Gold News Today

FXEmpire/FBS/1-21-2020

“It seems the Japanese yen has lost its position of the safe-haven asset. It is more likely the only recovery of the carry trade factor will be able to support the Japanese yen. However, the easing monetary policy of the central banks is among the major negative factors that may affect the carry trade.”

USAGOLD note:  We often referenced the Japanese yen and gold as traveling partners at this site. According to this article, that association is now a thing of the past.

MoneyWeek/Dominic Frisby/1-22-2020

“I ran into Jim Mellon at a party at the weekend, and we soon got talking about markets. One of his comments – stated with surety and simplicity – has stuck in my mind. ‘Investing in 2020 is going to be easy,’ he said. ‘All you need to do is own gold and silver.’ He said it like it was a no-brainer.”

USAGOLD note:  Dominic Frisby makes an interesting revelation in this piece having to do with gold’s 144-day moving average. He also passes along Ross Norman’s gold and silver predictions for 2020. That carries some relevance because Norman is “the LBMA’s number one forecaster over the last 22 years.”

Warren Buffett is considered the most successful investor of our time.  One of the indicators that he follows is the stock market’s total valuation  to GDP, which is now flashing red.  Buffett’s Berkshire Hathaway currently holds in excess of $128 billion in cash.

The vertical grey lines in the chart are major recessions.  Note how Buffett’s indicator peaked a year or so before the last two severe economic downturns.  Now, though, the stock market’s valuation to GDP is at an even higher level.  Is there a major recession awaiting about a year out?

If there is, we can expect the Fed to begin massive money printing to forestall it or at least to soften its effect.  Past money printing binges by the Fed resulted in bull markets in gold and silver. Wait! The Fed has already swung into action with repurchase agreements, reverse repurchase agreements, and its $60 billion monthly T-bill purchases.

Repo and reverse repo operations are used to adjust the supply of banks’ reserve balances and to keep the federal funds rate around the target level, which now is 1.55%.  When the fed funds rate shot above 10% last September, the Fed swung into action.

As of January 1, the Fed had injected $255 billion with repos alone, more than double what it supplied during the 2008 World Financial Crisis.  The Fed has said that it will continue repo activity through February, but there is speculation that it may be extended to April.

It should be kept in mind that the September 2019 fed funds rate surge to 10% caught the Fed by surprise.  So, we really don’t know how much money will be created as the Fed “handles” this development.

Meanwhile, gold and silver are holding steady as the world seems to suddenly remember that they  have been money for 6,000 years and are likely to remain money.