Kitco News
(Kitco News) – Holdings of gold by global exchange-traded funds are at a record high as investors sought safety from recent weakness in equities and worries about the coronavirus hurting the global economy, analysts said.
The post Gold ETF holdings hit record high amid coronavirus worries appeared first on WorldSilverNews.
AFTERNOON UPDATE
(USAGOLD – 2/26/2020) – Gold is attempting to regain momentum today with the price seesawing in a wide range between $1654 on the high side and $1627 on the low side. At the moment, it is trading in the area of $1640 and level on the day. Silver is down 16¢ at $17.88. Market sources cite the spreading coronavirus, sharp corrections in global stock markets, recession fears, and anticipated central bank easing to mitigate the fallout as pushing the upside. As for the recent correction off eight-year highs, Forex trader Tony Sycamore offers an interesting insight at the CityIndex website. “A second reason why gold may have underperformed over the past 24 hours,” he says, “is after this week’s sharp fall in equities, some funds are likely to have suffered losses on their equity books. As such, they may have moved to take profit on their winning trades e.g. long gold and silver to pay for their losses elsewhere.” For the patient accumulator, he goes on, this type of “de-risking or position wash” presents “an opportunity to buy gold at better levels.”
NBC News-Wall Street Journal/Public Opinion Poll/2-20-2020
Poll results:
Trump: 44%
Biden: 52%
Trump: 46%
Sanders: 50%
Trump: 43%
Bloomberg: 50%
Trump: 44%
Buttigieg: 48%
USAGOLD note: We tend to stay away from politics here at USAGOLD – part of a tradition that goes back to our early days on the world wide web starting in 1997. That said, at the very least, when we see a trend worth noting, we feel obligated to send along a heads-up to our clientele. Though early in the game, polling shows President Trump trailing all the leading candidates from the Democratic Party in head-to-head competition – Sanders, Biden, Buttigieg or Bloomberg. We find the polling results a surprise and we are fairly certain that President Trump would point to the flawed polling during the last election cycle to blunt its relevance. At the same time, it could signal underlying demographic trends worth monitoring. By the way, most of the polling organizations tracked at Real Clear Politics report similar results.
BerkshireHathaway/Shareholders Letter/2-22-2020
“What we can say is that if something close to current rates should prevail over the coming decades and if corporate tax rates also remain near the low level businesses now enjoy, it is almost certain that equities will over time perform far better than long-term, fixed-rate debt instruments. That rosy prediction comes with a warning: Anything can happen to stock prices tomorrow. Occasionally, there will be major drops in the market, perhaps of 50% magnitude or even greater. But the combination of The American Tailwind, about which I wrote last year, and the compounding wonders described by Mr. Smith, will make equities the much better long-term choice for the individual who does not use borrowed money and who can control his or her emotions. Others? Beware!”
USAGOLD note: It comes as something of a surprise that Buffett would warn his clientele of a possible 50% or greater stock market drop in Berkshire Hathaway’s annual client letter.
With the outbreak of COVID-19 (coronavirus), many economists – including a former Fed president – have called for lower interest rates to head off any recession.
Former Minneapolis Fed President Narayana Kocherlakota argues that the Fed should not wait even until the March meeting to cut interest rates of possibly 50 basis points (.5%).
“The virus could result in a significant worldwide economic slowdown” and a rate cut is “a cheap insurance policy for the economy that the Fed shouldn’t pass up,” he said.
Recent global developments, including the more rapid spread of the coronavirus outside of China, make it more likely the Federal Reserve will act soon to cut interest rates to address growth concerns, according to economists gathered for a top policy conference on Monday.
“I think they’re going to have to go,” said Carl Tannenbaum, chief economist at Northern Trust. “Sitting still would be seen as being tone-deaf.”
The solution is not to reduce interest rates, which are already at rock bottom. The problem is broken supply chains. Manufacturers cannot get the components needed for their final products with the hundreds of factories closed in China and South Korea.
Lowering interest rates still further will not solve the problem of broken supply chains. However, lower interest rates may feed Wall Street.
