/Reuters
Dollar starts week on back foot ahead of data, earnings

Benjamin Franklin Bill“The U.S. dollar edged down in Asian trade on Monday as investors looked to looming economic data from around the world and U.S. corporate earnings to gauge whether the markets’ guarded optimism on the economic outlook is justified.

The greenback had ended its third week of losses on Friday as investors bought into risk-sensitive currencies on bets that the worst of the pandemic’s sweeping impact was over.

The dollar index against a basket of major currencies slipped 0.2% in early Monday trade to 96.452.

U.S. coronavirus cases surged over the weekend, as Florida reported an increase of more than 15,000 new cases in 24 hours, a record for any state, surpassing a peak hit in New York in April.

“Rising coronavirus cases are not positive but at the moment, markets seem to think that there is still some distance to a situation where an overflow of the medical system will force them to put restrictions on the economy,” said Yukio Ishizuki, senior currency strategist at Daiwa Securities.”

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Marketwatch/Jeffry Bartash
Coronavirus spike in the dog days of summer saps economy of momentum

I want to work“Summer doldrums are taking on a whole new meaning during the coronavirus pandemic. The momentum in the U.S. economy appears to have melted away.

It’s not the July heat that’s at fault, of course. It’s a wave of new outbreaks of COVID-19 across the country that has forced some states to reimpose economic restrictions and others to pause further business reopenings.

Thirty-eight U.S. states have seen a rise in cases in the past 14 days. Harvard Global Health Institute researchers have developed a national tracker to trace the severity of the outbreak on a state-by-state basis, and it’s flashing red for Arizona, Florida, Louisiana, South Carolina and Georgia, with 25 cases per 100,000 people.

The loss of momentum in the recovery is evident in key segments of the economy such as retail and dining out. Some businesses in California, Texas and elsewhere have been ordered to scale back operations again. At the same time, fear of catching the virus has made Americans more reluctant to venture out.”

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Kitco/Neil Christensen
Gold’s winning streak stretches to five weeks, silver jumps on board

Gold Bars“Precious metals had a big week with gold prices holding critical support above $1,800 an ounce.

But let’s not forget about silver, gold’s baby brother pushing above $19 an ounce and seeing its highest weekly close in four years. But even after these big moves, nearly all analysts across the board see the potential for both metals to move higher.

In a world awash in economic uncertainty due to the unchecked spread of the COVID-19 pandemic, investors are looking for safe-haven assets and paying more attention to precious metals. With yields expected to remain low for the foreseeable future, the only real store of value in the marketplace right now is gold and silver.”

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Marketwatch/William Watts
Why ‘safe haven’ gold and the stock market are now moving the same direction

Gold Bars“Gold is traditionally thought of as a haven asset — a safe port in a storm. But that hasn’t stopped it from rising to a near nine-year high, and within striking distance of its record, even as equities and other assets traditionally viewed as risky remain buoyant as they rebound from the pandemic-inspired selloff suffered earlier this year.

Chalk it up, in part, to opportunity costs. Efforts by global central banks to push down interest rates, which have fallen into negative territory in real, or inflation-adjusted terms, in the U.S. and are outright negative in many parts of the world, mean that investors who hold gold aren’t missing out on the yield they would earn from holding bonds in more usual circumstances.

“As real yields turn negative, opportunity costs for holding non-yielding assets essentially vanish, particularly when viewed through the historical lens of fiat currencies and their purchasing power,” wrote Jeff deGraaf, chairman of Renaissance Macro Research, in a Thursday note.”

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CNBC/Keris Lahiff
Gold is the ‘real bitcoin’: Trader sees new highs ahead for the metal

Boris Schlossberg“Gold topped $1,800 on Wednesday, marking a nearly nine-year high.

Its rally may not be over yet, according to Boris Schlossberg, managing director of FX strategy at BK Asset Management.

“I guess gold is the real bitcoin,” Schlossberg joked on CNBC’s “Trading Nation” on Wednesday. “Ultimately I think what’s happening is the market is taking implicit bets that inflation is starting to pick itself back up, and I think there’s a really good reason why the market thinks so.”

Schlossberg said stimulus from global central banks that has fueled a fiscal expansion is going to make its way into the economy and drive inflation higher. This, then, will encourage central banks to hold rates low.

“Central banks are still going to have to keep rates very, very low, because their first and foremost priority right now in a post-Covid world is to maintain momentum, to maintain expansion as much as possible,” said Schlossberg. “So they’ll suppress interest rates, inflation will go a little bit higher, and of course gold loves nothing more than real interest rates going lower and lower and lower.”

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Reuters/Howard Schneider
U.S. recovery in limbo as retail traffic falls in virus hot spots

Retail Recovery“U.S. states that have driven a record surge in coronavirus cases may now be slipping backward here in their economic recovery, as cellphone data shows retail visits in a clutch of high case-growth locations falling below the rest of the country.

In Arizona, Texas, Florida, Georgia and South Carolina, which had edged ahead of other states during their drive in May to reopen commerce, retail foot traffic has slipped below levels elsewhere, information from data firm Unacast showed.

The data, which covers the period through July 3, is not representative of retail sales. But it does highlight the dilemma many economists and health experts have raised from the earliest days of the outbreak of novel coronavirus: Inattention to health protocols like wearing of masks and social distancing combined with a rush to reopen businesses could lead to worse outcomes for both public health and the economy.

“A mismanaged health crisis across many states means short-term gains will transform into medium-term sluggishness as social distancing relaxation is reversed and virus fear lingers,” Gregory Daco, chief U.S. economist at Oxford Economics, wrote in an analysis on Thursday. “It’s now evident that the economy is entering Q3 (third quarter) with much less momentum than previously anticipated.””

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Kitco/Anna Golubova
Real rates to drive gold prices higher – TD Securities

“Real rates will ultimately drive gold prices higher, says TD Securities. “The yellow metal is torn between its safe-haven bona fides, which are prompting money managers to sell on risk-on behavior in markets, and its inflation-hedge characteristics, which are driving a swarm of capital to seek refuge in the yellow metal. Ultimately we anticipate that real rates will continue to drive gold prices higher as normalizing inflation expectations and suppressed rates vol provide fuel for the trade,” TD Securities commodity strategists write. In the meantime, silver has the potential to outperform gold, the strategists add. “The industrial-precious silver could outperform — benefiting from both the positive precious metals environment and its industrial characteristics, at a time when its supply may remain constrained,” they said. TD Securities expects the silver market to operate at “full or even above full utilization.””

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Fox Business/Jonathan Garber
Biden blue wave tax hikes could batter stock market, strategists say

Trump and Biden“With the 2020 election approaching, Wall Street strategists are starting to factor in the consequences of a possible Democratic sweep, which could create major headwinds for stock-market investors who have been enjoying a record run under President Trump – even after the outbreak of the COVID-19 pandemic.

Democratic control of the presidency and both chambers of Congress, also referred to as a “blue wave,” may mean tax hikes and other legislation that hinders economic growth and weighs on the stock market.

“The implications for the stock market from this shift to higher taxes are generally negative,” wrote David Rosenberg, chief economist and strategist at Toronto-based Rosenberg Research

Potential legislation would include raising the capital gains tax for the highest earners and increasing the corporate tax rate in an effort to pay for at least some of the $6 trillion of proposed spending over the next 10 years.”

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Kitco/Anna Golubova
‘We still like gold at these levels’: Prices can move another $500 by end of next year – Wells Fargo

Gold Bars“Gold has been on a sprint since last year, breaking all kinds of residence levels, including $1,300, $1,400, $1,500, $1,600, $1,700 and now $1,800 an ounce. And for those wondering whether it is too late to get in, Wells Fargo has a reassuring answer: “We still like gold at these levels.”

Gold is currently trading at fresh nine-year highs at above $1,820 an ounce. August Comex gold was last seen at $1,827.40, up 0.97% on the day.

“In May 2019, gold finally and definitively broke above the $1,300 per ounce resistance level—after six years of trying. In the year since that time, gold has made comparably quick work of the next major resistance levels,” wrote Wells Faro investment strategy analyst Austin Pickle. “With our 2020 year- end target of $1,800-$1,900, we have been asked whether we still like gold at these levels. The short answer is a resounding, ‘yes’.”

The reason for that is that Wells Fargo sees gold rising all the way up to $2,200 – $2,300 by the end of next year, which means there is still a lot of upside potential — up to $500 worth to be precise.”

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Reuters/Howard Schneider
Fed officials suggest U.S. recovery may be stalling

Recovery“Federal Reserve officials raised fresh doubts on Wednesday about the durability of the U.S. recovery, while new business surveys highlighted developing risks from the relentless coronavirus pandemic.

In separate appearances, Atlanta Fed President Raphael Bostic, Boston Fed President Eric Rosengren and Richmond Fed President Thomas Barkin noted what Barkin characterized as “air pockets” facing the U.S. economy – businesses exhausting existing order books without refilling them, and households facing the end of unemployment benefits and other support.

“Businesses like construction had pretty good pipelines and kept going,” through the first phase of the pandemic Barkin said in webcast remarks to a group of local chambers of commerce in Virginia’s Shenandoah Valley.

But, “new orders are not coming on line in the same way. We have fiscal payments … that are coming to an end and it is not clear what is going to replace them.” Enhanced unemployment benefits that have proved key to replacing spendable income amid record setting unemployment are due to expire this month.

Facing that “fiscal cliff,” the economy is also grappling with a surge of COVID-19 cases to record levels.”

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Marketwatch/Myra P. Saefong
Why gold has become a ‘weapon of choice’ for investors

Weapon of Choice“Gold prices have climbed to their highest levels in nearly nine years, with the precious metal seen as a ‘weapon of choice’ for gold investors dealing with pandemic-related uncertainty in the stock market, clearing the path to a fresh record in the second half of the year.

Gold breezed through the $1,800 level and “seems to have recovered its mojo,” said Ross Norman, chief executive officer of precious metals news and information provider Metals Daily. Bulls will also be “much encouraged that silver is performing at last.”

September silver SIU20, 0.67% was up 44.1 cents, or 2.4%, at $19.14 an ounce in Wednesday dealings. It’s poised for the highest most-active contract settlement since September 2019.

Gold prices may still see some downward pressure from profit takers, warned Moy, but fundamentals indicate that higher gold prices ahead. “We have a long uncertain road ahead to recovery and that will be gold for gold prices.”

As for how high prices may go, Norman said his forecast issued to the London Bullion Market Association in December 2019 still stands, calling for a 2020 high of $2,080 an ounce for gold.”

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CNN Business/Paul R. La Monica
Gold tops $1,800 and hits highest level since 2011

Gold Bars“These are strange times on Wall Street. Stocks are surging on optimism about a potential economic rebound. Yet investors are still very nervous about the growing threat of a second wave of Covid-19 cases in the United States.

Just look at the rally in gold.

The price of the metal is now above $1,800 an ounce — its highest level since September 2011 — and it is creeping toward that record high of more than $1,900. Gold has soared nearly 19% so far in 2020.

Gold’s continued surge is a bit curious given the comeback in the broader market. The pop in gold prices earlier this year made more sense since gold often tends to do well in times of financial stress, when fear is prevalent.

After an initial dip following the 2008 Lehman Brothers bankruptcy, gold rallied as the market melted down later that year and into early 2009, for example.”

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Forbes/Naeem Aslam
Dow Jones Futures: S&P 500 Stocks & Coronavirus

Dow Jones Futures“The Dow Jones futures are trading modestly lower as traders are casting some doubts about the re-opening of the economy in the hard-hit southern states in the US. There are also concerns that the tensions between the US and China are strengthening every day due to the security law imposed in Hong Kong. Speculations are that the Trump administration may target the Hong Kong’s dollar peg. For Trump, this could be another way to punish China for its action in Hong Kong, but of course, the question is whether the US has the ability to punish China without facing some sort of counteraction.

Beijing can begin a currency war by devaluing the Chinese Yuan. That will not bode well for the US. So far, the idea of targeting the Hong Kong peg has gained much attention but hasn’t yet reached the White House.

The Dow futures, along with the S&P 500 futures, are also paying attention to new warnings from Fed officials who think that the US unemployment rate is likely to remain high despite the US economy re-opening. Social distancing is one of the things that is going to harm tourism and the retail industry. Without innovating new strategies, the path to recovery will be arduous.”

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Yahoo Finance/Julia LaRoche
Gundlach lashes Fed’s ‘incredible fiscal lending’ during coronavirus collapse

Jeffery Gundlach“Billionaire bond investor Jeffrey Gundlach believes the Federal Reserve has “propped up the economy” with extraordinary feats of lending and bond buying that have curbed market volatility during the COVID-19 crisis, but may come back to haunt policymakers.

In a recent interview with Yahoo Finance, the CEO of $135 billion DoubleLine Capital hit out at what he called “the most incredible fiscal lending [Fed policymakers] have ever contemplated.”

Since the early days of the coronavirus crisis, the central bank has spent trillions to backstop the economy — buying a host of corporate bonds — placating a whipsawed market in the process. Those efforts have sent the Fed’s balance sheet spiking well above $7 trillion.

“The Fed has decided that they want to pull out all the stops to reduce market and economic volatility,” Gundlach said. “’What they’re doing is really a bridge further than they have ever gone before.””

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Kitco/Jim Wyckoff
Gold prices at 9-year highs, bulls want more

Gold Price ChartGold prices are modestly up in early U.S. trading Wednesday and scored another nine-year high overnight. Meantime, silver prices notched a five-week high as the precious metals bulls are pressing the accelerator a little harder. Both markets remain firmly bullish from a charts perspective, suggesting still more upside in the near term. August gold futures were last up $4.30 an ounce at $1,814.30. September Comex silver prices were last up $0.121 at $18.825 an ounce.

Safe-haven demand is also seen in gold and silver amid the rise in Covid-19 infections and on worries about the longer-term ramifications of central banks opening up their spigots of free-flowing cash into their financial systems. Gold bulls are reckoning the piper will be paid at some point down the road.

Global stock markets were mixed in overnight trading. China’s stock market continues to surge following a government-owned media story telling Chinese investors it’s time to buy shares. The U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Many global stock markets have paused at mid-week following recent rallies. It could be that the alarming rise in Covid-19 cases in some countries, including the U.S., has finally dented trader and investor risk appetite. The U.S. reported a daily record of 60,000 new Covid cases on Tuesday.”

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Marketwatch/Shawn Langlois
The stock market is poised for a 40% drop, warns economist who says the current climate feels a lot like 1929

Unemployment“‘I think we’ve got a second leg down and that’s very much reminiscent of what happened in the 1930s where people appreciate the depth of this recession and the disruption and how long it’s going to take to recover.’

That’s A. Gary Shilling, longtime economist and president of A. Gary Shilling & Co., again delivering a gloomy take on what’s next in a recent CNBC interview.

“Stocks are [behaving] very much like that rebound in 1929 where there is absolute conviction that the virus will be under control and that massive monetary and fiscal stimuli will reinvigorate the economy,” he said, adding that the market could drop as much as 40% over the next year.”

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CNN Business/Julia Horowitz
Goldman Sachs thinks the US recovery is running into trouble

CNN“The surge in coronavirus cases across the Sun Belt is slowing the economic recovery in the United States.

That’s according to Goldman Sachs, which said this weekend it now expects a weaker rebound in the third quarter as local leaders impose fresh restrictions and consumers show signs of caution. The investment bank predicts the US economy will grow at an annualized rate of 25% in the three months ending in September, as opposed to 33%.

“The recent declines are minor compared to the collapse in activity in March and April, but they clearly indicate a break from the steady upward trend since mid-April,” chief economist Jan Hatzius told clients.

Goldman Sachs said it thinks spending on consumer services will “pause” in July and August.

“Over the last few weeks, the Covid situation in the US has worsened significantly to the point where the US is now a notable outlier among advanced economies,” the bank said.”

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Bloomberg/Reade Pickert, Yue Qiu and Alexander McIntyre
U.S. Coronavirus Surge Beginning to Show Up in Recovery Data

Main Street“The U.S. economy is gradually recovering as businesses reboot and scores of Americans head back to work, but a record surge in virus cases threatens to upend that improvement as reopening efforts stall in some places.

Bloomberg Economics created a weekly dashboard of high-frequency, alternative and market-based data to track the economy’s plunge into recession and eventual recovery. Most of the dashboard’s indicators, including applications for jobless benefits, consumer confidence and public-transportation usage, point to modest, incremental improvement. But some measures, including restaurant bookings, have slightly worsened.

Recent reopenings paired with government-sponsored small-business loans have helped bolster hiring across the nation. In June, U.S. employers added a record 4.8 million workers to payrolls. Even so, America’s jobs engine is still far short of where it was before the pandemic.”

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Kitco/Anna Golubova
Gold to perform well in Q3, on track to $2,000 by late-2021 — TD Securities

Gold Price“Gold is likely to have another solid quarter after it wrapped up Q2, up more than 14% since the start of the year, according to TD Securities.

After some turbulent trading near the $1,800 an ounce level, gold is back in a tight trading range right below that resistance level. At the time of writing, August Comex gold futures were trading at $1,795.2, up 0.29% on the day.

“The yellow metal has now rebounded back to over $1,770/oz and will likely perform well into Q3,” TS Securities commodity strategists wrote last week.

Any sell-offs due to positive macro data are likely to only be temporary for gold as higher precious metal’s prices and firmer economy can co-exist alongside each other, the strategists pointed out.

“Spot gold slipped below $1,770/oz immediately after the much stronger-than-expected U.S. June payroll (+4.8 million) data. The very strong positive equity market response to the jobs data likely drove more capital into risk assets at the expense of gold, at least initially. There’s an element of missing-out anxiety that is lifting risk appetite,” they said. “However … the USD is weakening, and real rates should drop as inflation expectations continue to rise.”

There are some COVID-19 after-effects that will continue to linger long-term, boosting gold higher for the rest of 2020 and into 2021.”

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CNBC/Reuters
Gold inches up as rising coronavirus cases boost safe-haven demand

Gold Bars“Gold prices edged higher on Monday as worries over a surge in coronavirus infections in the United States dented optimism about signs of a nascent economic recovery, prompting investors to seek the safe-haven metal.

Spot gold was up 0.1% to $1,775.97 per ounce by 0031 GMT. U.S. gold futures eased 0.2% to $1,787.30.

In the first four days of July alone, 15 U.S. states reported record increases in new cases of COVID-19, which has infected nearly 3 million Americans and killed about 130,000, according to a Reuters tally.

More than 11.35 million people have been reported to be infected by the novel coronavirus worldwide so far.

Gold has also been benefiting from lower interest rates around the world and widespread stimulus measure from major central banks as it is widely viewed as a hedge against inflation and currency debasement.”

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Kitco/Neil Christensen
Gold price to hit $1,950 in Q2 2021 – Natixis

Gold bar $100 bill“Expectations that the Federal Reserve will introduce yield curve control measure in September will continue to support prices through the first half of 2021. Still, gold’s gains will be limited as inflation pressures remain muted, according to one international bank.

In a report published Wednesday, Bernard Dahdah, head of precious metals research at Natixis, increased his price forecast for gold, saying that the yellow metal could hit $1,950 an ounce by the second quarter of next year.

The comments come as the gold market holds near their highest level since 2011 as the price pushed above $1,800 an ounce.

He said that yield curve control, coupled with inflation, would push real interest rates into negative territory, making gold an attractive safe-haven asset.”

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Forbes/Edward Siedle
Trump DOL And SEC Keep Tossing 401k Investors To The Wolves Of Wall Street

Wolf“Trump’s Department of Labor, Securities and Exchange Commission are scheming to make 401ks “greater” than ever, i.e., greater fees, greater risks and greater conflicts. That’s great for the wolves of Wall Street, not-so-great for America’s workers and no way to Make America Great Again.

Trump U. S. Department of Labor recently opened the door for private equity wolves to sell the highest cost, highest risk, most secretive investments ever devised by Wall Street to 401ks. As private equity is embraced, 401k costs will skyrocket, risk will dramatically increase and transparency will plummet.

That’s great, says Trump’s DOL, because paying greater fees to Wall Street and taking greater risks will permit 401k savers to “overcome the effects the coronavirus has had on our economy.”

That is, private equity gambling gains will make up for COVID losses.”

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VT Digger/Katie Jickling
Blue Cross Blue Shield of Vermont pension fund takes $40.6 million hit

Blue Cross Blue Shield of Vermont“Blue Cross Blue Shield of Vermont has lost $40.6 million, or 58%, of its pension fund for employees in the financial downturn.

The losses could have an impact on the company’s “solvency and reserves,” according to a letter that CEO Don George sent Monday to state regulators. The letter, which was obtained by VTDigger, noted that Blue Cross was “assessing potential remedies for this loss, including potential legal action” to recoup the money.

George did not say why the company lost the money, but Blue Cross spokesperson Sara Teachout confirmed that the pension funds were managed by Allianz Global Investors, which reported a 75% decrease in the value of a particular strategic portfolio in late March, according to an article by Pensions & Investments. Sixteen of Blue Cross Blue Shield’s companies nationally had money managed by the company, said Department of Financial Regulation Commissioner Mike Pieciak.

He declined to comment on whether his department had made any findings so far.”

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Fox Business/ Jonathan Garber
Gold price flirts with $1,800 as pandemic reshapes markets

Gold Bars“Gold topped $1,800 an ounce Wednesday morning, before giving up its gains, as investors sought to protect their wealth from pandemic-induced declines in other assets.

Front-month gold futures rose as much as 0.82 percent to $1,807.70 an ounce before rolling over. The precious metal has not closed above the $1,800 level since Sept. 21, 2011.

“Traders and holders of gold are very concerned with upcoming currency values, interest rates and pandemic headlines,” George Gero, managing director at RBC Global Wealth Management and a member of the COMEX board of directors, told FOX Business.

Open interest, or the total number of futures contracts outstanding, has increased every day for the past month and exchange-traded funds, or ETFs, have been adding to their gold holdings each day for the past month and a half.

Gero believes the buying is a “haven against upcoming inflation,” which he says is “starting to rear its head” after an unprecedented policy response to the steepest economic downturn of the postwar era.”

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Marketwatch/Rex Nutting
Fed warns stock market of a second recession if the coronavirus pandemic isn’t brought under control

Masks

“The Federal Reserve is a lot more worried about the economy than the stock market or the president are. Officials and staff economists at the Fed caution that a second wave of recession could sweep over the country later this year if the coronavirus pandemic isn’t brought under control, according to a lengthy summary of the Fed’s policy meeting held on June 9-10.

The consensus forecast of Fed policy makers calls for a gradual recovery in the economy over the next several years, but the minutes of that June meeting released on Wednesday indicate that a more pessimistic projection was judged as “no less plausible than the baseline forecast,” by the staff economists who work up the most detailed (but classified) forecast of the economy.

It’s all going to depend on the health of the American people. The meeting took place before the latest surge of infections that have derailed or delayed plans to further open up businesses in several states.”

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Reuters
Fed’s Bullard warns of financial crisis risks as virus cases spike: FT

James Bullard“St. Louis Federal Reserve Bank president James Bullard has warned that a growing number of bankruptcies due to the coronavirus outbreak could lead to a financial crisis, the Financial Times reported.

“Without more granular risk management on the part of the health policy, we could get a wave of substantial bankruptcies and (that) could feed into a financial crisis,” Bullard said in an interview with the newspaper on Wednesday.

He warned of “twists and turns” in the health crisis and said “it’s probably prudent to keep our lending facilities in place for now, even though it’s true that liquidity has improved dramatically in financial markets.””

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Marketwatch/Andrea Riquier
The coronavirus crisis is costing states and locals hundreds of billions, analysis finds

Neighborhood“Just how bad is the economic impact of the COVID-19 pandemic?

On the national and international level, things are tough, but perhaps a little more manageable than many analysts had feared at the onset of the crisis. Corporations are reporting earnings that are better than Wall Street expected, jobs were added, not lost, in May, and central banks and fiscal policymakers stepped up with robust aid packages.

On the state and local level, it’s a whole different ballgame, and observers of public finance and the municipal bond market are bracing for a long, slow burn. States, counties, cities and towns are on the hook for most of the costs associated with the pandemic — health care, emergency responses, and so on — even as their tax revenues, mostly from income and sales taxes, dwindle. Even revenue streams often seen as safe, like usage fees for things like airports, toll roads, arena ticket charges, and so on, have swooned in line with economic activity.

On Monday, Stephan D. Whitaker, a policy economist at the Cleveland Federal Reserve, released a fresh analysis of just how bad the budget situation is for state and local governments. Whitaker reckons that they’ve lost $141 billion in revenue from all sources in fiscal year 2020 — that is, through June 30.”

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Marketwatch/Greg Robb
Fed’s Williams warns that U.S. economy far from healthy even if worst of the coronavirus outbreak is over

New York Fed President John Williams “The economy seems to be on the mend from the worst of the early days of the coronavirus pandemic but remains damaged, said New York Fed President John Williams on Tuesday.

“There have been signs that we may be past the worst of the extreme economic distress and early indications of a recovery have started to emerge,” Williams said, in a virtual talk sponsored by the Institute of International Finance.

Consumer spending has rebounded, and building permits have risen, which is a sign of strength in construction, Williams said. In addition, the high unemployment rate has started to recede from peak levels, though job losses remain elevated.

While these improvements are welcome, “the economy is still far from healthy and a full recovery will likely take years to achieve,” Williams predicts.”

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Forbes/Frank Holmes
This Could Be The ‘Perfect Storm’ That Pushes Gold To A New Record High

Gold To A New Record High“A “perfect storm” of surging government debt levels, plunging real bond yields, rising coronavirus cases and deteriorating economic forecasts pushed the price of gold to an eight-year high last week, and some analysts now project the metal to top its all-time high within the next 12 months.

Gold touched $1,778 an ounce last Wednesday, its highest level since February 2012 and coming within striking distance of the psychologically important $1,800 resistance level.

What drove the yellow metal’s price action was not just an alarming rise in confirmed virus infections—U.S. cases hit a new single-day record of more than 42,255 on Friday—but also a weakening U.S. dollar. The greenback declined the most in three weeks as the yen and euro strengthened amid gains in global shares.”

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Kitco/Jim Wyckoff
Gold prices power to 8.5-yr high, much more upside likely

Gold Prices“Gold prices are sharply higher and hit an 8.5-year high Tuesday, on technical buying based on very bullish charts that got even more bullish today—suggesting still more (likely much more) upside price potential to come, including new record highs. Buy stop orders were triggered in the futures market when gold prices penetrated the previous for-the-move high scored in April. August gold futures were last up $19.90 an ounce at $1,800.90. September Comex silver prices hit a four-week high today and were last up $0.571 at $18.635 an ounce.

Underlying bullish fundamentals in the gold and silver markets include safe-haven demand due to the Covid-19 pandemic that appears to be getting worse instead of better and also further damaging global economies. Also, it appears traders and investors are realizing the massive infusion of central banks’ easy money into the world financial markets the past few months will create serious problems down the road—namely problematic inflation. Metals are a historical hedge from inflation.”

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Marketwatch/Myra P. Saefong
Gold posts largest quarterly gain in 4 years; talk of record prices by year end grows

Gold Record Prices“Gold futures posted a gain of nearly 13% for the three-month period ended Tuesday, the largest quarterly percentage climb since 2016, with analysts renewing talk of record prices by year end.

Gold’s performance so far this year is “not attributed to the pandemic,” said Alex Ebkarian, chief operating officer at Allegiance Gold. “COVID-19 simply exasperated the underlying weaknesses as evident by the negative real interest rates and further weakening of the dollar.”

On Tuesday, the August gold contract GCQ20, 0.12% settled at $1,800.50 an ounce, the highest finish since Sept. 2011, according to Dow Jones Market Data. Based on the most-active futures contracts, prices ended the second quarter with a gain of 12.8%. That was the largest quarter percentage rise since the quarter ended March 2016. Year to date, prices were up 18.2%.

Gold accelerated its move towards record highs in the second quarter of this year, as it was “already set on this trajectory” before the seriousness of the coronavirus was even realized, said Peter Spina, president and chief executive officer at GoldSeek.com.

The reaction to COVID-19 over the last quarter was of “historic proportions,” with global debt now soaring and governments injecting trillions of dollars into their economies. Under those conditions, gold is a “lower risk shelter to seek refuge,” said Spina.”

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CNBC/Patti Domm
BlackRock sees risks for U.S. stocks in the second half from virus and politics

“BlackRock’s global chief investment strategist said after the market’s strong gains, he is more cautious on U.S. stocks into the second half of the year because of risks from fading fiscal stimulus and potential election volatility.

The BlackRock Investment Institute, in its second-half outlook, said it retains equities at neutral, or benchmark weight in portfolios. Within that, it has an overweight on European stocks, underweight on emerging markets and neutral, or more cautious view on U.S. equities. It also favors higher-quality names across the board.

‘We entered the year overweight equities and credit. At the very end of February, as the storms gathering around the coronavirus became apparent, we cut those investments back to neutral weight,’ said Mike Pyle, global chief investment strategist at BlackRock. But when he returned to an overweight in risk in early April, it was just in credit, an asset class the Fed and other central banks are purchasing.”

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CNBC/Reuters

Kitco/Neils Christensen

Gold is the only commodity that looks good through 2020 – UOB Group

gold bars and gold chart“Hope that the global economy, devastated by the COVID-19 pandemic, will see a sharp recovery is driving broad commodity prices higher; however, one international bank is not convinced the current optimism will last.

In its third-quarter market outlook, United Overseas Bank Group said that gold is the only key commodity with a positive outlook for the rest of the year.

‘The question for gold is not one of whether the recent strength is sustainable? This more pertinent question for gold is how strong the rally will be?’ the analysts said.

The comments come as gold prices remain near their highest level in nearly eight years and continue to test critical resistance at $1,800 an ounce.  However, the bank said that the break might not come until the end of the third quarter.”

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 Fox Business/ Brittany De Lea

Top US CEOs see coronavirus economic effects enduring

going out of business sign“U.S. business leaders do not expect the effects of the coronavirus pandemic to wear off quickly even as the economy shows early signs of recovery, a new survey shows.

Executives at the country’s top companies are not optimistic about their capital spending, hiring plans or sales expectations throughout the remainder of the year, according to Business Roundtable’s Q2 2020 CEO Economic Outlook Survey. In the second quarter, the index’s overall reading was 34.3 – marking a contraction and the lowest reading since 2009.. now forecast it’ll hit a record $2,000 an ounce in 12 months.

Most businesses do not expect to recover to pre-pandemic levels until the end of next year, with more than one-quarter of respondents saying it could take even longer.

CEOs expected GDP to contract by 3.8 percent for the year.”

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Kitco

If history repeats itself, gold prices headed to $4,000 in three years – Frank Holmes

two gold bars“Gold prices have seen a positive correlation to the expansion of the Federal Reserve’s assets, and as the Fed embarks on the largest stimulus program in its history, the yellow metal is set rally in the same fashion as in the aftermath of the last recession, said Frank Holmes, CEO of U.S. Global Investors.

‘In the next three years, if we look back, if [history] repeats itself, from 2008, 2009 to 2011, that three year run saw gold go from a $750 – $800 range up to $1,900. If we forecast that because we have the same expansion of the balance sheet of the Fed then it would project, if cycles are exactly the same, gold could go to $4,000,’ Holmes said.

Holmes noted that although trillions of dollars have already been injected into the monetary system this year through the Fed’s quantitative easing program, more stimulus is still on its way.

‘This is going to cost the U.S. government approximately $10 trillion in fiscal and monetary policy to get the economy back, so I think that number you’re seeing after 2008, 2009 after Lehman Bros. went bankrupt, you saw the balance sheet expand from $1 trillion to $3 trillion. I think it’s got to hit the overall $10 trillion,’ he said.

What’s different this time is the policies toward trade from global leaders.”

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CNN Business/Julia Horowitz
Wall Street braces for another rocky quarter

“In recent weeks, there’s been plenty of hand-wringing about the security of the massive rebound in financial markets, with the reopening of many economies looking precarious at best.

That’s for good reason. Though there’s still a few days to go, the S&P 500 could notch its best quarterly return in 50 years, Bank of America observed in a note to clients.

But there are signs Wall Street is hedging its bets heading into the third quarter, looking more closely for opportunities without assuming everything will keep going up.

See here: Nearly two in three asset managers think the long-term impacts of Covid-19 have not been sufficiently factored into stock markets, according to a recent survey conducted by Institutional Investor.”

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CNBC/Reuters

Gold rises as virus concerns lift safe-haven bid

gold bars and coins“Gold prices rose on Monday as worries over a surge in fresh COVID-19 infections globally dented investor optimism about a swift economic rebound and drove investors towards the safe-haven metal.

Spot gold was up 0.2% at $1,773.43 per ounce by 0259 GMT. Prices were $5.63 shy of a near eight-year high of $1,779.06, hit last week.

U.S. gold futures rose 0.1% to $1,781.60.

‘Certainly the safe-haven buying is coming through fairly strong, with the fresh outbreak of coronavirus in the U.S., in particular, really driving that investor appetite at the moment,’ said ANZ analyst Daniel Hynes.

California ordered some bars to close on Sunday, following similar moves in Texas and Florida, as cases nationwide soar to record levels each day. Washington state and the city of San Francisco have paused re-opening plans.

Relentless spread of the coronavirus intensified investor fears about a delay in global economic recovery and weighed on risk appetite, driving inflows into safe-haven assets.”

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Yahoo Finance/Bloomberg/Ranjeetha Pakiam

Gold Edges Closer to $1,800 as Virus Cases Surpass 10 Million

gold bars stacked like a pyramid“Gold futures edged closer toward $1,800 an ounce — a level last seen at the end of 2011 — as demand for haven assets surged amid concerns over rising coronavirus infections.

Bullion is heading for its best quarter since 2016 as deaths surpassed 500,000 worldwide and confirmed cases exceeded 10 million, according to Johns Hopkins University data. The increasing numbers are a chilling reminder that the deadliest pandemic of the modern era is stronger than ever.

The precious metal has rallied 17% this year as governments and central banks implemented stimulus measures to aid economies battered by the pandemic. Investors are increasingly turning to gold as a store of wealth, and banks including Goldman Sachs Group Inc. now forecast it’ll hit a record $2,000 an ounce in 12 months.”

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Money & Markets/Tom Luongo

Gold Will Flourish in the Worst US Political Landscape in 160 Years

a gold chart in front of gold bars“The headlines earlier this week had gold hitting eight-year highs. Futures prices nearly topped $1,800 for the first time since the 2012 relief rally after the September 2011 peak.

The broad fundamentals for gold are lining up for a big rally into the first half of this decade (in fact, M&M Chief Investment Strategist Adam O’Dell says gold is going to $10,000).

The financial system is fundamentally broken. There are leaky pipes in the plumbing of markets all over the world.

Right now, central banks are doing their best to patch these leaks, but the outflow is just too great. And the stock market is still in a state of denial that the world we used to know is gone.”

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Marketwatch/Mark DeCambre
‘Make no mistake…the pandemic morphed into a Depression-like crisis,’ says UCLA economist, who predicts U.S. economy won’t recover from coronavirus until 2023

“The road to recovery for the U.S. economy from the COVID-19 pandemic could be a very long one, predicts David Shulman, senior economist at UCLA Anderson School of Management in a recently published quarterly research report.

Shulman said the current economic damage created by lockdowns and closures that have been put in place for months goes well beyond a garden-variety economic recession. ‘To call this crisis a recession is a misnomer,’ he warned.

‘Make no mistake, the public health crisis of the pandemic morphed into a depression-like crisis in the economy,’ he wrote. Shulman is forecasting a 42% annual rate of decline in real gross domestic product for the current quarter, which he says will be followed by a so-called ‘Nike swoosh,’ or more gradual recovery “that won’t return the level of output to prior fourth quarter of 2019 peak until early 2023.”

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Yahoo Finance/Reuters/Megan Davies

IMF warns markets at risk of correction after run-up

man wearing mask at the new york stock exchange“Markets for stocks and other risky assets could suffer a second swoon if the coronavirus spreads more widely, lockdowns are reimposed or trade tensions surge again, the International Monetary Fund warned on Thursday.

Equity markets tailspinned into bear market territory in record time earlier this year as the virus and related lockdowns pounded sentiment, but they have broadly rallied from their March 23 low. The S&P, which fell 34% in just 23 trading days, has been boosted by central bank support, and is now roughly 10% off its record high.

A ‘disconnect’ between financial markets and economic prospects has emerged, said the report, by Tobias Adrian, Director of the IMF’s Monetary and Capital Markets Department and Fabio Natalucci, a deputy director in the department. That “raises the specter of another correction in risk asset prices,” with valuations across many equity and corporate bond markets ‘stretched.’”

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CNBC/Reuters

Gold set for third straight weekly gain as virus cases soar

gold bars“Gold prices were headed for their third consecutive weekly gain on worries about rising global cases of the novel coronavirus, although prices see-sawed on Friday after a firm dollar and a gain in equities countered safe-haven demand.

Spot gold was steady at $1,760.73 per ounce as of 0339 GMT. The bullion has risen more than 1% so far this week, with prices scaling a near eight-year high of $1,779.06 on Wednesday. U.S. gold futures rose 0.2% to $1,770.90.

‘The amount of money pumped in by governments definitely supports gold as a safe haven with this COVID-19 situation still around,’ said Brian Lan, managing director at Singapore dealer GoldSilver Central, amid low interest rates globally.

But gold is seeing some profit-taking after almost reaching the $1,780 mark due to the overall strength of the dollar and stocks, Lan added.”

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Kitco/Gary Wagner

Higher gold prices will continue as long as Covid-19 does

Higher gold prices will continue as long as Covid-19 does“The fundamental factors which have taken gold pricing from $1460 in March, to within four dollars of $1800 per ounce this week are still present, and they continue to be highly supportive of gold prices. First and foremost, and at the root of other fundamental issues is the global Covid – 19 pandemic which is now in its fourth month. In that short period of time the total number of reported cases globally has swelled to 9,649,299, resulting in the loss of 487,800 souls.

The pandemic resulted in businesses globally shutting down as countries went into a lockdown mode to slow the spread of the virus. This lockdown led to a massive global unemployment rate. In the United States as of June 22nd 33 states still have double digit unemployment rates. Even with a fractional improvement from the April unemployment rate of 14.7%, the unemployment numbers for May were a staggering 13.3%. The number of individuals unemployed in the United States is approximately 30 million, leaving one out of ten Americans jobless.

The U.S. Treasury Department has allocated roughly $3 trillion in aid through the “CARES Act”. The Federal Reserve took interest rates to near zero and simultaneously infused liquidity into the economy through a monetary policy of quantitative easing and added $3 trillion to their balance sheets as they purchased mortgage-backed securities, U.S. treasuries and now corporate bonds. These actions are not isolated as many other central banks including the European Central Bank have implemented extremely accommodative monetary policies.”

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Kitco/Anna Golubova
This gold rally could take prices as high as $3,000 an ounce – Edison

golden bull with increasing arrow coming from behind“With the Federal Reserve’s response to the COVID-19 crisis, gold prices are likely to near $1,900 with the potential to go up as high as $3,000 an ounce, according to Edison’s latest gold report.

This outlook is based on the projections that the coronavirus crisis is a protracted one and the Federal Reserve’s balance sheet either stabilizes or continues to increase, Edison’s Investment Research director Charles Gibson said.

‘With the total U.S. monetary base now at US$5.1tn (and given the close historical correlation between the two), the gold price could very reasonably be expected to rise to US$1,892/oz and potentially as high as US$3,000/oz,’ Gibson wrote in the investment research company’s gold report.

Supporting gold at the moment is a combination of factors, including money printing, aggressive bond buying, COVID-19 lockdowns and economic crisis.

The report makes a comparison between the current negative interest rates in the U.S. to similar volatility in interest rates between September 1979 and October 1980, the time to which Edison refers to as gold’s “first great bull run in the period of flat money”.

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Business Insider/Ben Winck

Gold’s trading patterns foreshadow record highs in the 2nd half of 2020, Bank of America says

“Gold’s rally over recent weeks sets it up to post record-highs before the year is out, Bank of America said in a Tuesday note.

The precious metal is up 17% year-to-date, thriving on investors betting the coronavirus will drive a prolonged recession. Gold’s trading range now sets a breakout level at $1,900, the firm said. Should traders continue to flock to the popular safe haven, it stands to keep gaining through the end of the year.

‘The breakout occurring now that is ending Q2 completes an eight week trading range that has resumed higher,” Paul Ciana, technical strategist at Bank of America, wrote. “These patterns say gold can make a new all-time high in [the second half of 2020] with Q3 on our mind.’

Gold reached its highest point since early 2012 on Wednesday as rising COVID case counts fueled fresh recession fears.”

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Reuters/Tom Westbrook, Jessica DiNapoli

Stocks sell-off as coronavirus surge knocks recovery hopes

man walking in front of market changes wearing a mask“Asia’s stock markets slipped, bonds rose and the U.S. dollar was firm on Thursday as surging U.S. coronavirus cases, global trade tensions and an International Monetary Fund downgrade to economic projections knocked confidence in a recovery.

MSCI’s broadest index of Asia-Pacific shares outside Japan fell 0.7%, Tokyo’s Nikkei slumped 1.4% and Australia’s ASX 200 tumbled 1.8%. U.S. stock futures also declined 0.7% following on from an overnight slide on Wall Street.

Markets in Hong Kong and mainland China are closed for public holidays on Thursday.

Florida, Oklahoma and South Carolina reported record increases in new cases on Wednesday. Seven other states had record highs earlier in the week and Australia posted its biggest daily rise in infections in two months.

The governors of New York, New Jersey and Connecticut ordered travelers from nine other states to quarantine on arrival, a worry for investors who had mostly been expecting an end to pandemic restrictions.

Texas is also facing a ‘massive outbreak’ and authorities are considering localised restrictions, Governor Greg Abbott said in a television interview.”

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Marketwatch/Jonathan Nicholson

U.S. to hit Japan-like levels of government debt by 2050, budget group says

person walking in front of capitol building“The level of U.S. government red ink is set to explode to more than twice the size of the entire economy in three decades, according to a prominent anti-deficit group.

The Committee for a Responsible Federal Budget, a bipartisan group that focuses on fiscal matters, issued its estimate in a report Wednesday that attempts to update the 10-year projections usually made by the Congressional Budget Office and the White House’s Office of Management and Budget.

The CBO has already estimated the deficit for 2020 will rise to a record, in dollar terms, of $3.7 trillion, with public debt rising to 101% of gross domestic product. The nonpartisan budget scorekeeper for Congress is expected to update its 10-year projections in September.

The CRFB’s estimates hint that update could be grim. While the CBO in March, before the pandemic began to affect the economy deeply, estimated a cumulative shortfall of $14.164 trillion from 2020 through 2030, the group’s estimate projects the deficit to be $19.899 trillion over that period, an increase of $5.735 trillion.”

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CNBC/REUTERS

Gold soars towards 8-year high as coronavirus cases jump

“Gold surged to its highest in nearly eight years on Wednesday as rising coronavirus cases globally dented hopes of a rapid economic recovery and pushed investors towards safe haven assets.

Spot gold prices climbed 0.6% to $1,777.53 per ounce, having earlier hit their highest since October 2012 at $1,779.06. U.S. gold futures gained 0.7% to $1,794.60.

‘Everybody is worried about a second wave of the coronavirus not only in the U.S., but in Latin America, Brazil and Russia, so that’s supporting the rally,’ said Jigar Trivedi, commodities analyst at Mumbai broker Anand Rathi Shares. ‘People are expecting stimulus packages from central banks and higher the stimulus, better the prospects for gold.’

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Kitco/Neils Christensen

$2,000 gold in 2021 is a conservative estimate – MKS PAMP Group

gold bars“Unprecedented economic conditions caused by the COVID-19 pandemic will continue to support gold and silver prices at least through the first half of 2021, according to the latest research from Swiss refiner MKS PAMP Group.

In its latest forecast the analysts at the precious metals firm said that since their initial price forecast at the start of the year, the world has seen massive central bank action to support the global economy devastated by the coronavirus. They note that since March more than $15 trillion has been pumped into financial markets.

‘This is unprecedented and will have a long-term impact on the world economies,’ the analysts said. ‘Over the medium term, this massive influx of capital could result in inflationary pressure and a loss of purchasing power, in a negative global growth and negative interest rates context.’

In this environment, the analysts said they see gold prices pushing through $2,000 an ounce by the first half of 2021 as economic uncertainty and low interest rates continue to support prices.

‘Despite a significant price increase in our forecast, we believe our scenario to remain conservative,’ the analysts said. ‘As paper money loses value and markets remain volatile, gold shall face a significant influx of buying interest, and play its role as a safe haven and capital preservation asset. It is a perfect storm for gold or even a perfect hurricane!’”

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Marketwatch/ Andrea Riquier

COVID-19 undid 3 years of economic progress in China. Don’t expect a quick rebound, these experts say

family gathered wearing masks“A quick return to economic normalcy after the body blow of the coronavirus pandemic isn’t in the cards, if China is any indicator, Leland Miller says.

Miller is CEO of the China Beige Book, which attempts to provide a peek into the notoriously veiled economy. Right now, that view is grim.

China Beige Book’s just-released second-quarter report shows ‘an economy still mired in deep recession,’ its analysts noted. Even more problematic, Miller said in an interview, it implies that the government of the world’s second-largest economy is willing to walk back steps toward a more progressive economic model in order to claw out of the deep recession created by the virus that was first identified there in December.

The firm, which uses survey data from over 3,300 Chinese companies and 160 bankers in 34 industries across the country as source material, reports that most measures of business activity are ‘down massively’ compared with a year ago, even if the second quarter shows a modicum of improvement over the previous three-month period.”

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Kitco/Anna Golubova
Russia ramped up gold production right before COVID-19 hit

russia ramped up gold production“Prior to the coronavirus paralyzing the world, Russia was ramping up its gold production, according to the Union of Gold Producers of Russia.

Russia’s total gold output reached more than 64 metric tons in Q1, which is up 5.11% from the same period last year, the union said.

‘The coronavirus pandemic did not impact Russian gold mining companies’ production performance during the first three months of 2020. On the contrary, the results of the first quarter (Q1) maintained the trend of 2019, when Russia reached its record high in gold output,’ says the union’s chairman Sergey Kashuba.

Total gold mined, excluding recycled gold, was up 4.6%, reaching more than 48 tons in Q1, the union added.

After March, however, gold production saw problems due to COVID-19 shutdowns.”

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Marketwatch/Mark DeCambre

The decline of the U.S. dollar could happen at ‘warp speed’ in the era of coronavirus, warns prominent economist Stephen Roach

“Stephen Roach, a Yale University senior fellow and former Morgan Stanley Asia chairman, tells MarketWatch that his forecast for a sharp deterioration of the U.S. dollar could be a very near-term phenomenon, not an event that looms off in the distance.

‘I do think it’s something that happens sooner rather than later,’ the economist told MarketWatch during a Monday-afternoon interview.

His comments come as the financial expert has been warning for weeks of an epic downturn of the buck that could signal the end of the hegemony of the greenback as a reserve currency — an event that would ripple through global financial markets.

‘In a COVID era everything unfolds at warp speed,’ Roach told MarketWatch on Monday. He pointed to the contraction of the U.S. economy from an employment rate that was hovering around a 50-year low at around 3.5% near the start of 2020 to one that shows some 49 million people unemployed since the pandemic took hold in March. He also noted the rapid and unprecedented fiscal and monetary response that has ballooned the Federal Reserve’s balance sheet to more than $7.2 trillion from $4 trillion at the start of the year as examples of the celerity at which the currency market could change.”

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CNBC/Jeff Cox

The Fed’s corporate bond buying is stoking bubble fears

Jerome Powell“The Federal Reserve’s move into the next phase of its corporate bond buying is generating renewed concerns over potential asset bubbles.

While the initial announcement of the program provided a major lift to Wall Street, there now are worries that the risk-on sentiment could be getting carried away.

‘The Fed’s shock-and-awe campaign worked amazingly well,’ Yardeni Research founder Ed Yardeni said in his daily market note Monday. ‘This raises the question of whether the Fed really needs to do much more.’

Indeed, the mere pronouncement on March 23 that the Fed would establish two credit facilities – one for newly issued bonds and leveraged loans and another for those already on the market and tracked through ETFs – helped assuage a market that had locked up amid coronavirus fears.

The worries are that the market has now gone too far as interest rates linger around record lows and issuers count on perpetual Fed support should buyer appetite wane.

‘The goal was to restore liquidity to the credit markets,’ Yardeni said. ‘They are clearly functioning well again. If the Fed persists in flooding the markets with liquidity, the risk is that the Fed will create the greatest financial bubble of all times.’”

Click here to read the full article

Kitco/Anna Golubova

Gold prices get another boost as U.S. existing home sales disappoint in May

housing market graphic“Gold prices saw more gains and traded near five-week highs after U.S. existing homes sales missed expectations in May.

Existing home sales tumbled 9.7% last month to a seasonally adjusted and annualized rate of 3.91 million units, compared to April’s annualized rate of 4.33 million homes, the National Association of Realtors (NAR) said on Monday. The drop comes following a plunge of 17.8% in April. Economists were expecting to see a decline of 3% to 4.12 million units in May.

Gold prices edged up after the data release with August Comex gold futures last trading at $1,778.80, up 1.47% on the day.

Overnight, gold prices rallied and climbed to five-week highs on increased safe-haven demand triggered by a concerning rise of COVID-19 infections around the globe.

‘Traders and investors continue to weigh the positive aspect of economies continuing to come back to life and at a faster pace than most expected versus the negative aspect of a worrisome rise in Covid-19 cases worldwide, including in many states in the U.S. Importantly, the sense of the marketplace is that major central banks of the world will continue to print money if global economies show further signs of sputtering,’ said Kitco’s senior market analyst Jim Wyckoff.”

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REUTERS/CNBC
Gold hits highest in over a month as rise in virus cases bolsters appeal

Gold BarsGold prices hit their highest level in more than a month on Monday as a resurgence of coronavirus infections in some countries raised doubts about a swift global economic recovery.

Spot gold was up 0.3% at $1,748.05 per ounce, after rising to as high as $1758.35 earlier in the session, its highest level since May 18. U.S. gold futures was also 0.3% higher, at $1,758.10.

Spot prices are now $17 shy of a 7-1/2 year high of $1,764.55, hit last month.

Gold is seen as a safe haven during times of economic turmoil and benefited as global investors were unnerved after the World Health Organization reported a record jump in global infections of the coronavirus on Sunday, with the biggest increases seen in North and South America.

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Marketwatch/ Shawn Langlois
‘La la land?’ The stock market is ‘insanely disconnected’ and due for a ‘reckoning,’ Warren Buffett warns

The Stock Market is in La La LandThose betting against this “absurdly overvalued” stock market are about to get paid, if Kevin Smith, Crescat Capital’s chief investment officer, has it right in his gloomy assessment.

“Speculation is rampant and being championed by a bold new breed of millennial day traders,” he said. “The mania is based on a widespread hope in Fed money printing. The catalysts for reckoning are numerous as a major cyclical economic downturn has only just begun.”

Smith, who recently talked about learning the ropes from a stack of Berkshire Hathaway BRK.A, -0.51% BRK.B, -0.55% shareholders letters his dad gave him long ago, said, in a very un–Warren Buffett fashion, that shorting stocks “is worthy of a significant allocation today.”

Smith used this chart of plunging S&P 500 SPX, -0.56% profit margins to show “how insanely disconnected equity prices are from their underlying fundamentals.” He warned that buy-the-dip investors are “not paying attention and have simply been too eager to call the bottom.”

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MARKET INSIDER/Yun Li
The stock market is running out of steam with reopening trades fading and economic data ‘uneven’

Rocky Recovery for the Stock MarketThe stock market, so eager to put the entire blow from the pandemic behind it, is now coming to terms that a “V-shaped” recovery might be too rosy a scenario.

With recent spikes in coronavirus cases and fluctuations in the economic data, the market seems to be stuck in a range amid elevated volatility. Market analysts said investors should expect more turbulence ahead because the economic recovery is most likely to be bumpy.

“The market was priced for a continuation of improvement and I think that’s overstating what’s going to happen,” said Brian Levitt, Invesco’s global market strategist. “We are going to have episodes of cases rising. We are going to have a very slow and uneven improvement in the jobs market.”

After soaring more than 40% from the March lows, the S&P 500 turned sideways in the past two weeks, trading at similar levels to early June. The market, which used to turn a blind eye to disastrous news on the thinking that the economy had already bottomed, has become more vulnerable to negative economic headlines as the data begins to give a read on the shape of the recovery.

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Reuters/Yoruk Bahceli
Inflation Dog May Finally Bark, Investors Bet

Gold, forests, property stocks, inflation-linked bonds – these are just some of the assets investors are pouring money into on the view that the recent explosion of government spending and central bank stimulus may finally rouse inflation from its decade-long slumber.
With the world economy forecast to shrink 6% this year, it may seem like a strange time to fret about inflation.

And sure enough, market-based gauges suggest an uptrend in prices may not trouble investors for years. U.S. and euro zone inflation gauges indicate that annual price growth will be running at barely over 1% even a decade from now.

So if inflation really is, as the IMF put it in 2013, “the dog that didn’t bark”, failing to respond to all the central bank money-printing unleashed in the wake of the 2008-9 crisis, why should investors prepare for it now, especially as demographics and technology are also conspiring to tamp down inflation across the developed world?

The answer is that some think the dog really will bark this time, partly because – unlike in the post-2008 years – governments around the world have also been rolling out massive spending packages, in a bid to limit the impact of the coronavirus pandemic.

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by Sean Kelly

Maybe you’ve seen the parody picture that has gone viral (bad choice of words these days!) on the internet recently of Doc Brown and Marty McFly from Back to the Future.

Wearing his perpetually alarmed expression, the time-traveling Doc warns Marty, “Whatever happens, Marty, don’t ever go to 2020!”

It makes us laugh because it has been a year like no other… and it is not even half over yet!

And now there’s something new to add to 2020’s dark resume right along with everything else that has happened.

Something that made us think of silver.

We’ll get to that in a moment. But first, what happened.

On Monday (6/15), people across the US discovered their cell phones were not working. They couldn’t make calls or send texts. Family members were out of touch. Parents couldn’t check on their children. Social plans were disrupted. Business calls didn’t go through. Messages weren’t received. Call-backs weren’t made. Meetings were missed.

The problems spilled over to Facebook and Instagram. People we know were affected. Perhaps people you know were as well.

It didn’t take long for some to conclude it was a hack, a cyber-security attack on US telecommunications. The report by The Sun, a British tabloid, read, “A MASSIVE cyber attack targeting the USA was feared last night as major telecoms, internet and banking platforms were crippled at the same time.”

It passed along claims that the outages were “caused by a large-scale distributed denial-of-service (DDoS) attack, meant to cripple services by flooding them with traffic so they are unusable.”

Millions of people on Twitter and elsewhere read that it was attack. One congressman echoed the claim. But it didn’t take long for a cooler explanation to prevail. Since T-Mobile, apparently most affected by the service problems, merged with Sprint in April, some traced the problem to an update in merging the two companies’ technical systems.

T-Mobile’s CEO said it was “an IP traffic related issue.” That sounds plausible to us. The FCC intends to investigate.

Whatever the cause of the problem, the incident should focus us on how utterly dependent we are on systems that may not be robust. In this era of pandemics and lockdowns, with closed business, and workers furloughed, to say nothing of riots, protests, looting, and arson, you need to ask yourself if you are prepared for large-scale interruptions in the things that make our modern lives work.

What happens if there is an interruption in the power grid because of mismanagement or sabotage? If public utilities fail in a lawless environment? If banks and other businesses are forced to close, if there are urban fires, road closures, or “no-go zones” in your town?

What happens if the ATM machines stop spitting out cash? What happens when solar events interfere with satellite communications.

What happens if there is a wave of bank failures, or if a foreign government dumps US treasuries?

These are sensible questions that arise, not out of alarmism, but because our digital infrastructure in 2020 is increasingly complex and fragile. That is why technology and security officials gather from around the world to discuss just these questions.

That is why this cell phone failure made us think of silver.

We strongly recommend that each family have a portion of their wealth and savings in silver. Silver coins provide a small and convenient form of purchasing power, a bread-and-butter currency for emergencies like these and in times of currency failure.

Owning physical gold and silver is the single most important thing you can do to protect yourself from Black Swans, low predictable events that carry outsize impacts. Not only is silver especially favorably priced now compared to gold, silver coins and bars are an important part of your self-protection in 2020.

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FORBES/Eric Brotman
How The 2020 Elections Will Affect Your Retirement Plan—Regardless Of The Outcome

“November may seem far off, but the 2020 election is right around the corner. With the current state of the country, we can expect a lot of changes to take place soon after the election, no matter what the outcome is.

These changes will have huge impacts on Americans financially, so you’ll want to start preparing as soon as possible.

It’s going to be taxing.

We are on the heels of one of the largest stimulus packages in human history, and there are talks of another—even larger—package to come. Basically, our budget deficit and national debt have never been greater and will only grow from here.

At some point, Americans will need to pay this back. Governments of every level—local, state and federal—will need to find more revenue in the form of taxes.”

Click here to read the full article.

CNN/Martin Neil Baily and Benjamin H. Harris
The Great Recession was especially bad for older workers. The pandemic could be even worse

capital building“Recessions often have profound impacts on retirement savings, but not necessarily in obvious ways. In the wake of the Great Recession, for example, 401(k) balances rebounded after a yearlong freefall. But those hit the worst by the downturn were older workers who were required to take early retirement and were pushed out of the labor market before they were financially prepared or ready to stop working. For these premature retirees, the recession meant a hit to their standard of living that has lasted throughout their retirements.

As bad as the 2009 recession was for older Americans, Covid-19’s impact on retirement will likely be worse and more widespread.

The sheer magnitude of the current layoffs will mean that many older workers will lose their jobs and may never find another one. According to a late-May Census Bureau survey, approximately 40% of households with people in their 60s reported losing wages during the pandemic. And if prior experience is any guide, older workers will have a disproportionately hard time regaining their lost income. For example, laid-off men over 62 are over 50% less likely to find a job than a younger worker and typically experience steep pay cuts when they do.

Record-low interest rates are making matters worse for retirement savers. In cutting target interest rates to close to zero, the Federal Reserve has locked in ultra-low interest rates for the foreseeable future.”

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CNBC/REUTERS
Gold firms as new virus cases cast shadow over economic recovery hopes

gold bars“Gold prices rose on Thursday, as fears that new coronavirus cases could impede economic recovery bolstered demand for the precious metal and weighed on riskier assets.

Spot gold was up 0.3% at $1,731.88 per ounce, having earlier hit a near one-week high of $1,736.49. U.S. gold futures rose 0.5% to $1,744.80 per ounce.

Gold, seen as a safe asset during times of economic turmoil, continues to be supported by persistent concerns over the state of the global economy, said FXTM market analyst Han Tan. “Investors are currently dealing with competing narratives, between the risks of a second wave and the optimism surrounding the post-pandemic recovery,” Tan said.”

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MARKETWATCH/Sean Kelly
The government says there’s no inflation — except for the things people are actually buying

market watch charts“The things that we are still spending money on — food, rent, booze and video streaming — are going up in price as the coronavirus pandemic wears on. The things that we aren’t buying as much of — gasoline, clothing, transportation and hotel rooms — are going down in price.

And the government says there’s no inflation.

The Bureau of Labor Statistics reported Wednesday that the consumer price index fell 0.1% in May, driven by deep discounting on energy, car insurance, clothing and public-transportation prices. The so-called core rate of inflation, which strips out volatile food and energy prices, also fell 0.1%; it marked the first time the core rate has fallen three months in a row.

I’m not questioning the accuracy of the data, but there are serious questions about whether the consumer price index over the past few months reflects the experience of many households. After all, do you care if gasoline prices fell 3.5% in May if you didn’t buy any?

Most households spend most of their income on necessities, such as food, shelter, transportation, health care and clothing. Low-income households typically spend 82% of their income on those five categories, while middle-class families spend 78% of theirs, according to researchers at the Brookings Institution. Even high-income families spend about two-thirds of their income on necessities.

But there are necessities, and then there are the absolute necessities.”

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MARKETWATCH/Greg Robb
Powell says economic activity far below pre-pandemic levels despite ‘modest rebound’ in some areas

“Federal Reserve Chairman Jerome Powell on Tuesday suggested investors shouldn’t overreact to surprisingly good economic data like the May retail sales report.

In testimony prepared for the Senate Banking Committee, Powell acknowledged some economic indicators have pointed to a stabilization in activity and others have even suggested “a modest rebound.”

“That said, the levels of output and employment remain far below their pre-pandemic levels, and significant uncertainty remains about the timing and strength of the recovery,” Powell said.

The Fed chairman said until the coronavirus disease is contained, a full recovery is unlikely.

In his testimony, Powell said he thought the economy would go through three stages.

The first stage was the shutdown with a sharp drop in activity and that may end at the end of June. The second part will be the “bounceback” with people going back to work. “We’re seeing apparently the beginning of that,” Powell said. The third stage will be the economy “well short” of the pre-pandemic level in February.

“Much of that economic uncertainty comes from the uncertainty about the path of the disease and the effects of measures to contain it,” Powell said.”

Click here to read the full article.

KITCO/Jim Wyckoff
Gold prices down as stock markets resume rallies

24 hour spot gold“Gold prices are moderately lower in early U.S. trading Wednesday, as global equity markets have jumped back into rally modes following last week’s pullbacks. That’s negative for safe-haven gold and silver markets. August gold futures were last down $12.30 an ounce at $1,724.30. July Comex silver prices were last up $0.013 at $17.67 an ounce.

Global stock markets were mostly up in overnight trading. U.S. stock indexes are pointed toward firmer openings when the New York day session begins. Traders and investors are weighing the bullish aspects of generally faster rebounds in world economies than many had expected versus the bearish element of a resurgence in Covid-19 reported cases in some regions of the globe, including some U.S. states. At present, it appears the global economic growth factor is winning out. Skeptics can argue the rally in world stock markets is mainly due to the floods of central-bank infused cash that have hit the global financial system.”

Click here to read the full article.

RED ROCK SECURED/Sean Kelly
BACK TO THE FUTURE!

back to the future“Maybe you’ve seen the parody picture that has gone viral (bad choice of words these days!) on the internet recently of Doc Brown and Marty McFly from Back to the Future.

Wearing his perpetually alarmed expression, the time-traveling Doc warns Marty, “Whatever happens, Marty, don’t ever go to 2020!”

It makes us laugh because it has been a year like no other… and it is not even half over yet!

And now there’s something new to add to 2020’s dark resume right along with everything else that has happened.”

Click here to read the full article.

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CNBC/Stephanie Landsman
A dollar crash is virtually inevitable, Asia expert Stephen Roach warns

Dollar Index“Stephen Roach, one of the world’s leading authorities on Asia, is worried a changing global landscape paired with a massive U.S. budget deficit will spark a dollar crash.

‘The U.S. economy has been afflicted with some significant macro imbalances for a long time, namely a very low domestic savings rate and a chronic current account deficit,’ the former Morgan Stanley Asia chairman told CNBC’s ‘Trading Nation’ on Monday. ‘The dollar is going to fall very, very sharply.’

His forecast calls for a 35% drop against other major currencies.

‘These problems are going from bad to worse as we blow out the fiscal deficit in the years ahead,’ said Roach, a Yale University senior fellow.”

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CNBC/Elizabeth Schulze
Economist Mohamed El-Erian warns about the risk of ‘zombie markets’

“’Zombie markets are markets that are completely mispriced, they’re completely distorted,’ El-Erian said. ‘Why? Because there is a policy view that you need to subsidize everything in markets for now.’

The Fed has taken extraordinary steps, including pledging to buy corporate debt and unlimited amounts of Treasurys, to keep the financial system running smoothly during the coronavirus recession. On Monday, the central bank said it would expand its purchases in the credit market to include individual corporate bonds.

The Fed’s aggressive actions have helped stocks recover from big losses earlier this year when the coronavirus pandemic started to spread across the U.S. The S&P 500 has surged nearly 40% since March 23, when the Fed first announced it would buy corporate bonds, even as parts of the economy came to a standstill and unemployment surged.

El-Erian said the Fed’s actions have created a “win-win” mentality in the stock market, as many traders expect the central bank will continue to buy assets including equities in order to prevent a financial crisis.”

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MARKETWATCH/Mark DeCambre
The rise of mom-and-pop investors in the stock market will ‘end in tears,’ warns billionaire Cooperman

lee cooperman“A number of recent reports attribute the market’s rally since its March 23 low, and its subsequent choppy trading, to an era of zero-commission discount brokerage trades, ushered in by Charles Schwab SCHW, 2.48%, and platforms like Robinhood that cater to younger investors.

Critics like Cooperman say that a dearth of diversions due to COVID-19 lockdowns and unemployment have created a perfect environment for newly minted day traders to wreak havoc on Wall Street.

On Monday, Cooperman pointed to purchases of bankrupt car-rental company Hertz Global Holdings Inc. HTZ, 1.86%, which has drawn feverish buying interest from bargain-hunting investors, even though the company’s bankruptcy means that there is little if any equity value in the enterprise.

‘The gambling casinos are closed and the [Federal Reserve] is promising you free money for the next two years, so let them speculate,’ Cooperman said, referring to the central bank’s balance sheet which has ballooned to $7.2 trillion from about $4 trillion at the beginning of March, as it rolls out stimulus measures to limit the damage from the pandemic.”

Click here to read the full article.

KITCO/John Wyckoff
Gold, silver prices fade a bit on strong U.S. retail sales

24 hour spot gold“Gold and silver prices are trading near steady in early U.S. trading Tuesday, but have backed down from overnight highs in the wake of a much-better-than-expected U.S. retail sales report for May. A rally in the U.S. stock market due in part to reports that a drug has been realized that can cut death risks of patients on ventilators by one-third has also crimped the safe-haven metals. August gold futures were last up $6.30 an ounce at $1,733.50. July Comex silver prices were last up $0.216 at $17.61 an ounce.

The just-released U.S. retail sales report for May showed a rise of 17.7% versus expectations for a rise of 7.7%. This is yet another U.S. data point that shows a surprising rebound in the U.S. economy from the Covid-19-inducted damage of the past three months.

Global stock markets were mostly up in overnight trading. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. The U.S. stock indexes on Monday made a strong recovery from sharp early-day losses, due in part to the Federal Reserve announcing it has started buying corporate bonds, in an extension of an existing program that had only purchased corporate bond exchange traded funds. Reports also said the Trump administration is planning to spend $1 trillion on U.S. infrastructure improvements.”

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CNN/Clare Duffy, Laura He, Jill Disis and Anneken Tappe

Dow dives as coronavirus resurgence fears grow in the US and China

“Volatility has returned to the stock market, as the United States and China grapple with new coronavirus outbreaks. It’s a sign that the pandemic isn’t done wreaking havoc on the global economy.

US stocks tumbled at the opening bell in New York, with the Dow (INDU) falling 2.6%, or 660 points. Trading was volatile in the first minutes: The Dow briefly bounced back and then fell more than 700 points, or 2.8%.

The S&P 500 (SPX) and Nasdaq Composite (COMP) both also dropped sharply at the open, and traded down 2.3% and 1.7%, respectively, in the first minutes of the session.

Oil prices moved lower, also pushed down by concerns about a resurgence of the virus that could lead to lower demand. US oil prices tumbled more than 4% to $34.75 a barrel. Brent, the global oil benchmark, slipped 2.5% to $37.75 per barrel.”

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CNBC/Fred Imbert and Yun Li

Dow drops more than 600 points as Wall Street adds to last week’s sharp losses, airlines fall

recovery reversal“The Dow Jones Industrial Average fell 608 points at the open, or 2.4%. The S&P 500 slid 1.9% while the Nasdaq Composite traded 1.4% lower.

Stocks which stand to benefit the most from a successful reopening led the losses. Carnival and Royal Caribbean cruise lines each lost more than 7%. United Airlines lost 7.9% and American Airlines slid 7.6%. Retailers Kohl’s and Gap declined. These types of stocks surged in May as investors bet that the worst of the virus was over.

“We’re in the midst of a correction,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “The coronavirus is spiking up again and that’s a problem. There was also over-exuberance in the market. The market was discounting a quicker economic rebound.””

Click here to read full article.

SEEKING ALPHA/John M. Mason

Money Is Moving Out Of U.S.: The Debt Party Is Over

100 dollar bills“Foreign money that had been invested in the United States appears to be leaving the country as the extent and length of the economic downturn is now being realized.

The huge amount of debt that has been created over the past twenty years, combined with the debt now being issued, is creating a huge burden that must be satisfied.

Federal Reserve actions will help meeting the liquidity needs of financial markets but are not expected to create the economic growth needed to cover the debt burden.

In only three of the last 20 years has the United States experienced foreign investors being net sellers of US Treasury securities. The last his this happened was in 2016.

“Goldman Sachs expects foreign investors to be net sellers of US Treasuries this year,” writes Eva Szalay in the Financial Times.”

Click here to read full article.

KITCO/John Wyckoff

Gold, silver prices down, following global stock market sell-off

“Gold and silver prices are solidly lower in early U.S. trading Monday. On this day traders appear more focused on the bearish prospects of reduced consumer demand for precious metals due to hobbled economies, than on their safe-haven aspects. August gold futures were last down $22.70 an ounce at $1,714.50. July Comex silver prices were last down $0.297 at $17.185 an ounce.

Global stock markets were mostly down in overnight trading. U.S. stock indexes are pointed toward solidly lower openings when the New York day session begins. Traders and investors are risk averse to start the work week, as there are growing signs that the Covid-19 pandemic is making a resurgence. Reports said parts of Beijing are on lockdown again, with cases in some U.S. states also on the rise as businesses reopen and American citizens become more lax on social distancing. Reported cases in the U.S. have now risen above 2 million.

There are also growing notions that the global stock market rebounds have come too far, too fast, given the actual economic conditions in the major industrialized countries at present. The general and even many in the investing public are asking, “How could the Nasdaq stock index hit a record high last week when U.S. unemployment has surged to around 15% and much of the economy remains crippled?””

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KITCO/Video

The Fed knows the economy isn’t roaring back

video screenshot“The Federal Reserve has tipped its hand and its expectations to hold interest rates at the zero-bound range for the next two years is sapping hope of a sharp recovery out of financial markets and boosting gold prices.

Gold prices have recently pushed back to the top of their two-month trading range and in an interview with Kitco News, Christopher Vecchio, senior currency strategist of IG Group, said that in the current environment, it is only a matter of time before gold prices breakout to the upside. Additionally, a second wave of COVID-19 is likely to slow down any economic growth.”

View the full video here.

MARKETWATCH/Satyajit Das

Government’s cure for the coronavirus recession is worse for the global economy than the disease

“A major legacy of the COVID-19 pandemic will be a significant increase in already high global debt levels. In the U.S., government debt is expected to rise to $27 trillion by September 2020 from $23 trillion a year ago — a debt-to-GDP ratio of 135%. In OECD countries, debt levels are expected to increase by $17 trillion, rising from 109% to more than 137% of GDP.

Public sector debt increases reflect higher healthcare spending, actions to alleviate the economic effects of the COVID-19 crisis, emergency loans and the loss of tax revenues. Households and businesses have also substantially increased borrowings to cover income shortfalls. If the recovery is slower than expected, then the rise in borrowings will be greater.

Growth and debt are now inextricably linked. Increasing amounts of debt are needed to generate growth. Globally, around $2-$3 of new debt are needed to produce each dollar of growth. This means debt is increasing at a faster rate than growth.’

Click here to read the full article.

CNBC/Fed Imbert and Eustance Huang

Wall Street comeback fades, Dow now up 300 points

making up lost ground chart“Stocks rose on Friday, clawing back some of the sharp losses from Wall Street’s worst day since March.

The Dow Jones Industrial Average traded 329 points higher, or about 1.3%. The S&P 500 gained 1% while the Nasdaq Composite advanced 0.9%. The major averages were off their session highs, however. The Dow had gained more than 800 points earlier in the day.

Despite those sharp gains, the major averages were all on pace to post their first weekly losses in four weeks. The Dow and S&P 500 are both down more than 5% week to date while the Nasdaq has lost 2.4%.

Investors on Friday went right back into the plays whose fates hinge on a successful reopening of the economy. Carnival Corp jumped 11.1%. United Airlines climbed 11.2%. Other winners included brick-and-mortar retailers Kohl’s and Gap. Those stocks were hit big time during Thursday’s sell-off as investors feared the reopening of the economy could be delayed by a second wave of cases”

Click here to read the full article.

CNBC/Ranjeetha Pakiam and Elena Mazneva

Gold set for biggest weekly gain since April on bearish economic outlook

gold bars“Gold rose on Friday as fears regarding the resurgence of coronavirus infections and grim economic outlook by the U.S. Federal Reserve boosted demand for bullion, leading the metal towards its biggest weekly gain since early-April.

Spot gold gained 0.3% to $1,732.91 per ounce, and has jumped about 2.8% so far this week, which could be its biggest gain since the week of April 10. U.S. gold futures eased 0.1% to $1,738.60.

“One of the reasons has been the statement form the FOMC and the testimony of the (Fed Chair) Jerome Powell, painting a darker picture of the U.S. economy,” said Quantitative Commodity Research analyst Peter Fertig. Also, “there is talk about second wave especially after cases of new infections of the virus have risen again in some countries. A warning which many people ignored.””

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CNBC/Fred Imbert and Yun Li

Dow plunges more than 800 points on worries of second coronavirus wave, airlines and retailers fall

stock market volatility“Concerns about a second wave of coronavirus cases have risen as U.S. states push deeper into reopening. Texas has reported three consecutive days of record-breaking Covid-19 hospitalizations. Nine California counties are reporting a spike in new coronavirus cases or hospitalizations of confirmed cases, AP reported Wednesday.

Friendly monetary policy from the Federal Reserve cannot “offset a severe COVID second wave,” said Dennis DeBusschere, macro research analyst with Evercore ISI, in a note. “With TX, AZ, CA new cases and hospitalizations increasing and investors concerned that recent protest will fuel a wave of infections, the risk of persistently weak economic and earnings growth has increased. S&P fair value estimates are falling as a result.”

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KITCO/Video

Another crash is coming; gold to hedge against 100% inflation

value of money destroyed“’The economic numbers are absolutely catastrophic, and yet, we’re back at all-time highs,’ Chambers told Kitco News. ‘The only possible explanation for stocks being so high is that inflation is coming, and when you think about it, if inflation is coming, where do you put your money?’

While gold would be the obviously solution to hedge against inflation for retail investors, larger institutional investors would likely only put their money into equities in this situation, which is one of the reasons why stocks have been driven up to erase most of March’s losses.

Additionally, a second wave of COVID-19 is likely to slow down any economic growth.

‘The second wave is already upon the U.S. The numbers have gone from 18,000 a day to 20,000 day in new cases. America is relatively unlocked now,’ he said.

However, it is unlikely that governments will implement another lockdown of businesses for risk of sending us back ‘into the stone age,’ Chambers said..”

View the full video here.

BLOOMBERG/Ranjeetha Pakiam and Elena Mazneva

Gold Futures Rally as Powell’s Fed Delivers for Bullion Bulls

“Gold futures rallied as the Federal Reserve vowed to hold interest rates lower for longer and investors tracked signs of a resurgence in infections in some U.S. states.

The haven pushed higher after Chairman Jerome Powell said Wednesday the Fed is committed to “do whatever we can, for as long as it takes.” Almost all officials forecast keeping rates near zero through 2022, and the central bank also said it will at least maintain the current rate of bond purchases.

“The conditions are here for gold still going to $1,800,” Dominic Schnider, head of commodities & Asia Pacific currencies at UBS Group AG, told Bloomberg Television. The metal has support “with rates staying where they are for longer, and real rates expectations potentially shifting more negative,” he said.”

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MARKET INSIDER/Saloni Sardana

The OECD said coronavirus has triggered the worst global recession in almost 100 years – and laid out 2 scenarios for its impact on the world economy

“The COVID-19 pandemic has triggered the “most severe recession in nearly a century,” the Organization for Economic Co-operation and Development warned on Wednesday as it released two scenarios for how the virus could develop and impact global markets.

The OECD said in Wednesday: “With little prospect of a vaccine becoming widely available this year, and faced with unprecedented uncertainty,  the OECD has taken the unusual step of presenting two equally likely scenarios – one in which the virus is brought under control, and one in which a second global outbreak hits before the end of 2020.”

A pair of very different scenarios

The OECD sees world economic output collapsing by 7.6% in the event of a second wave of coronavirus before the end of this year.”

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CNBC/REUTERS

Gold gains as equity rally pauses ahead of Fed verdict

gold gains“Gold extended gains on Wednesday as global equity markets eased after a recent rally, while U.S. Treasury yields dropped ahead of the outcome of the Federal  Reserve’s meeting that is expected to shed light on the state of  the economy and further stimulus.

Spot gold was up 0.1% at $1,715.43 per ounce, as of  0248 GMT, after posting its best day in a month on Tuesday. U.S. gold futures also edged up 0.1% to $1,723.60.

“We are seeing a fairly clear risk-off sort of dynamic in the markets and I think that’s been supportive for gold as yields have fallen against that narrative over the past 24 hours,” said DailyFx currency strategist Ilya Spivak.”

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MONEY & MARKETS/Michael Carr

Warning: Why This Greed-Driven Rally Looks Like the Great Depression

rally looks like Great Depression“Right now, the S&P 500 is in the midst of its biggest three-month gain since 1957. Many analysts use the S&P 500 as a benchmark to describe the stock market. Their data often goes back to 1957 because that’s when Standard & Poor’s expanded the index to 500 companies and their stocks.

This ignores the fact that there was a stock market before 1957. Analysts using 1957 as their starting point argue markets before then were different than modern markets. These earlier markets, including the market crash leading into the Great Depression, were so different they can be ignored.

At times like this, that argument seems ridiculous. Human nature has been the same for thousands of years. Greed and fear have always been important motivations. After all, ancient civilizations went to war because of greed and fear.”

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RED ROCK SECURED/Sean Kelly

RON PAUL SAYS $3,000 GOLD THIS YEAR!

Ron Paul in front of a bunch of gold“Ron Paul is not in the habit of making market predictions.  But when he does, we have learned to pay close attention.

This time last year Dr. Paul announced that we were in a new gold bull market.  He was certainly right about that.

Now the long-time congressman and former presidential candidate says he expects gold to hit $3,000 an ounce this year.  That is certainly possible.

Ron Paul is one of the nation’s foremost gold authorities.  He was a member of President Ronald Reagan’s Gold Commission in the 1980s, and is the co-author of The Case for Gold about the commission’s findings, as well as the author of Gold, Peace, and Prosperity, and the New York Times bestseller End the Fed.

In House Financial Services Committee hearings, Congressman Paul made more than one Federal Reserve chairman squirm.  When Ben Bernanke testified before the committee, Dr. Paul asked him if gold is money.”

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KITCO/Jim Wyckoff

Gold prices up as global stock markets pull back

24 hour spot gold“Gold prices are moderately higher in early U.S. trading Tuesday, as world stock indexes were mostly weaker overnight. Gold bulls are working to kill a fledgling price downtrend that has developed on the daily bar chart, but have some more work to do in the near term to stop it. August gold futures were last up $12.20 an ounce at $1,717.20. July Comex silver prices were last up $0.002 at $17.90 an ounce.

Global stock markets were mixed but mostly weaker in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins, on normal corrective pullbacks from recent strong gains. The Nasdaq index Monday hit a record high, while the S&P 500 stock index hit a three-month high. Trader and investor risk sentiment remains upbeat. The just-released NFIB small business optimism index rose to 94.4 in May from 90.9 in April. The U.S. government reported the American economy officially entered recession in February, while also on Monday the Federal Reserve expanded its lending program to U.S. businesses.”

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FXEMPIRE/Paul Rejczak

Gold Gaining Ahead of Tomorrow’s Fed Release

gold gaining“Gold is gaining 0.5% this morning, as it retraces more of its Friday’s sell-off. Financial markets remain in risk-on mode, as stocks continue to hover along their medium-term highs. What about the other precious metals? Silver gained 2.37% on Monday and today it is 0.9% lower. Platinum gained 3.71% and today it is 1.3% lower. Palladium gained 4.32% yesterday and today it is 2.8% lower. So precious metals’ prices are mixed today.

The recent economic data releases have been confirming negative coronavirus impact on global economies. However, Friday’s U.S. monthly jobs data came out much better than expected. And the Nonfarm Payrolls number has been positive. Will we get more positive surprises this week? Today we will get the U.S. Wholesale Inventories data. But the markets will await tomorrow’s very important data releases: Consumer Price Index and the FOMC Statement.”

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MARKETWATCH/Myra P. Saefong and Mark DeCambre

Gold prices push more than 1% higher amid global equity pullback

“Gold prices headed sharply higher Tuesday as global equities staged a modest retreat after being buoyant for weeks on the back of the reopening of economies stricken by the coronavirus pandemic.

Prices for the precious metals are finding some traction “in the wake of a risk off global trade in equities, official recession labeling for the U.S. economy and because of the markets capacity to reject sub-$1,700 pricing for a second day in a row,” analysts at Zaner Metals wrote in a daily note.

Against that backdrop, August gold GCQ20, +1.21% on Comex was up $23.20, or 1.4%, at $1,728.30 an ounce, after finishing Monday’s session up 1.3%. Meanwhile, July silver SIN20, -0.04% added nearly a penny, or 0.04%, to trade at $17.90 an ounce, following a 2.4% climb in the previous session.”

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CNBC/Jesse Pound

Cramer on rampant market speculation: ‘I’ve never seen so many games played with stocks’

markets now“CNBC’s Jim Cramer cautioned investors on Tuesday to avoid the risky stocks favored by day traders these days amid rampant speculation in the market.

“I’ve never seen so many games played with stocks, which is that, ‘hey, we’re taking this one up today. We’re taking that one up today,’” Cramer said on “Squawk on the Street.”

The market’s amazing comeback from its March coronavirus low has led to excessive risk taking by many traders.

Along with retail investors trying to catch up to the rally, commission-free trading, the lack of sports and even stimulus checks from the Treasury Department being used to buy stocks have played a factor. Traders have even bid up the stocks of companies that have filed bankruptcy or are expected to do so soon. Cramer warned on Tuesday that many of those traders were likely to lose money in these trades.”

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SEEKING ALPHA

Gold: Time To Load Up The Truck Again

gold chart 1“The recovery of unemployment was faster than expected, which is very positive for the economy, decreasing the risk of a global depression. The surprising shift from jobs lost to jobs added shows potentially that this demand that was eliminated could come back into the economy with a vengeance. The government’s stimulus has been at historic levels, which saved the markets. The debt levels are now completely out of whack. Although it was deflationary, this contraction decreased values way down, but the turnaround could be faster than anticipated. If we get demand back into the economy faster than expected, it could lead to shortages and inflation and force interest higher. The world is going to have to pay for this disruption caused by COVID-19.

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KITCO/Jim Wyckoff
Gold, silver prices see corrective rebounds from recent pressure

24 hour spot goldGold and silver prices are higher in early U.S. trading Monday, on upside corrections from recent selling pressure that has produced near-term chart damage in the gold market. A shaky U.S. dollar on the foreign exchange market and higher crude oil prices are bullish “outside market” forces working in favor of the metals market bulls to start the trading week. Still bearish for the safe-haven metals is upbeat trader and investor risk appetite recently that has seen money flowing into equities markets. August gold futures were last up $13.50 an ounce at $1,696.40. July Comex silver prices were last up $0.411 at $17.89 an ounce.

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MARKETWATCH/Mark DeCambre

Gold prices head higher after Friday fall as investors bet on continued central-bank stimulus

“Gold prices on Monday rose off a two-month low as investors wagered that stimulus from central banks will remain in place for the foreseeable future, bolstering the case for bullion, despite a powerful rebound from equities off their lows in the U.S.

“The global economic recovery will still require further aid and gold prices should still be supported over the medium-term,” wrote Edward Moya, senior market analyst at brokerage Oanda, in a daily research note.

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CNBC/Mathew J. Belvedere

Mohamed El-Erian: I’m ‘uncomfortable’ betting on continued ‘huge recovery’ in the stock market

huge unemployment surprise“Mohamed El-Erian, who in early March correctly called a coronavirus-driven bear market, told CNBC on Monday he’s reluctant to buy the latest stock rally.

“For me personally, it’s an uncomfortable bet to continue to bet on a huge recovery,” the chief economic advisor at Allianz said on “Squawk Box.” “I don’t like doing this. But I respect and admire those who can.”

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by Sean Kelly

Cities burning.  A plague on the land.  Soldiers fighting mobs.

We know it sounds like an old Cecil B. DeMille movie.

But this isn’t Hollywood.  It’s real life today.

All of these things—a public health crisis, the pandemic lockdown, civil unrest, property destruction—are an enormous drag on prosperity. They are a tax on opportunity and growth at the very least and are always met by massive government spending.

In our case that means more money printing.

The shredding of the social fabric and civil disorder are good reasons to own gold.  So is a historic economic downturn.  But there is another story that is being crowded off the front pages. Something in addition to the riots and looting.  Something more than the coronavirus, businesses that are closed never to reopen, millions unemployed.

It is not more important that our domestic chaos.  But it must not escape your notice.

We are also living in an extremely dangerous geopolitical moment.  International tensions are running higher than at any time since the Cold War—this time between the US and China.

The war of words is escalating.  China has “ripped off the United States” like no one before, says Trump.  For its part The Global Times, a Chinese government newspaper, accuses Trump of “typical international hooliganism.”

Cracking down on Hong Kong’s autonomy, China has imposed a new national security order that would allow its secret police, the Ministry of State Security, to operate in Hong Kong the way that secret police operate.

In response, the US is ending Hong Kong’s preferential trade status.  (That seems like a peculiar policy since it will hurt China, but it will hurt Hong Kong more.)

The shipping lanes of the South China Sea are growing crowed with both territorial claims and warships, making likely a confrontation even over an accident.  The Taiwan Times is reporting that China’s People’s Liberation Army is conducting drills in preparation for an assault on the Pratas Islands, held by Taiwan.  On the American side, reports the newspaper, “in recent weeks a succession of U.S. aircraft and naval vessels have patrolled the area south and west of Taiwan in response to frequent forays into Taiwanese airspace by PLA aircraft.”

Not every front of the Sino-American divide is territorial.  There are commercial fronts as well.  US Secretary of State Mike Pompeo is employing maximum bluster in the direction of Israel and other countries against deepening economic ties with China.  One of Pompeo’s aims is to impede the adoption of China-based Huawei’s 5G networks.

Nevertheless, European officials are now speaking quite openly about the “the end of an American-led system and the arrival of an Asian century.”

Other charges are bouncing back and forth across the Pacific.  Legal cases are being drawn for COVID-19 claims against China.  China is signaling that it will retaliate against the US Huawei ban, with Boeing, Tesla and Apple all mentioned.  Increasingly discussed are major restrictions against Chinese students studying in the US.

Meanwhile, Republican strategists and early ads have made clear that they intend China to be central  to their presidential campaign.  Democrats won’t let themselves be outdone on the issue.

Bear in mind that as all this goes on, and as US spending soars and the national debt compounds, China remains a major US creditor.  It holds $1.08 trillion in US Treasury securities at a time the US needs all the creditors it can find.  China does not loan all that money to the US as a favor.  It needs dollar reserves for its own purposes, such as settling international trade deals.  But as Russia discovered in replacing most of its US Treasury holdings with gold, China can get by with a lot fewer dollar-based reserves.

Rising tensions carry the very real prospect—and at some point the inevitability—of massive Chinese disinvestment in the dollar and an accelerated reliance on gold –not just as an alternative, but as an upgrade to their dollar holdings.

It is a reasonable thing for China to do.  Afterall, prominent figures on Capitol Hill are making the suicidal suggestion—suicidal for the us—that the government renege on China’s US debt portfolio.

That would end the reign of the dollar, crash the stock market, and destroy the bond markets.

China has been getting ready for this moment for a long time.  Since 2006 its gold reserves have grown from 600 tons to 1,948 tons.  Bear in mind, that these numbers from the People’s Bank of China reflect official state holdings.  But many observers believe they substantially understate China’s gold position.  Most agree that there has been a tremendous flow of gold into private hands in China as well, mostly from Europe and the West.  At the same time, China remains far and away the world’s largest producer of gold.

Stated in the terms of personal financial management, China has diversified its portfolio with an emphasis on gold.  It is investing for a crisis.  It knows exactly what the Federal Reserve is doing and anticipates the dethroning of the dollar as the world’s reserve currency.

China has been getting ready for this moment.

We think you would be wise to diversify into gold as well, now, in this time of chaos and crisis.

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SEEKING ALPHA/Clif Droke

Gold’s Safety Factor Is As Strong As Ever

gold safety factor chart“A new bull market in equities has removed some of the sheen from gold, leaving some to wonder if the gold bull is dying. But while worries over the U.S. economic outlook are dwindling, worries over U.S. and global social unrest have emerged to keep gold’s safety factor intact. At the same time, continued central bank stimulus is keeping interest rates low, which in turn bodes well for gold’s intermediate-term outlook. Here we’ll take a closer look at the main evidence which supports higher yellow metal prices this summer.

The last few weeks have tested the patience of gold investors, as the precious metal fell 4% below its April high and went nowhere in May. Gold’s price peak occurred at around the same time as the height of the coronavirus panic, and safety-related gold interest subsequently waned as investors’ risk appetite increased and equity prices rebounded.”

Click here to read the full article.

FXEMPIRE/Arkadiusz Sieron

Will Great Unlock Push Gold Prices Down?

“As Great Lockdown was positive for the gold prices, the Great Unlock will be bad, right? We invite you to read our today’s article about the Great Unlock and find out whether it really must be negative for the gold prices.

It’s all government’s fault, right? After all, the Great Lockdown was introduced by the federal and state governments introduced, wasn’t? Well, not quite.

Before I will explain why, let me clear one thing up: I’m a liberty lover and I’m skeptical about the government regulations. And the economic shutdown was obviously untenable – the only reason to shut down the economy was to buy some time to prepare the healthcare system for better handling of the epidemic. So, it’s good that the Great Lockdown is ending.”

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KITCO/Neils Christensen

Gold price drops as U.S. economy creates 2.5 million jobs in May

people wearing masks behind computers“The gold market has been unable to hold support around $1,700 an ounce and struggling to find positive momentum after the U.S. economy surprisingly added jobs last month.

Friday, the Bureau of Labor Statistics said 2.5 million jobs were created in May. The data significantly beat expectations; according to consensus forecasts, economists were expecting to see job losses of around 7.75 million.

New life is being breathed into the U.S. economy as states start to ease nearly two-month lockdown measures that were put in place to slow the spread of the COVID-19 pandemic.

“These improvements in the labor market reflected a limited resumption of economic activity that had been curtailed in March and April due to the coronavirus (COVID-19) pandemic and efforts to contain it,” the report said. “In May, employment rose sharply in leisure and hospitality, construction, education and health services, and retail trade.”

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CNBC/REUTERS

Gold falls as risk appetite grows; focus on US jobs data

gold bars“Gold fell and was on track for a third straight weekly decline on Friday, weighed down by gains in riskier assets as investors grew more hopeful of a rebound in the coronavirus-hit global economy.

Spot gold was down 0.3% at $1,705.73 per ounce. U.S. gold futures fell 1.2% to $1,707.30.

Bullion has declined 1.2% so far this week, on track for its biggest fall since the week ending May 1.

“The European Central Bank’s move yesterday is supporting risk-taking …. It seems more investors holding gold are switching out to the equity market,” said UBS analyst Giovanni Staunovo.

“I still see gold moving in a $1,700-$1,750 range for the time being.”

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CNBC/REUTERS

Gold rises on bargain hunting, focus on US payrolls data

“Gold rose on Thursday as investors took advantage of the previous session’s steep price decline to buy the metal, with markets awaiting the release of Friday’s U.S. non-farm payrolls data for May.

Spot gold rose 0.9% to $1,713.37 per ounce. U.S. gold futures climbed 0.8% to $1,719.10.

“There are quite a few market participants still bargain-hunting gold given the fundamental backdrop of the coronavirus crisis and ongoing recession,” Julius Baer analyst Carsten Menke said.”

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KITCO/Neils Christensen

Gold price rises as ECB sees 8.7% decline in European economy in 2020

European Union Flag“The gold market is seeing renewed upward momentum Thursday after the European Central Bank increased its stimulus measures with the COVID-19 pandemic expected to significantly impact European growth.

Following its monetary policy meeting, the ECB said that it was increasing its emergency spending program by €600 billion to a total of €1,350 billion. The move comes as the ECB sees economic growth falling 8.7% this year, according to its latest economic projections.

“Incoming information confirms that the euro area economy is experiencing an unprecedented contraction,” said ECB President Christine Lagarde in her opening statement. “While survey data and real-time indicators for economic activity have shown some signs of a bottoming out alongside the gradual easing of the containment measures, the improvement has so far been tepid compared with the speed at which the indicators plummeted in the preceding two months.”

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MARKETWATCH/Myra P. Saefong and Mark DeCambre

Gold gets a boost from weakness in U.S. dollar and stocks, as traders parse ECB decision

man holding two gold bars“Gold futures rose on Thursday, with prices getting a boost from some weakness in the U.S. stock market and the dollar, as investors digested policy actions by the European Central Bank.

The ECB, as expected, boosted the size of its Pandemic Emergency Purchase Program on Thursday, saying the envelope for asset purchases was increased by €600 billion ($674.5 billion), to €1.35 trillion euros.

The PEPP is now set to run through at least the end of June 2021, versus the end of 2020, while maturing principal payments from assets purchased under the plan will be reinvested until at least the end of 2022, the ECB said.”

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FXEMIRE/Chris Vermeulen

Gold & Silver “Washout” – Get Ready For A Big Move Higher

Silver Futures Daily Chart“Gold and Silver moved lower early on June 2nd and 3rd.  Our research team believes this is a “Washout Low” price rotation following a technical pattern that will prompt a much higher rally in precious metals.  This type of washout price rotation is fairly common before very big moves after Pennant/Flag formations or just after reaching major price trigger levels.

With Gold, a sideways Pennant/Flag formation has been setting up near our GREEN Fibonacci Price Amplitude Resistance Arc.  We believe the downward price rotation recently is a perfect setup for skilled technical traders to take advantage of lower entry price levels.  The GREEN Fibonacci Price Amplitude Arc will very likely be breached over the next 5 to 10 trading days and the price of Gold should rally well above $1850 in the process.  We believe this Washout Rotation is a process of running through the Long Stops just below recent price activity that will end with a defined upside price rally over the next 2 to 5+ weeks.”

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KITCO NEWS/Video

Gold is going to $2,500 so buy the dips

“The gold market is stuck in a channel as it tries to hold its ground around $1,750 an ounce; the spark that could ignite the next phase in the precious metal’s rally could be just around the corner, according to Phillip Streible, chief market strategist at Blue Line Futures.

In an interview with Kitco News, Streible said that momentum in equity markets is providing some competition for gold; however, he added that this enthusiasm could prove to be misplaced.

“The federal reserve is propping up all U.S. equities and the prices of most assets right now. That’s causing this, this fear of missing out in the equities,” he said. “The reality is: on the equity side, earnings are going to continue to fall. A safety value play will come into effect and that’s where gold prices really take off because the fed is completely handcuffed right now.”

Watch the full video here.

MARKETWATCH/Steve Goldstein

There’s a danger in the disconnect between complacent markets and weak fundamentals, analyst warns

“All roads seem pointed in one direction at the moment. The S&P 500 SPX, 0.89% closed up on Tuesday for the third-straight session, extending the rebound from the March lows to nearly 38%. Investors continued to flock to the hard-hit cyclical sectors, including energy, industrials and materials.

Mike Larson, senior analyst at Weiss Ratings, said he has never seen anything like it.

“It’s the biggest disconnect I can remember in the almost-quarter century I’ve been active in the markets,” he said. “I can’t recall a time when we’ve seen a large disconnect between, not just what’s going on in Main Street versus what’s going on in Wall Street, but what’s going on in the underlying fundamentals that would normally impact Wall Street.””

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CNBC/REUTERS

Gold dips as equities rally on economic recovery hopes

gold bars“Gold prices extended losses on Wednesday as equities jumped to three-month highs on optimism over global economic recovery, though losses were limited by a weaker U.S. dollar and civil unrest in the United States.

Spot gold fell 0.5% to $1,718.26 an ounce after dropping about 0.7% on Tuesday. U.S. gold futures fell 0.7% to $1,722.70.

“Generally, markets are getting comfortable with the fact that even though the data is bad, things are likely to improve and that is taking the shine off gold,” said Michael Hewson, Chief Market Analyst at CMC Markets UK.”

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BLOOMBERG/Josh Friedman

First U.S. Gold Coin May Fetch $15 Million in Private Sale

gold coins in safes“The Brasher Doubloon, the first gold coin struck in the U.S., is being offered privately at a $15 million asking price, according to numismatic adviser Jeff Sherid. His firm, Los Angeles-based PCAG Inc., is marketing the coin on behalf of a collector he would only identify as a former Wall Street executive.

The doubloon is dated 1787 — 11 years after the Declaration of Independence was signed, the same year the Constitution was written and five years before the federal mint opened in Philadelphia. Metalsmith Ephraim Brasher, George Washington’s next-door neighbor on New York’s Cherry Street, privately minted a small batch of the coins and punched this unique version with his hallmark “EB” on the eagle’s breast. The soon-to-be president almost certainly handled it, according to longtime numismatist John Albanese, founder of Certified Acceptance Corp., a coin-grade verification service.”

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CNBC/Jeff Cox

GDP is now projected to fall nearly 53% in the second quarter, according to a Fed gauge

“Economic activity in the second quarter has been cut by more than half, according to a tracker employed by the Atlanta Federal Reserve.

The GDPNow outlook is now showing a 52.8% tumble, following data Monday that manufacturing in the U.S. remains firmly in decline and will weigh on investment and consumption. That data from the Institute for Supply Manufacturing showed just 43.1% of firms seeing expansion in May.

Extrapolating from that data, the Atlanta Fed anticipates personal consumption expenditures, which make up 68% of the nation’s gross domestic product to fall 58.1% in the April-to-June period. Gross private domestic investment, which accounts for 17% of GDP, is now projected to slide 62.6%.”

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KITCO/Jim Wyckoff

Gold prices pause Tuesday, while equities rally despite storm clouds

24 hours spot gold“Gold prices are near steady in early U.S. trading Tuesday. The safe-haven metal is being supported by safe-haven demand as the U.S. dollar sinks amid major civil unrest in America. However, limiting the upside for the precious metals is stock market traders that appear to be wearing blinders as they push equities prices north–despite keen turmoil in the world. August gold futures were last up $1.20 an ounce at $1,751.70. July Comex silver prices were last down $0.037 at $18.79 an ounce.

Global stock markets were mostly firmer in overnight trading. U.S. stock indexes are pointed toward higher openings when the New York day session begins. Stock markets are at present seemingly ignoring major storm clouds churning, including the Covid-19 pandemic that has severely crippled world economies, a looming “cold war” between the two largest economies in the world—the U.S. and China, and civil unrest in the U.S. that has exploded into violence not seen in over 50 years. Many market watchers are reckoning the strength of world stock markets is mainly due to the enormous injection of monetary stimulus by central banks into economies that sees much of that money flowing into equities. The juxtaposition of a rallying Wall Street and a struggling Main Street could have significant political implications down the road.”

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FXEMPIRE/Christopher Aaron

Gold Price Forecast: Pullback Ahead as Gold Approaches $1,800

gold bar and 100 dollar bill“Gold has been strong recently on the heels of Coronavirus fears, Federal Reserve stimulus packages, and continued geopolitical tensions, which are now being exacerbated by the George Floyd riots in the United States.

Gold is up by $57 for the month of May to close at $1,731 in the spot market as of Friday afternoon. The metal is higher by $155 for the quarter thus far and $228 for the year 2020, which is not yet half over.

That said, in the markets as in life, nothing moves in a straight line forever. We have reason to believe that following some further gains during the month of June, gold is due for a multi-hundred dollar pullback that could coincide with the next wave of Coronavirus-related debt defaults.

Let us study both the long-term and short-term price action for gold to arrive at the highest-probability trajectory for the remainder of 2020.”

Click here to read the full article.

MARKETWATCH/Barbara Kollmeyer

Trump use of military to quell protest could stop rebounding markets and economy in their tracks, warns influential economist

military vehicles on street“After another night of protests and riots across the U.S., President Donald Trump has warned state governors to quell unrest or he will send in the military.

At least outwardly, investors look calm, with stock futures in the black. With the S&P 500 SPX, 0.54% and Nasdaq COMP, 0.20% up 36% and 39%, respectively, from Mar. 23 lows, the question is how long gains can continue against a backdrop of unrest?

Our call of the day, from Tim Duy, an economics professor at the University of Oregon, warns that stocks may run into trouble if we see troops on the streets of America.”

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MARKETWATCH/Callum Keown

Here’s why the ‘unloved but welcome’ U.S. stock market rally from March lows won’t last, Goldman says

“Brief hopes that U.S.-China trade tensions may subside appear to have been dashed.

Investors had breathed a sigh of relief on Friday when President Donald Trump chose not to mention sanctions or tariffs at a press conference about China’s new security law in Hong Kong.

However, Beijing is set to pause purchases of certain U.S. products, including soybeans, according to reports, sending stock futures slightly lower before the open. Traders had initially shrugged off a weekend of protests against police killings of black people.

Optimism over the economic recovery from coronavirus, with all 50 states taking steps to reopen, has sent stocks higher in recent weeks.”

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KITCO/Jim Wyckoff

Gold prices weaker as traders assessing new crisis in U.S.

24 hour spot gold“Gold prices are modestly lower in early U.S. trading Monday. The safe-haven metal sees some pressure from U.S. stock indexes that are surprisingly not showing much reaction to major civil unrest that has exploded across major U.S. cities. Silver prices are posting solid gains and hit a more-than-three-month high overnight. August gold futures were last down $5.10 an ounce at $1,746.60. July Comex silver prices were last up $0.186 at $18.685 an ounce.

Global stock markets were mixed in overnight trading. U.S. stock indexes are pointed toward mixed openings when the New York day session begins. Civil unrest over racial inequality that erupted in U.S. cities during the weekend has dealt another major blow to the world’s largest economy. Reports said President Trump Friday night had to take cover in a bunker at the White House due to unruly crowds gathered at the White House. With the U.S. dealing with its own civil problems, it seems even less likely mainland China will loosen its tightening grip on Hong Kong.”

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MARKETWATCH/Mark DeCambre and William Watts

Gold edges lower as investors play down U.S.-China tensions

gold bars in a pile“Gold futures traded slightly lower Monday, losing ground as equities drifted into positive territory and investors appeared to play down U.S.-China tensions and a weekend of civil unrest in several U.S. cities.

Gold for August delivery GCQ20, -0.14% on Comex fell $6.50, or 0.4%, to $1,745.10 an ounce, while July silver SIN20, 1.11% was up 14.10 cents, or 0.8%, at $18.64 an ounce.

”Investors are continuing to largely ignore the escalating U.S.-China tensions, the global recession and ongoing riots in the U.S., among other risks. Sentiment remains supported due to the easing of lockdown measures and because of ongoing central bank support,” said Fawad Razaqzada, market analyst at ThinkMarkets, in a note.”

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by Sean Kelly

More central banks are planning to buy gold this year.

The increase in the number of central banks buying gold in 2020 is especially significant since central bank gold buying already reached record levels in 2019.

That’s according to the World Gold Council’s 2020 Central Bank Gold Reserves survey released this month.  Twenty percent of central banks intend to acquire gold over the next twelve months according to the report.  That compares to eight percent in the 2019 survey.

Key factors in the central banks’ gold acquisition plans are no different than those of informed individual investors.

Interest rates head the list of bankers’ concerns.

  • “88 percent of respondents say that negative interest rates are a relevant factor for their reserve management decisions.
  • “79 percent of respondents view gold’s performance during times of crisis as an important reason to hold gold, up from 59 percent in 2019.”
  • “74 percent of respondents consider gold’s lack of default risk to be an important reason for holding the metal, up from 59 percent in 2019.”

The report concludes that these shifts signal an ongoing re-evaluation of gold’s role in the international monetary system and reflect “long-term concerns about fiscal sustainability as government stimulus is deployed to cushion the global economy.”

We are disappointed that the mainstream media does not feature reports on this news more prominently, since it is part of a global shift away from the dollar and will affect American living standards over time.  In any case, this “de-dollarization” is a leading financial megatrend of our times and is a very bullish development for gold, of which our friends and clients deserve to be aware.

This megatrend affects individual precious metals investors in three specific ways.  First, the central banks buy in huge quantities, last year adding 650 metric tons to their holdings.

It is a harbinger of a changing world order, a move to weaken the US geopolitical hegemony that had grown for the last century.  As central banks move to gold, they do so mostly with the dollars they once held.  Ten years ago, Russia held $180 billion in US Treasury securities.  Now Russia’s gold holdings have grown, its dollar holdings have fallen so low they are reported down in the asterisks in US Treasury listings, below the holdings of countries like Iraq and Vietnam.  This shift from dollars to gold over time removes some of the underpinnings of the dollar in global markets.

We also view gold in central bank reserves to be gold held in strong hands.  That means it is not likely to be sold in the case of market events, such as margin call selling in a stock market crash.

The World Gold Council reported earlier this year that global investment demand for gold (bullion, coins, ETFs) in the first quarter of 2020 was 80 percent higher than during the same quarter in 2019.

More central banks are planning to buy gold this year.  We recommend you do so, too.  Before they do!

 

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MARKETWATCH/Mark DeCambre

Gold rises Friday and set for weekly gain as investors await President Trump statement on China

“Gold futures headed higher for a second session Friday, putting gold prices on track for a modest weekly gain amid focus on U.S.-China tensions and global monetary stimulus measures.

President Donald Trump said that he was preparing to hold a Friday news conference on China but hasn’t set a specific time. His planned remarks would come after the U.S., Australia, Canada and the U.K. governments issued a joint statement Thursday reiterating their “deep concern regarding Beijing’s decision to impose a national security law on Hong Kong,” after China’s parliament, the National People’s Congress passed legislation Thursday that could greatly curtail democratic freedoms.

Fawad Razaqzada, market analyst at ThinkMarkets, said that “the rising US-China rift, which has deepened over moves by Beijing to impose a security law on Hong Kong, has further boosted the appeal of the haven metal,” in a Friday research note.”

Click here to read the full article.

KITCO/Allen Sykora

U.S. April personal spending falls while income rises; core inflation minus 0.4%; gold higher

credit cards and currency“Gold remained higher early Friday after a report showed that personal spending by Americans fell by 13.6% in April, while income rose 10.5% and core inflation declined 0.4%. Spot gold was last up $11 to $1,730 an ounce.

Ahead of time, most consensus forecasts compiled by news organizations called for spending to be 12.6% to 13% lower, while income was expected to fall by somewhere between 2.1% and 6.5%. The core inflation rate was seen down 0.3%

“The increase in personal income in April primarily reflected an increase in government social benefits to persons as payments were made to individuals from federal economic recovery programs in response to the COVID-19 pandemic,” the Bureau of Economic Analysis said.”

Click here to read the full article.

BLOOMBERG/ Elena Mazneva and Jack Farchy

Virus Has Sparked Round-the-Clock Rush to Fill U.S. Gold Vaults

Virus Has Sparked Round-the-Clock Rush to Fill U.S. Gold Vaults“The scramble to jump on one of the hottest gold trades in years — by shipping bullion to New York — has sparked what may be one of the largest ever physical transfers of the metal.

“The flows into New York are unprecedented,” said Allan Finn, global commodities director at logistics and security provider Malca-Amit. His company’s teams in New York have been working 24 hours a day to cope with demand while navigating lockdowns, flight disruptions and social distancing.

Gold flooded into the U.S. in recent months as traders rushed to profit from an arbitrage caused by dislocations in the market triggered by the pandemic. Since late March, some 550 tons of gold — worth $30 billion at today’s price and roughly equal to global mine output in the period — have been added to Comex warehouse stockpiles. Hundreds of tons of that was imported.”

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CNBC/Christina Wilkie

Trump’s China press conference could mark the end of his cautious approach to Beijing

Trump's China Press Conference“For weeks, the Trump administration has been ratcheting up pressure on Beijing over its alleged cover-up of early coronavirus cases, and Trump has publicly blamed China both for the virus itself and for its outsized severity in the United States.

Beijing, in turn, has suggested the virus originated in U.S. service members, a claim widely refuted by international health experts. The four-week moving average for new claims – normally viewed as a more reliable measure of the labor market since it smooths out week-to-week volatility – fell by 436,000 to 2.61 million.

In the past week, however, the pressure from the United States has taken a more serious turn in response to a proposed Chinese security law that threatens the long-standing independence of Hong Kong. The law was formally approved Thursday by China’s People’s Congress, and it is expected to criminalize most forms of political protest under blanket bans on “sedition” and “subversion.””

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CNBC/REUTERS

Gold gains as simmering US-China tensions boost demand

“Gold rebounded on Thursday as deteriorating U.S.-China relations over Beijing’s move to impose a national-security law in Hong Kong fanned concerns over quick economic recovery and drove investors towards the safe-haven metal.

Spot gold was up 0.8% at $1,722.70 per ounce, recovering from a two-week low of $1,693.22 touched in the previous session. U.S. gold futures rose 0.8% to $1,739.70.

“The tensions between U.S. and China continue to be rather on the high side. Overall, the market is a bit worried about the situation geopolitically and also economically,” said Afshin Nabavi, senior vice president at precious metals trader MKS SA.”

Click here to read the full article.

MARKETWATCH/Elisabeth Buchwald

The extra $600 Americans receive in weekly unemployment benefits ends in July — how that could cost the U.S. more jobs

hand washing sign“Two-thirds of Americans are receiving more money from unemployment benefits than they did from their jobs, largely because of a supplemental $600 weekly benefit that’s part of the $2.2 trillion CARES Act.

But decreasing those benefits could cost the country even more jobs on top of the historic 40 million jobs that have already been wiped away by the coronavirus pandemic, Heidi Shierholz, an economist at the Economic Policy Institute, a left-leaning think-tank based in Washington, D.C., said.

The weekly supplemental $600 benefit is set to expire at the end of July if the U.S. Senate and President Donald Trump don’t pass the $3 trillion HEROES Act stimulus package, which would extend the $600 weekly add-on unemployment benefit into January 2021.

Many Republican lawmakers hold that the $600 weekly boost in unemployment insurance during the pandemic is a disincentive to return back to work, given that people could earn more from not working.”

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KITCO/Jim Wyckoff

Gold prices gain as risk aversion upticks late this week

24 hours gold spot“Gold and silver prices are trading moderately higher in early U.S. trading Thursday, as safe-haven demand has returned to the metals after a brief absence. Souring China-U.S. relations are back on the front burner of the market place. August gold futures were last up $10.70 an ounce at $1,737.50. July Comex silver prices were last up $0.108 at $17.86 an ounce.

Global stock markets were mixed in overnight trading, with European shares mostly higher and Asian shares mostly lower. U.S. stock indexes are also pointed toward mixed openings when the New York day session begins. There is a bit more risk aversion in the marketplace Thursday, as China’s government has ratified what is calls a national security law that ostensibly tightens mainland China’s grip on Hong Kong. The move has further angered the U.S. as relations between the two largest economies in the world continue to deteriorate. The U.S. Secretary of State on Wednesday said Hong Kong was no longer autonomous from China, implying the U.S. may revoke Hong Kong’s favorable trade status. Such would have big implications for the many major U.S. companies doing business in Hong Kong. The U.S. House of Representatives Wednesday passed a bill that would sanction China for its oppression of minority groups.”

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KITCO/Allen Sykora

Another 2.12 million Americans file initial jobless claims; gold remains higher

chart with pen“Americans have now filed a total of 40.77 million initial claims since the week of March 21.

New weekly claims have been above 2 million every week since March 21 after the previous all-time high had been 695,000 back in October 1982, according to Labor Department figures. Traders have been closely monitoring jobless claims as a key gauge of the weakness in the economy due to lockdowns and social-distancing measures across the country to combat the spread of the COVID-19 pandemic, with many businesses temporarily closing their doors. States are now gradually reopening their economies.

The four-week moving average for new claims – normally viewed as a more reliable measure of the labor market since it smooths out week-to-week volatility – fell by 436,000 to 2.61 million.”

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FORBES/Frank Holmes

You Can’t Just Print More Gold

“’I think there is a strong likelihood we will need another bill.’

That’s according to Treasury Secretary Steven Mnuchin, who supports additional fiscal stimulus to combat the economic impact of the novel coronavirus—within reason.

The secretary’s statement comes after the House passed a record-shattering $3 trillion relief package, though leaders in the Senate have said they will not put it up for a vote. Senate Majority Leader Mitch McConnell has made it clear that the next coronavirus bill “cannot exceed $1 trillion,” according to reporting by Axios.

Even so, the U.S. government’s response is already massive, dwarfing anything that’s come before it.”

Click here to read the full article.

KITCO/Jim Wyckoff

Gold prices lower as investor risk appetite rising this week

24 hour spot gold“Gold prices are trading lower again and back below $1,700.00 in early U.S. trading Wednesday, amid keener trader/investor risk appetite in the marketplace at mid-week. The recent safe-haven bids that had supported gold and silver markets has evaporated, for the moment. June gold futures were last down $13.20 an ounce at $1,692.30. July Comex silver prices were last down $0.16 at $17.435 an ounce.

Global stock markets were mostly higher in overnight trading. U.S. stock indexes are pointed toward solidly higher openings when the New York day session begins. Traders and investors remain upbeat at mid-week. After two months or more of being mostly quarantined the citizens of major industrialized countries are eager to get back to their pre-Covid-19 ways of life and are seeing light at the end of the tunnel. The global stock markets are trading like they expect the world’s consumers to get back to old spending habits sooner rather than later. Still, tens of millions of workers in the major global economies have been idled by the pandemic-induced closure of businesses. A significant number of lost jobs are gone for good.”

Click here to read the full article

CNBC/Chloe Taylor

Coronavirus is accelerating a ‘capital war’ between China and the US, investor warns

US-China capital war“The coronavirus crisis will accelerate a capital, trade and technology war between the world’s two largest economies, one investor has warned.

Speaking to CNBC’s “Squawk Box Europe” on Tuesday, Michael Howell, CEO of Crossborder Capital, warned that the preliminary trade deal between the U.S. and China was under threat, and there could even be a new battleground: investing capital.

“I think the real tension oncoming is not just trade wars but capital wars — we’re in a world where capital wars matter,” he said, noting that there was “an awful lot of liquidity” being poured into markets amid the coronavirus crisis.

Governments and central banks around the world have rolled out unprecedented stimulus packages in an effort to curb the economic shock from the pandemic, with President Donald Trump in March approving a historic $2 trillion coronavirus relief bill.”

Click here to read the full article.

CNBC/REUTERS

Gold falls 1% as risk appetite firms on recovery optimism

gold bars and gold coins“Gold fell over 1% on Tuesday as major economies further eased coronavirus-linked restrictions, fueling hopes for economic recovery and bolstering risk appetite.

Spot gold slipped 1.1% to $1,710.95 per ounce, having earlier hit a low since May 13 at $1,708.47. U.S. gold futures settled down 1.7% at $1,705.60.

“There is a risk-on tone in the market, driving the reversal of (gold’s) safe-haven flows,” said Daniel Ghali, commodity strategist at TD Securities.

U.S. stocks surged as investors grew optimistic about business restarts and a potential coronavirus vaccine.

Spain urged foreign tourists to return from July, while Britain will reopen thousands of shopping centres next month. U.S. states were also gradually easing restrictions.

“A breakdown below $1,700 could crack open the doors towards $1,680 (for gold),” said FXTM analyst Lukman Otunuga. Nevertheless, the downside is likely to be cushioned by trade woes, disappointing economic data and growth fears.”

White House economic adviser Larry Kudlow said President Donald Trump is so “miffed” with Beijing over the novel coronavirus and other matters that the trade deal is not as important to him as it once was.”

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by Sean Kelly

We would like to thank Federal Reserve Chairman Jerome Powell for doing our work for us Sunday night on the CBS program 60 Minutes (5/17/20).

A good deal of our day has to do with discussing the US dollar and our monetary system.  It is no surprise that so few American understand how it works.  The schools don’t really deal much with it.  And frankly, parts of the monetary system were designed to shroud the sketchiest parts of the operation.

We don’t blame people for not knowing more about it: how dollars are created and what gives them value.  People have families to provide for and work responsibilities that demand their attention.  A good mechanic knows more about our cars than we will ever learn.  A pharmacist has a dizzying array of medicines to counsel customers about.

Individual areas of expertise like that don’t leave people a lot of extra time to pay attention to arcane monetary issues like debt monetization or liquidity operations.

But Chairman Powell pulled the curtain back on what the Fed really does in his interview with Scott Pelley.

And that’s a big help!  Because in talking to our friends and clients about the importance of gold in their retirement accounts and financial portfolios, the subject almost always comes up.  And once they understand the way the Fed makes money out of nothing, money that gets stovepiped to bailout reckless banks or to crony companies and even foreign governments, the gold story starts to become more clear.

And when they learn that dollars created out of nothing take on value to the degree they dilute the value of the dollars they have been saving, the reasons to own gold come into sharp focus.

So what did Chairman Powell say that helps make much of this clear?  Just the truth.

Discussing the Fed’s response to the COVID-19 shutdown, the interviewer asked if the Fed has just flooded the country with money.

Here’s a partial transcript:

Reporter: “Fair to say you simply flooded the system with money?”

Fed Chairman: “Yes. We did. That’s another way to think about it. We did.”

Reporter: “Where does it come from? Do you just print it?”

Fed Chairman: “We print it digitally. So as a central bank, we have the ability to create money digitally. And we do that by buying Treasury Bills or bonds for other government guaranteed securities. And that actually increases the money supply. We also print actual currency and we distribute that through the Federal Reserve banks.”

Reporter: “In terms of size, Mr. Chairman, how does what the Fed is doing right now compare to the unprecedented action it took in 2008?”

Fed Chairman: “So the things we’re doing now are substantially larger. The asset purchases that we’re doing are a multiple of the programs that were done during the last crisis. . .”

Bear in mind that when the Chairman says the Fed buys assets in the afternoon, it is doing so with money that didn’t exist in the morning.  It didn’t exist until somebody hit “enter” on a computer keyboard.  And made it up.

You might think that creating “money” that isn’t backed by anything is like writing a check on an account with no deposits, or even like counterfeiting.  You would be right.

It is like counterfeiting.  But it is legal counterfeiting.

So, our hat is off to Powell.  Other Fed chairman have been obfuscatory about what they do, and for good reason.  Most people work too hard to believe that real wealth is created out of thin air.  And once they learn that there is no discipline on government spending and no limit on the dollars the Fed can create, they begin to see gold in a new light.

Actually, we shouldn’t say new light, because gold has been the shining and enduring money of the ages for thousands of years and in the far-flung corners of the earth.  People turn to gold for both protection and for profit when the authorities start doing things like making “money” out of nothing at all.

So, thank you Chairman Powell for helping us out.

For today, our work here is done.

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MARKETWATCH/Mark DeCambre

Gold prices rise amid U.S.-China tensions, but the metal is looking at a weekly decline

“Gold prices headed higher on Friday as testiness between the U.S. and China drew investors into assets considered havens, including government debt and the Japanese yen.

However, continuing plans to reopen economies that have been frozen by the COVID-19 pandemic and hope for remedies has limited the upside in precious metals, experts said

“The heightened uncertainties in the markets are causing further ventures into riskier waters to pause for breath, after what has been a bumpy ride for risk assets this week,” wrote Han Tan, market analyst at FXTM, in a Friday research note.

“Gold is climbing back towards the $1730 handle and the Yen is advancing against all of its G10 and Asian peers,” he wrote.”

Click here to read full article.

KITCO/Jim Wyckoff

Gold prices up on safe-haven bid amid rising China tensions

“Gold and silver prices are trading higher in early U.S. dealings Friday, on safe-haven buying after fresh developments in China have sapped investor and trader risk appetite heading into a long U.S. holiday weekend. June gold futures were last up $15.50 an ounce at $1,737.70. July Comex silver prices were last up $0.276 at $17.645 an ounce.

Global stock markets were also mostly lower in overnight trading. U.S. stock indexes are pointed toward lower openings when the New York day session begins. U.S.-China tensions remain high. A new geopolitical element thrown into the mix is China’s threat to impose new national security laws in Hong Kong to thwart protesters there. Hong Kong’s main stock index, the Hang Seng, saw its worst day in nearly five years Friday—down over 5%.”

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CNBC/REUTERS

Gold gains as US-China tensions boost safe-haven demand

“Gold prices rebounded on Friday as escalating tensions between the United States and China lifted bullion’s safe-haven appeal, though a stronger U.S. dollar kept gains in check.

Spot gold was up 0.4% at $1,732.60 per ounce, after falling 1.4% on Thursday. U.S. gold futures rose 0.7% to $1,734.

U.S.-China tensions have risen in the past few weeks over the source of the coronavirus pandemic, and China’s proposal on Thursday to impose security laws on Hong Kong prompted a strong warning from U.S. President Donald Trump.”

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CNBC/REUTERS

Gold prices climb toward 5-week high as doubts grow about coronavirus vaccine

“Gold prices headed higher Wednesday for a second session as investors remain mostly bullish about the prospects for the commodity against the backdrop of economies attempting to reopen from the COVID-19 pandemic.

The precious metal pulled back on Monday after a report from Moderna pointed to progress with an experimental vaccine for the novel strain of coronavirus that has infected nearly five million people globally. However, a report from STAT News on Tuesday raised some doubts about the prospective remedy for the viral outbreak, providing some lift for bullion.

“Speculators do blow things out of proportion the moment they get any news about a Coronavirus vaccine,” wrote Naeem Aslam, chief market analyst at AvaTrade, in a Wednesday research note. “But, when the optimism fades and reality becomes apparent, investors are left with no option but to hedge their bets,” he wrote.”

Click here to read the full article.

KITCO/Video

Peter Schiff: Fed will ‘wipe out’ many investors; gold to return as reserve currency

10 year gold/silver ratio“The Federal Reserve is going to create an inflationary environment that is like a tax that will hurt society on all levels, according to Peter Schiff, chief executive officer of Euro Pacific Capital.

“I think most people are going to get wiped out by the inflation tax. All of this government is not free. This incredible increase in the size of government is going to cost somebody. Somebody has to pay the bill for all the bailouts and all the stimulus, and if we’re not raising taxes, then how are we doing it?” Schiff told Kitco News.

This “tax” is also going to devalue fiat currencies, and investors should be holding onto physical gold and silver, he continued.

“So what you’ve got to do to mitigate the damage, your share of that inflation tax, is before the dollar collapses, get rid of your dollars and use them to accumulate real money, gold and silver or to buy quality income-producing assets in other countries,” he said.”

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CNBC/REUTERS

Gold gains as bleak economic outlook stokes safe-haven demand

gold bars on conveyor belt“Gold prices gained on Wednesday as bleak data from major economies reflected the fallout from the coronavirus crisis, while the initial euphoria over a potential Covid-19 vaccine fizzled and gave way to safe-haven demand.

Spot gold was up 0.2% to $1,747.19 per ounce, as of 0256 GMT. U.S. gold futures rose 0.4% to $1,753.30.

In testimony before the U.S. Senate Banking Committee, Federal Reserve Chair Jerome Powell said the Fed was looking at extending access to the credit facilities to additional borrowers, including states with smaller populations.”

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KITCO/Tom Horwitz

The buyers are back; gold, silver and platinum surging

gold, silver and platinum surging“A lot has happened since Monday’s reversal in the metals; the buyers are back. As we wrote yesterday, Monday’s pullback was really a buying opportunity and not a place to panic. None of the action this week has been surprising. In fact, it has almost been to script.

Gold remains the steadiest of the group and is in a long-sustained uptrend with no real sign of weakening. Gold was under a little pressure early in the month and was in danger of reversing; however, buyers stepped in and have not stopped. Gold is now ready to make a big run through the $1,788 June futures high. New support is about $1,730 in the June futures, and until further notice, pullbacks are a buying opportunity.”

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CNBC/Jeff Cox

Most investors don’t think this rally is for real, according to widely followed Wall Street survey

“More than two-thirds of professional investors doubt that the stock market jump off the March lows is the start of a legitimate new bull market, according to the Bank of America Fund Manager Survey for May.

Amid a surge that has seen the S&P 500 rise 32% since the March 23 trough, some 68% of survey respondents called the move a “bear market rally.” The term implies that even though the surge tops the 20% benchmark that would signal a new bull market, the fundamentals tell a more pessimistic story. The Bank of America poll is among the most widely followed surveys of investors on Wall Street.

That said, respondents still see the near-term “pain trade,” or the one that catches most investors off guard, as the market going higher. Current sentiment is consistent with an S&P 500 level of 3,020, or about 2.3% higher than Monday’s close, according to Michael Hartnett, chief investment strategist at Bank of America Global Research.”

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MARKETWATCH/Mark DeCambre

Gold edges higher a day after decline induced by coronavirus vaccine hope

gold coins and gold bars“Although reports indicate that pharmaceutical company Moderna Inc. MRNA, +19.95% has made some early progress toward a vaccine for the virus, some gold bulls say that the outsize fiscal and monetary stimulus measures enacted by governments across the globe will support gold buying over the long term.

“For long-term gold positions, a vaccine may not be an absolute game-changer as central bank balance sheets will not miraculously evaporate, and political/trade tensions between China and the US are unlikely to de-escalate,” wrote Stephen Innes, global chief market strategist at AxiCorp, in a daily research note.”

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REUTERS/Brijesh Patel

Gold edges higher as global recession fears persist

gold and silver coins“Spot gold was up 0.2% at $1,734.66 per ounce by 0944 GMT. U.S. gold futures rose 0.1% to $1,736.60. On Monday, gold had slipped from a multi-year peak after drugmaker Moderna said its COVID-19 experimental vaccine showed promising results in an early-stage trial, lifting U.S. stocks and oil prices.

The pandemic, which has battered global growth, has prompted nations to roll out massive stimulus measures to limit economic damage caused by the virus. Gold tends to benefit from widespread stimulus from central banks because it is widely viewed as a hedge against inflation and currency debasement.

“Right now, market is focused on the aftermath of the big rally in stock markets yesterday that has taken some of the bid out of gold, but the underlying demand has not gone away,” Saxo Bank analyst Ole Hansen said. “We are looking at weaker economic outlook, massive amount of central bank measures in market and also have the tensions on the geopolitical front which should keep gold prices higher.””

Click here to read the full article

FORBES

Gold Continues To Outperform S&P 500

gold bars and hundred dollar bills“A week that was decidedly risk off, with the prior week’s gains erased after multiple poor economic numbers hit the tape. Not to mention, escalating tensions with the U.S. and China after Federal Reserve Chairman Jerome Powell voiced the need for much more stimulus to prevent a depression. So in all, it is not surprising to see mainly outflows from equity funds, while bond and gold funds benefited. There was one bright spot, as tech continues to be the major winner from the pandemic as more businesses are forced to work-from-anywhere and utilize more bandwidth than before. For the week, the S&P 500 lost over 2%, while gold gained over 2%.”

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MARKETWATCH/Mark DeCambre

Gold prices jump, rally toward highest close in about seven years

“Gold prices on Monday headed sharply higher, putting the precious metal on track for its highest settlement since 2012.

Bullion has marked mostly rangebound moves from a high of $1,788 to a low of $1,676 an ounce in recent weeks but has been underpinned by higher by worries about the harm to the global economy from the COVID-19 pandemic and the monetary-policy response by central banks to limit the impact of business closures, which were only recently being undone.

“Gold is skyrocketing with the price climbing to its highest in seven years. Dovish comments from the Federal Reserve and concerns about the stock market have lifted bullion,” wrote Carlo Alberto De Casa, chief analyst at ActivTrades, in a daily research note.”

Click here to read the full article.

MARKETWATCH/Mark DeCambre

It’s a runaway; gold, silver and platinum breaking out

marketwatch graph“Every day last week, we wrote about the patterns in the metals. They went from the ugly to strong. Those patterns are playing out this morning once again with gold, silver and platinum breaking out to new recent highs. Therefore, you never argue with price, which dictates everything.

Silver is parabolic and looks headed to $18 in the July futures, possibly higher. Platinum is right there and trying to chase down $900 in the July futures. Gold’s pattern is a little more rational but is tracking $1,800 in the June futures. As you can see, the rallies have been powerful and backed with solid volume.”

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BLOOMBERG/Ranjeetha Pakiam and Elena Mazneva

Gold Jumps to 7-Year High After Fed’s Warning on Stocks, Growth (Video)

unemployment rate graph“Gold extended its rally to a fresh seven-year high after the Federal Reserve warned of potential asset-price declines as an economic recovery could stretch through until the end of next year. Palladium jumped.

Haven demand for bullion is being supported by dismal economic data and fears over new infections, even as investors are encouraged by businesses reopening across major economies.

Gold’s recent breakout raised prospects that it could set an all-time high soon as massive stimulus measures push holdings in bullion-backed exchange-traded funds to a record. The market is also being driven by speculation that U.S. interest rates could go negative and increased tensions with China.

“The recovery is probably set to be more problematic than the optimists think, with gold set to benefit from the enormous boost to money supply that is going to ensue,” said Gavin Wendt, a senior resource analyst at MineLife Pty..””

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CNBC/REUTERS

Gold price pushes to session highs following 16.4% drop in April retail sales

people walking in shopping area“Gold jumped more than 1% on Monday to its highest since October 2012 after a batch of weak data knocked hopes for a speedy global economic recovery while auto-catalyst palladium surged to a three-week high.

Spot gold was up 1% at $1,758.55 an ounce by 0931 GMT and U.S. gold futures rose 0.8% to $1,770.70.

“The market continues to speculate about negative interest rates in the U.S. and extremely low interest rates and cheap money all over the world,” said Commerzbank analyst Eugen Weinberg. “Also, fears of economic crisis are unfolding given the very weak data in the United States and elsewhere.”

Data published on Friday showed U.S. retail sales and industrial production both plunged in April, with the coronavirus crisis continuing to pummel the U.S. labour market.”

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by Sean Kelly

Few Americans realize the US dollar is more than simply another currency, that thanks to its global dominance the dollar has also been weaponized.  It is not just a unit in commercial transactions; whether for good or for ill, it is a bludgeoning tool of US foreign policy.

President Nixon’s Treasury secretary John Connally rubbed the world’s face in this reality in 1971 when he told a group of foreign finance ministers that “the dollar is our currency, but it’s your problem.”  Connally was right.  Only weeks earlier the US suddenly repudiated its promise to foreigners to redeem the dollar they held with the gold they had been promised.

This vulnerability to US dominance is a remnant of the post-war Bretton Woods agreement.  With that arrangement, most of the world’s countries agreed to hold dollars instead of gold as their own currency reserves.  Having abandoned gold, they became hostages to US policy.

The dollar’s status as the world’s reserve currency has cemented this dominance into geopolitical affairs.  Tools of this reach include the SWIFT system, a global interbank financial communications system used to settle international accounts.  By denying countries at odds with US policy access to SWIFT, the US cuts foreign nations out of international markets and thereby exerts unprecedented control over global economic activity in furtherance of its geopolitical and military objectives.

Sanctions… penalties… asset seizures:  foreign banks have been fined billions of dollars while entire countries have had their foreign assets frozen and claim to have been economically crippled by the US for violation of what they believe are promiscuous, arbitrary, and cruel US sanctions.

Although they have been biting their tongues for years, foreign governments are now openly bristling at this state of affairs and making common cause to change it.  They are racing to establish bi-lateral and multi-lateral institutions to bypass the old order, the “exorbitant privilege” enjoyed by the dollar.

The accompanying movement of central banks around the world, most notably Russia and China, to de-dollarize by repositioning the reserves out of dollars and into gold may prove to be the most significant megatrend of this decade.  It is a shift in global monetary management that can damage the dollar badly and propel gold much higher.  Since 2006 China’s gold reserves have grown from 600 tons to 1,948 tons, while Russia’s have swollen from 400 tons to 2,299 tons today.

Foreign nations aren’t ganging up against the dollar because it is in a position of strength.  The COVID-19 pandemic, with its exponential growth of US debt and warp speed Federal Reserve money printing, provides a fresh opportunity to unite against dollar hegemony.

The president of the Shanghai Gold Exchange, the world’s largest spot physical gold trading center, Wang Zhenying, used this pandemic moment to voice the common dissatisfaction with the dollar.  “When the Fed turns on the liquidity tap, the U.S. dollar will, in theory, be in a long-term depreciatory trend,” he said.  “Future global trade needs a super-sovereign currency system under which no single country has the power to freeze the international assets of another country.”

Talk of a “super-sovereign currency” may ring a bell.  Long ago French President Charles de Gaulle called for a new monetary system “on an indisputable monetary base that does not carry the mark of any particular country. . . . Yes, gold, which does not change in nature, which is made indifferently into bars, ingots and coins, which does not have any nationality, which is considered, in all places and at all times, the immutable and fiduciary value par excellence.”

De Gaulle was on to something.  A few years before dollar holders were left holding the “old maid” when the US suspended the dollar’s convertibility to gold, de Gaulle had sent the French navy across the Atlantic to pick up France’s gold reserves held in the US.

Good move.

The moral of this story is that with the old-world monetary order under growing strain and de-dollarization spreading, moving assets into the global “super sovereign currency” is especially alluring.

For nation states and individuals alike.

Gold is the super sovereign currency today, just as it has been for thousands of years.

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CNBC/REUTERS

Gold hits 3-week high as US-China dispute fans growth concerns

“Gold prices gained for a fourth straight session on Friday, hitting a more than three-week high as rising U.S.-China trade tensions added to fears about the global economy already reeling from the coronavirus pandemic.

Spot gold was up 0.2% at $1,732.63 per ounce, after hitting its highest since April 23. Bullion has risen nearly 2% so far this week. U.S. gold futures were steady at $1,740.20.

“Gold has been consolidating for weeks and finally broke free yesterday, the momentum from that move could be sustaining the rally,” OANDA analyst Craig Erlam said. “When something has been consolidating for so long, the breakout can be quite explosive as stops are triggered and longs initiated. I feel it may be a combination of the (U.S.) jobless claims catalyst and technical factors here.”

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MARKETWATCH/Mark DeCambre

Gold heads to highest in May as U.S. economic data highlights impact of coronavirus

person holding gold bar“Gold prices headed higher on Friday as U.S. economic data underscored the damage from the COVID-19 pandemic on business activity in the America, providing safe haven support for bullion at around its highest level so far this month.

A reading of U.S. retail sales tumbled by a record 16.4% in April and fell 16.2% excluding automobile sales and gas price, due to lockdown measures implemented to slow the worst outbreak in more than a century.

Meanwhile, a reading on business activity in the New York area, the New York Fed’s Empire State business conditions index, rose 29.7 points to minus 48.5 in May, the regional Fed bank said Friday, marking the second-lowest reading on record. Economists had expected a reading of minus 65, according to a survey by Econoday.”

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BLOOMBERG/Justina Vasquez and Elena Mazneva

Gold, Silver Race Higher on Fear of Second Virus Wave

breaking out“Gold jumped to a three-week high after bleak U.S. government data underscored how hard coronavirus-related shutdowns have hit the world’s largest economy.

Bullion headed back toward its peak in April, when prices hit the highest since 2012, after U.S. factory production plummeted in April by the most in records back to 1919. And a gauge of U.S. retail sales plunged through the record set just a month earlier.

“Everybody must have realized it, but it’s just more evidence that the reality is this is a pretty bleak economic picture right now,” Phil Streible, chief market strategist for Blue Line Futures LLC, said by phone. “People are continuing to pile into gold because that weak economic picture is going to continue to drive interest rates lower.”

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KITCO/Neils Christensen

Gold price pushes to session highs following 16.4% drop in April retail sales

people walking in shopping area“Gold prices are at session highs holding near a one-month high and is reacting slowly to extremely disappointing economic data as U.S. consumers forced to stay at home last month significantly cut back on shopping.

U.S. retail sales fell 16.4% in April following March’s revised decline of 8.3%, according to the latest data from the U.S. Commerce Department, released Friday; the data missed expectations as economists were forecasting an drop of 12%.

According to reports, this is the biggest drop in retail sales since the data has been collected. Last month was the previous record.

“The modern retail sales data series dates back to 1992 and this is double the worst fall on record,” said Adam Button, senior currency strategist at Forexlive.com”

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MARKETWATCH/Mark DeCambre

Gold prices climb as investors parse jobless claims report

“Gold futures on Thursday were headed higher as investors digested an economic report on the labor market, which highlights a growing sense of the challenges the U.S. economy may face in recovering from the COVID-19 pandemic.

U.S. unemployment data showed that those seeking jobless benefits rose 2.98 million in week ended May 9. The number is higher than consensus estimates from economists polled by MarketWatch for 2.7 million but indicates that applications for unemployment compensation peaked at a seasonally adjusted 6.9 million in late March and has fallen steadily over the past month.

The precious metal gained support from comments from Federal Reserve Chairman Jerome Powell who on Wednesday described the path forward for the domestic economy from the deadly pathogen as uncertain, though the central-bank boss appeared to reject the idea of pushing key interest rates, which stand at a range between 0% and 0.25%, to subzero levels, which would support bullion prices.”

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KITCO/Todd Horwitz

Gold tests first resistance; silver and platinum quiet

gold has been moving up“Gold has been moving up the last couple of days and has reached the first resistance of $1,730 in the June futures. The pattern looks ready to break out out to the upside and may be reversing the recent pressure it has be under. Remember, gold has been consolidating with a lean to the downside since early April but held support.

If gold can break through the $1,730 level in the June futures, the next target is $1,775. The fact that gold has made higher lows for the last week adds momentum to a possible breakout. We remain long and will stay there until the pattern is violated to the downside.

Silver and platinum remain in almost identical patterns, with both looking like they are getting ready to make big moves. Based on our positions, we assume these moves to be higher. However, the pattern itself is based on confusion, which suggests that silver and platinum can go either way. Levels to watch include: silver, $15-$16, July futures; and platinum, $750-$850, July futures.”

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CNBC/Jeff Cox

Weekly jobless claims total 2.981 million, bringing coronavirus tally to 36.5 million

jobless claims since early March“New filings for unemployment claims totaled just shy of 3 million for the most recent reporting period, a number that while still high declined for the sixth straight week, according to Labor Department figures Thursday.

The total 2.981 million new claims for unemployment insurance filed last week brought the coronavirus crisis total to nearly 36.5 million, by far the biggest loss in U.S. history. The count announced last week count was revised up by 7,000 to 3.176 million, putting the weekly decline at 195,000 between the two most recent reports.

Economists surveyed by Dow Jones had been expecting the latest count of new claims to be 2.7 million.”

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