(USAGOLD – 9/6/2019) – Gold retreated another $13 in overseas markets last night, but then showed signs of stabilizing in early U.S. trading. It is priced now at $1512 – down $7 on the day. Silver is down 12¢ at $1855. This morning’s weaker-than-expected jobs report helped to reverse gold’s downtrend this morning.
Gold these days tends to bend with the wind on day-to-day news but sticks stubbornly with the longer-term trend after all is said and done. Consistent central bank demand keeps domestic production at home in the number one and number four producers – China and Russia. It also diverts available supply to other, most emerging countries, making an effort to build their reserves. As the World Gold Council reported yesterday,
One of the primary drivers to this uptrend over the past several months is central bank demand which many experts see as a bulwark to the market’s day to day machinations.
Writing for the South China Morning Post, Joshua Rotbart, managing director of Hong Kong’s J. Robart & Co. says: “Gold provides stable insurance against a weaponised US dollar. By hedging their portfolios with gold, Russia and China – especially China, given current events – can manoeuvre with wider geopolitical freedom. As the ‘de-dollarisation’ continues, expect more purchases by central banks, especially considering that gold consists of only 2.5 per cent of China’s foreign reserves, but over 75 per cent of US foreign reserves. How the currency war, in conjunction with the trade war, will unfold remains unclear. What is clear is that gold bullion – physical gold – is back in fashion among many central banks as a suitable substitute for fiat currencies that wield too much geopolitical muscle.”
“And with stocks and real estate suddenly showing vulnerability,” says Peak Prosperity’s Adam Taggart, “it’s perhaps little surprise why gold has finally vaulted above the trading range its been mired in since 2013. Capital is suddenly starting to look for safe havens. And despite the nice jump in price gold, silver and the mining stocks have enjoyed so far this year, we’re still in the early innings (perhaps still the first!) of this new precious metals bull market. If history is any guide, the real action still lies ahead.”
Quote of the Day
“Bear markets are sneaky beasts and they like to do their damage as secretly and as unobtrusively as possible. I hate to say it but somewhere ahead, the bears going to get it all together and the innocent little stream is going to turn into a waterfall. What can you do about it? Stay out of the market? Protect yourself by remaining in pure wealth, gold. For thousands of years, silver and gold have been treated as pure wealth. As the standard measures of wealth (stocks and bonds) have deteriorated, veteran investors have forgone profits and moved their assets into pure wealth.” – Richard Russell, Dow Theory Letters
Chart of the Day
Chart courtesy of HowMuch.net
Chart note: We post this chart simply as a matter of general interest and not necessarily because it has any influence on the gold market. It does reflect, however, the inflationary growth in housing values since the 1940s and the mortgages that accompany it. Outstanding mortgage debt is 284 times greater in 2018 than it was in 1949. Total mortgage debt first exceeded $1 trillion in 1977. From 2008 to 2012, during the height of the Great Recession, total mortgage debt in the U.S. actually decreased every year. As a percentage, the largest increase in mortgage debt year-over-year occurred from 1949 to 1950, when mortgage debt increased by more than 50%.
Source: USA gold