Month: October 2020

–– An In-Depth Weekend Read ––

SpectatorLife/Matthew Lynn/10-8-2020

“It could have been technology stocks such as Amazon and Zoom, of course; or government bonds; or cash; or a property, preferably in the countryside. As the Covid-19 crisis rippled around the world and locked-down economies crashed into one of the worst recessions ever recorded, there were plenty of different ways investors might have tried to ride out the storm. But there was one asset they could easily have overlooked, and yet which would have outperformed almost any of them: silver.”

USAGOLD note: Year to date the S&P 500 is up 6.29%.  Gold is up 24.54%.  Silver is up 34.2%.

Chart courtesy of TradingView.com • • • Click to enlarge

 

The post Silver linings: The asset that’s outperforming gold (and most other investments) first appeared on Today’s top gold news and opinion.

Financial Times/Colby Smith and Tommy Stubbington/10-6-2020

“Ahead of a potentially disputed result on November 3, fund managers are casting around for new harbours to shelter from a potential storm. Popular strategies include short-selling currencies that mirror stock movements; derivatives that provide insurance against falls; and emerging market bonds that offer a higher yielding, though riskier, hedge for equity holdings.”

USAGOLD note:  An argument could be made that such strategies unwisely introduce even more risk to the portfolio than existed before such “hedges” were introduced ……

The post Investors creatively hedge US election selloff first appeared on Today’s top gold news and opinion.

Making the case for $3000 gold: the power of scarcity  Kitco NEWS

Gold/silver/copper/bitcoin: your 2021 portfolio  Kitco NEWS

Gold price has room to move higher but breakout remains uncertain  Kitco NEWS

Gold price not ‘suppressed’ by spoofing and manipulation, here’s why  Kitco NEWS

Gold Price Forecast – Gold Markets Look Reassert Uptrend  FX Empire

Trust. When you lose trust, you’ve lost everything.

Consider this: At the present time the U.S. dollar is the most trusted “asset” in the world. I put quotes around asset because the U.S. dollar is actually a liability.

As trust in traditional investments like real estate, stocks, and bonds falters, the run to the dollar will inevitably take place, and soon after, the run to gold. You can already see the roots of this movement build. The dollar is not showing a great deal of strength at present, which leads me to believe that what comes next will be bifurcation: a fork in the road that dethrones the dollar as a safe haven, making gold the only true safe haven.

I might be getting ahead of myself. We’re not there yet. But it’s hard to ignore the fact that big money, smart money, is starting to move away from the dollar.

A testament to this is my personal experience with the March stock market washout. Investors with millions of dollars, who had never bought gold before in their lives, were eager to take action and move away from the bank and into gold.

This isn’t to say that the U.S. dollar value will go to absolute zero. It will not become absolutely worthless, but the fear of it reaching that point will take enough of the public’s consciousness on a global basis. The resulting run to gold will be so grand; it’ll go down in the history books.

The Banker’s Last Vestige of Hope

Cash has been considered sacrosanct, and most people don’t understand the gold market and how it functions. As a result, people tend to trust their local currency the most. Some countries more than others, and all trust the U.S. dollar as the most trustworthy.

However, when this belief system gets questioned as gold’s value increases in global currencies and surpasses all-time highs, some may recognize too late that the fiat systems are failing, and even the U.S. dollar is not worth holding.

Gold continues to move higher, but nothing about gold has changed. An ounce of gold is an ounce of gold. What is changing is the acceleration in the trust in currencies – all currencies.

These currencies will go up and down against each other. This is what I refer to as ‘the banker’s last vestige of hope’: when they try to convince people that one currency is stronger than others when, in reality, it isn’t. The perceived strength of a currency is simply a function of which country is printing money the fastest and who has got the most psychological cognitive control to make you think that your currency is stronger against another country’s currency.

The Restless Metal in a High-Tech Society

Professor Roy W. Jastram, author of Silver: The Restless Metal, concludes in his book that if there is an increase in the monetary base, it is silver, not gold, that is the best place to be. In other words: monetary inflation. He did not speak about the velocity of money and this is an important factor. However, I agree with Professor Jastram when the public gets the idea inflation is destroying their purchasing power, their savings, their future, many will seek safety. And there is nothing safer in a financial panic than the precious metals.

However, the problem with silver on a global basis is it is not easy to obtain in many foreign countries. While the U.S. has a good base to buy physical silver, countries in Europe and Asia impose a value-added tax and make it difficult to purchase. Gold, on the other hand, is far more accessible and easier to purchase overseas. If that were the case with silver, there would be many more people holding silver than there is now.

More than gold, silver is vulnerable to supply shortages due to its crucial role in our high-tech society. Consider the emerging technology of 5G phones. Most phones on the market today are not equipped to handle 5G technology, but as the global trend shifts towards integrating 5G infrastructures, it will not be long before new phones are produced to accommodate.

And these new phones will need silver: approximately 88 Million ounces of it. Do not underestimate the demand for silver just because its supply now appears to be plentiful.

As much as we hear the gold story, it truly is silver that keeps the economy running. Oil may be far more important than silver, but that does not negate the fact that we need silver to continue to operate in today’s world. The banking system cannot run without computers and there is silver in their computers, and we cannot communicate without the silver as it is required in all communications landline or wireless.

Silver is more critical than most people ever consider because it is ubiquitous. It is everywhere, in a very small amount. Every day, we handle little silver fragments, and we never even think about it—food for thought.

I discussed these topics in more detail earlier this week in an interview with FX Strategies. You can watch the full interview below.

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Precious metals investors faced choppy market seas this week. Gold bobbed to a slight decline while silver essentially treaded water through Thursday’s close. Both are advancing here today.

As of this Friday recording, gold comes in at $1,934 an ounce and now registers a weekly gain of 1.4%. Spot silver shows a price increase of nearly a dollar or 4.1% this week to trade at $24.83. Platinum is up by 0.9% to trade at $898. And finally, palladium is putting in a robust weekly advance of 6.5% to command $2,480 per ounce price.

Metals markets are being overshadowed by equities markets. The S&P 500 broke out to a 5-week high yesterday. The rally comes on a rising tide of Federal Reserve liquidity coupled with on again, off again hopes for a stimulus deal in Washington.

More stimulus is definitely coming. The only question is how many trillions and whether they get dished out before or after the election.

At some point investors might begin to rethink whether trillions in additional deficit spending plus unlimited Quantitative Easing is as bullish for stocks as it ultimately will be for hard assets. A rising tide may lift all boats, but an undercurrent of inflation could send some investment vessels off course while giving others a big boost.

Investors must navigate through an unprecedented monetary environment. Never before has the nation’s central bank become so openly committed to depreciating the currency in coordination with politicians on Capitol Hill.

Past Federal Reserve chairmen at least publicly tried to urge members of Congress to be fiscally responsible. They warned of the dangers of running up excessive amounts of debt, even if they lacked the will to stop accommodating it with low interest rates.

But current Fed chair Jerome Powell is taking a categorically different approach – one that in just about any other time history would have been widely dismissed as bizarre or possibly even insane.

This week Powell lobbied politicians to spend more on fiscal stimulus. Despite already being on course to run up a record high budget deficit of over $3 trillion, Powell thinks it’s not big enough. He told lawmakers that there is now virtually no risk of spending too much, but that there is asymmetrically greater risk of spending too little.

Fox Business picked up on Powell’s big push.

Edward Lawrence: This is the biggest push yet that I’ve seen from the Federal Reserve chairman to get more fiscal stimulus into the economy. He says that too little fiscal stimulus put into this economy would cause possibly a weaker recovery. He says, “You cannot overdo the package.” He says, “If it seems to be too large.” He says, “The risk is low, because that money would be helped anyway, in order to get this recovery moving.” The Federal Reserve will keep rates near zero until they believe they’re at maximum employment and the inflation is on track to run moderately above 2% for some time.

If higher inflation and larger government deficits are the keys to a stronger economy, then what’s the point of having the government collect taxes at all?

According to Powell’s own logic, tax evaders as well as currency counterfeiters are doing us all a favor by stimulating the economy and contributing to the depreciation of the U.S. dollar.

Of course, to the elites who rule from Washington, it’s all about control. They want monopoly control over the counterfeiting of currency. They want to determine which parts of the economy get stimulated and which don’t.

A dangerous side effect of all the fiscal and monetary interventions into the economy is that market signals are no longer functioning properly. Fair value is no longer about what something is worth in a free market. It’s about what speculators think the Federal Reserve might buy next or Congress might rescue or subsidize next.

Everyone knows the bond market isn’t a real market when the largest buyer is a central bank set on controlling interest rates.

Some investors still think the stock market is a real market. But clearly, it’s not trading based solely on business fundamentals. It’s getting a massive, artificial valuation boost that just so happens to be tied to growth in money supply.

As artificial as these paper share markets may be, that doesn’t necessarily mean they are overvalued in terms of U.S. dollars. A case could be made that the S&P is actually undervalued – not yet fully pricing in the trillions in phony fiat set to be pumped into the banking system and consumers’ pockets so it can be capitalized on Wall Street.

An even stronger case could be made that precious metals markets are undervalued in terms of both Federal Reserve notes and most other asset classes on the planet. Silver in particular remains ridiculously cheap on a historical basis. Despite recently posting its sharpest rally in years, it has much, much further to run before it even challenges its former highs in terms of nominal dollars.

If the powers that be are actively trying to suppress silver and gold prices while at the same time trying to stimulate higher inflation rates, something will have to give. They cannot succeed at both objectives – not in the long run.

That should give long-term owners of bullion all the confidence they need to keep holding and keep exchanging their fiat money for hard money when opportunities present.

In other news, a major bad actor within the retail precious metals industry just got busted BIG TIME for ripping off people looking to acquire gold and silver bullion.

Regulators in 30 different states just joined together with the Commodities Futures Trading Commission and filed an unprecedented federal lawsuit and enforcement action against Barrick Capital (also known as Chase Metals or Metals.com) accusing the company of operating a large-scale precious metals fraud scheme.

Barrick gathered leads of potential gold or silver investors and targeted them with aggressive sales tactics from boiler-room phone banks, pressured to liquidate stocks in their IRA accounts, and then sold “Canadian Polar Bear” and other bullion coins priced 100% to 300% over the actual melt value. In other words, instead of selling bullion items for the typical 5% to 20% over the silver spot price, they charged premiums amounting to $20 to $50 per ounce!

The scheme went on for several years, with the company and its owners allegedly taking vulnerable investors for about $180 million.

Even as gold spot prices surged to an all-time record high this year (and silver more than doubled off its low), buyers of these ridiculously overpriced coins still lost money on them.

The way to ensure that never happens to you or to someone you love who may be new to precious metals is to be informed!

Part of our mission at Money Metals Exchange – from the very founding of our company over a decade ago – has been to educate Americans to recognize and avoid the bad actors that still operate in our industry.

In fact, these slimy outfits may become even be more prevalent as millions of new Americans wisely seek ownership of physical precious metals in the current environment of exploding debt, money printing, and economic devastation.

Some of the gold dealers you see advertising on TV, especially those with high-priced celebrity spokespeople, are running unethical schemes. They gather leads and then hammer the prospects with high-pressure phone calls in an attempt to peddle their super-marked up gold and silver products, usually in the form of proof, commemorative, or supposedly rare coins.

Fortunately, it’s fairly easy to determine whether you’re buying the right kind of precious metals product from the right kind of dealer.

The right kind of product is one that derives nearly all of its value from its actual metal content. Expect to pay only a modest premium over current spot prices to cover minting costs plus the dealer’s costs of doing business.

There can be periods of time, such as this year, where high demand and the resulting shortages cause premiums on coins, bars, and rounds to rise to some extent, but there are usually other items available where the higher premiums can be avoided.

Always know the melt value of what you are buying… and make sure any markup you pay over that melt value is reasonable.

As for much larger “collectible,” “numismatic,” or “rarity” premiums, these are entirely avoidable. Any coins marketed as such should be avoided entirely unless you have a keen interest in this highly specialized segment of the coin market and know in advance exactly how much premium you’re willing to pay.

Otherwise, any dealer who tries to convince you that high-premium specialty products are a better way to buy than common low-premium alternatives is probably trying to rip you off.

You can also check out a dealer’s reputation online and with the Better Business Bureau before becoming a client. You can also test a dealer’s customer service by making a call and asking a few basic questions about the ordering process.

We are certainly proud of the reputation we have built over the years at Money Metals Exchange. We have been named “Best in the USA” by an independent global ratings group.

We will continue to work hard to keep our reputation as a highly trusted dealer – and to educate the public about avoiding the rip-offs and scams.

Not only are bad actors bringing discredit to our critically important industry, but also their abuses could lead to a regulatory crackdown that harms legitimate dealers and their customers — through higher compliance costs, higher barriers to entry, clumsy restrictions, and undue invasions of privacy.

Well that will do it for this week. Be sure to check back next Friday for our next Weekly Market Wrap Podcast. Until then this has been Mike Gleason with Money Metals Exchange, thanks for listening and have a great weekend everybody.