Archive for Metals

Global Insanity Prevails

By The Gold Report

Source: Michael Ballanger for Streetwise Reports   09/14/2019

Sector expert Michael Ballanger uses storytelling and personal experience to unpack the myths and machinations behind the precious metals and financial markets.

“Destroyers seize gold and leave to its owners a counterfeit pile of paper.” —Ayn Rand

Why don’t we start things off a tad differently this evening? Let me relate to you all a parable from the Book of Quantitative Easing where all is good and noble in the world of government oversight, the most widely used oxymoron in the history of mankind.

Granny Smith, now in her late nineties, wakes up one morning and finds that her dear husband for nigh-on seventy years has gone on to meet his Maker. But alas, as distraught as one would expect her to be, she is covertly delighted because, well, old Egbert Smith was not exactly the man she married and being forced to change his diaper and his bedsheets each night had grown both tiresome and difficult.

When the lawyer had finished probating the will after eight meetings that could have been just as effective with one, it was learned that Granny was in possession of a sizeable pool of capital, on the order of US$5,000,000. She immediately ordered a meeting with that nice young man from the bank that “smiles at me and always smells good” in an effort to determine what she should do with her money.

You see, for the past fifty years, husband Egbert handled the family finances because, well, women were not expected to understand money. But prior to marriage, Granny had a job in a bank and was quite proficient in helping “customers” (as opposed to “clients”) understand how the bank was trying to screw them. She understood fully the “Power of Compounding” long before some wannabe-evangelist-cum-motivational-speaker windbag decided to sell a million copies of his latest (plagiarized) book. However, I digress. . .

She enters the mahogany-walled offices of the bank CEO with her handbag full of post-it-note reminders of just how he is going to try to make her $5,000,000 work for him instead of her and sits down in the largest, plushest, most expensive, high-backed chair in banker history.

“Five mil is a lot of money” is the opening salvo of this former drug-dealer-car-salesman-turned-bank-CEO as he shows her a chart of the five top banks’ CD (certificate of deposit) rates. “The range for a 5-year CD is minus 0.23 to minus 0.29 with the our bank, highlighted in yellow. Remember, we value your money,” he says and then asks his “administrative assistant” to fetch them some tea and cookies. “And I want you to know that safety is paramount.”

Granny Smith looks at Mr. Bank CEO and says, “Forgive me, Mr. Morgan, but I am an old lady trying to understand your business so please describe to me what is meant by the minus sign before those figures.”

“Well, Mrs. Smith, it’s pretty simple. We protect your money from thieves and corporate raiders and the government so that you can live the rest of your life stress-free.”

Granny looks up at him quizzically from a half-knitted tea cozy and two very intimidating needles as she says, “Well thank you, but what I meant to ask was what return I will have on my money if I deposit it at your bank in your government-insured Certificate of Deposit?”

At this point the banker starts fiddling with his tie and perspiring heavily as he goes on for another fifteen minutes about “global uncertainty” and “government guarantees” and “bank safety,” and at the exact moment he decides to launch into his “final close,” to get $5,000,000 cash into his bank, which desperately needs to shore up the $6 billion in bad car loans, little Granny Smith interrupts him with this, the most innocent of all questions: “Mr. CEO, if I give you and your wonderful bank all of my five million dollars, how much will I get back after five years?”

Now choking on the ramifications of a truthfully answered question, Mr. Bank CEO pivots into the “You-don’t seem-to-understand” defensive formation, followed by yet another twenty minutes of diatribe.

At this point of the early evening, Granny has been transformed from an “innocent and quite defenseless elderly lady” to “totally pissed off and ready-to-rumble granny-goon,” and decides to ask the banker the ultimate question. Holding a Hewlett Packard financial calculator in her left hand while pointing one of her knitting needles at his throat with her right, she snarls “How much freakin’ money do I get back on September 12, 2024, if I give you my $5 million today?”

The banker stands up; he straightens his tie; he wipes his brow; and he says to the now openly hostile granny, “$4,290,435, my dear, but with the full safety and security of our bank.”

Granny: “So, let me get this straight. I give you five million dollars today and five years from now, when I’m 103, you give me back less than i started with???

The banker CEO smiles bravely and says, “Welcome to the New World Order, Mrs. Smith.”

She grabs her bag, rising quickly from the high-backed chair, and says with the utmost of decorum, “Welcome to the World of f-you, Mr. Banker.” And leaves the building.

And so ends the first parable.

Why, pray tell, would anyone in their right mind, let alone a fiduciary entrusted with the prudent stewardship of client capital, ever buy a financial instrument from a high-risk institution (remember subprime?) that guarantees a negative yield to maturity? Now, I don’t pretend to be a balance sheet genius, nor do I profess to understand all the financial engineering that is practiced these days but it seems to me there is a checklist of possible reasons. Here are but a few:

  • You have borrowed money from the financial institution and they demand you put up collateral in the form of a bond yielding negative returns. In other words, they layer a second level of “fees” on you, jacking up your effective cost of borrowing to inflated levels;
  • Your financial institution uses government securities as a reserve requirement in order to soften the interest expense to the government. Since the government regulates your financial institution, they are forced to play ball and the added inconvenience is passed along to the customer,
  • You are a professional money manager that sees rates going from –1% to –2%, thus opening up a potential capital gain in the price of the bond. As there is an inverse relationship between yield and price, declining yields are accompanied with rising price, hence the rationale for playing the “Greater Fool” game. The early idiot sells the useless bond to a bigger idiot and banks the gain;

And finally,

  • You were walking to work this morning and were hit on the head by a falling quote machine thrown by an incensed gold trader and were senseless when you made the decision to buy a bond that ensures that you will lose money.

I am sure there are many, many more reasons someone buys a negative-yielding financial instrument, and reasons that are quite possibly more sophisticated than the ones listed above. The point I make is that when you really think about the symptoms of a collapsing global banking system, one needs look no further than the 65% of all global bonds that are delivering a negative yield.

Strong economies are found in regions and countries that are sporting strong balance sheets, just as strong companies are able to cover interest costs from existing cash flow with ease. After several decades of mercantilist behavior fully supported by governments across the globe, with the exception of those countries (Russia, China, Cuba, Zimbabwe, and now Venezuela) that attempted to function under socialist/communist systems of government, we have now arrived at the ultimate tipping point, where government spending now not just exceeds, but dwarfs, tax receipts.

In the case of China, where the shadow banking system cloaks much of their toxic debt, they do not have the additional burden of entitlements, which are the Achilles heel of the American government, military, and banking system. Whenever I look around and try to find a country living within its means, I am hard-pressed to find one. Maybe the Sultan of Brunei could offer lessons as his country sports the lowest debt-to-GDP (gross domestic product) ratio on the list, and while Japan is the worst offender, their total debt at $9 trillion pales in comparison to United States’ $19 trillion debt load. What the U.S. dollar bulls fail to take into consideration is that the entitlements of Medicare, Medicaid and Social Security have to be added to that figure, and the reason they don’t is that they can’t figure out the numbers.

Falling into the realization category of The Emperor’s New Clothes, I contend that we are today at the precipice of a massive drop in global living standards brought on by the final reconciliation of debt. Individual citizens who take advantage of generous lending practices and pile on layer after layer of debt always encounter that point in time where bankruptcy arrives first slowly, then suddenly (thanks to Ernest Hemingway), because cash flow from earnings or dividends and interest falls disastrously short of cash outflow.

At that point, assets must be sold to reduce debt, and while individual citizens can sell things like homes or automobiles or cottages, governments can only sell land. And as any politician knows (think the Greek Islands), the mere mention of carving off a piece of Hawaii or Vancouver Island to pay down someone else’s obligation is certain career suicide. Hence, and with good reason, governments are moving—no racing—to get the trillions upon trillions in toxic bonds to a negative yielding setup, because just as interest expense is a charge upon the government income statement, interest earned (by negative yielding bonds) is a credit. In this manner, there suddenly exists an accounting function whereby debt becomes an asset, and in this manner, the deadbeat global central banks and criminally compromised treasury departments are able to prolong the largest Ponzi scheme in history.

I further contend that the public is coming to the realization that the smartest people in the room are rarely politicians and never central bankers. However, the best communicators in the room from a political perspective are those who can speak to the masses in a language and style foreign to most educated people (think Donald Trump). After fifty or so years of movie star orators like Ronald Reagan, Bill Clinton and Barack Obama, public perception within the lunch-bucket crowd has now swayed away from “slick” and is gravitating to “blunt” with factual accuracy in the message a mere bonus.

I refer to this growing malaise of disenchantment and unrest as being rooted in one word—mistrust. That mistrust is going to manifest itself within large pools of investible capital fleeing the 10-year safety-net investment strategy, where every 10% drop is met with Fed intervention and jawboning, winding up in alternative investments such as gold and silver. We have already witnessed the impact of the Millennials and GenY-ers on cryptocurrency deals in 2013–2017 and then cannabis deals from 2013–2019. The moves in those two sectors were mind-blowing because, as a generation, with thanks to the wonderment of social media, their access to timely information allows them to move in swarms, not unlike bee colonies, chasing deals in mob-like fashion while exiting with the same virulence.

This impulsiveness is the reason we are getting such wild swings in everything, and no better example of that than in the recent June–September advance in silver from $14.50 in late May to $19.75 on Sept. 4. It took three months for silver to get through $17/ounce, but only three more weeks to peak at $19.75, as the last $2.75 was a wholly new breed of investor arriving into the precious metals markets. Having never been laid out by the bullion bank traders before, they were like sheep being sent to the corral, and just as quickly as they inhaled every share of GDX and GDXJ above $30 and $42 respectively, bludgeoning their way in, today they are all bludgeoning their way out. Same drill over at the Crimex; late longs in silver and gold are being beaten like rented mules.

I sounded the alarm back in June, when gold first attempted to surmount the five-year resistance at $1,350–1,375 and while I stand behind the reasoning, I was overly cautious and exited the GLD call options, NUGT, and JNUG way early. I kept 100% positions in the GGMA portfolio in physical gold and silver and held on (for dear life) as the GDX and GDXJ positions screamed ahead until late August, when I sold 50% positions in the $30 and $43 range (GDX and GDXJ respectively), with the balance jettisoned on Sept. 4.

Also sold at or near the top was Great Bear Resources Ltd. (GBR:TSX.V; GTBDF:OTC) (at $9.02) for a 292% profit from Jan. 2. So, between the leveraged and non-leveraged trades, the GGMA portfolio is ahead 163% for the year and is sitting on a 53% cash position, looking for a reentry point to the unleveraged miner ETFs as a starter, followed by the leveraged ones (including GLD and SLV calls) if and when we get to a deeply oversold position.

Now, I’ve had a number of people message me with congratulatory salutations on some of the trades but make no mistake about it: I am terrified to be without positions in the GDX and GDXJ, or, as they say, “flat and nervous.” In fact, I feel more anxiety being underinvested and cashed up than I did when I was fully invested and down 15%.

On that note, let me clarify. We are finally in the throes of angst that accompany all bull markets in their early stages. My favorite is silver for all of the reasons you have been reading for the past forty-six months, since I opined in December 2015 that we had just ended the 2011–2015 bear market and were about to embark on a brand new bull, one that would (and will) change fortunes and lifestyles for all on board.

That opinion has not changed. In fact, for reasons well documented in this publication and others, conditions are ripe for a hyperinflationary conflagration that will, based upon the sheer magnitude of scurrilous counterfeiting of sovereign currencies around the world, make 1921 Weimar Germany look like a tea party. There is only one sanctuary for savings in a world of monetary madness, and that sanctuary absolutely must reside outside of the banking system, because the tattered tentacles of Deutsche Bank are intertwined with the shadow banks in Shanghai, which are, in turn, part of a global labyrinth of debt and collusion and intervention and fraud.

I will repeat analogy from years past. When you visit a pig farm, you see brown pigs and white pigs and pink pigs and even mottled pigs, but at day’s end and the bell is sounded, every pig in the sty sullies up to the feeding trough regardless of color. Similarly, banks can be from the United States or the UK or China or Brussels; they all depend on “fiat” (decree or mandate) and when this growing mistrust of the system finally embodies itself in the daily decisions of investors around the world, all banks will topple, regardless of their locale. At that point, and fear explodes, there will be simply not enough gold and silver to satiate demand. Where infinite and urgent demand meets limited and tightly held supply, pricing chaos ensues. That is what I expect, and that is why I am “flat and nervous.”

I close out the week by reminding you all that despite what you are being fed about a “new paradigm” and that “it’s different this time,” take one look at the COT Report and realize that the 33,130 contracts covered during the last COT reporting period probably involved a $30–40 per ounce clip that represents 100 ounces per contract or $100-125 million in profits taken by bullion banks from the pockets of investors and speculators. At the top in very early September, I counted no fewer than fifty articles in the blogosphere that finger-wagged their conviction that the forces of good had finally and convincingly defeated the “cartel” and it was now “safe” to ignore the bullion banks and go “all in.”

It is late in the Friday trading session, and with the weakness in today’s session in silver, it has now corrected back to a level where, while not egregiously oversold yet, it represents a decent reentry with a small amount of capital into the SLV December $18 calls at $0.42 for a trade to $2.50 by expiry. I will probably be bidding for 25% positions in the GDX at $26.50 and GDXJ at $36 on Monday morning, after which I will overmedicate myself and take a bold swipe at the diabolical duo of NUGT and JNUG. Edging one’s toe into the waters has always served me well because averaging up is a far wiser strategy than averaging down. (Just ask my bank manager, accountant, psychiatrist and pharmacist).

Originally trained during the inflationary 1970s, Michael Ballanger is a graduate of Saint Louis University where he earned a Bachelor of Science in finance and a Bachelor of Art in marketing before completing post-graduate work at the Wharton School of Finance. With more than 30 years of experience as a junior mining and exploration specialist, as well as a solid background in corporate finance, Ballanger’s adherence to the concept of “Hard Assets” allows him to focus the practice on selecting opportunities in the global resource sector with emphasis on the precious metals exploration and development sector. Ballanger takes great pleasure in visiting mineral properties around the globe in the never-ending hunt for early-stage opportunities.

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Disclosure:
1) Michael J. Ballanger: I, or members of my immediate household or family, own securities of the following companies mentioned in this article: None. My company has a financial relationship with the following companies referred to in this article: None. I determined which companies would be included in this article based on my research and understanding of the sector. Additional disclosures are below.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: Great Bear Resources. Click here for important disclosures about sponsor fees.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Charts provided by the author.

Michael Ballanger Disclaimer:
This letter makes no guarantee or warranty on the accuracy or completeness of the data provided. Nothing contained herein is intended or shall be deemed to be investment advice, implied or otherwise. This letter represents my views and replicates trades that I am making but nothing more than that. Always consult your registered advisor to assist you with your investments. I accept no liability for any loss arising from the use of the data contained on this letter. Options and junior mining stocks contain a high level of risk that may result in the loss of part or all invested capital and therefore are suitable for experienced and professional investors and traders only. One should be familiar with the risks involved in junior mining and options trading and we recommend consulting a financial adviser if you feel you do not understand the risks involved.

( Companies Mentioned: GBR:TSX.V; GTBDF:OTC,
)

JPMorgan’s Top Metals Trader in the Crosshairs for Illegal Manipulation

By Money Metals News Service

Michael Nowak, the global head of trading for both base and precious metals at JPMorgan Chase, allegedly oversaw an illegal market manipulation operation.

JP Morgan

He was placed on leave in late August and is a target in a widening DOJ criminal probe.

Reuters reports that Nowak and Gregg Smith, whose title is unknown at this time, are the third and fourth people now implicated in a criminal price rigging scheme at the bank. They may not be the last.

Christian Trunz and John Edmonds, who worked for Nowak, have already pleaded guilty and agreed to cooperate with the investigation. They have outlined an operation that spanned nearly a decade and “thousands” of fraudulent trades. They have said their training in the dark arts of rigging prices and cheating clients was provided by more senior bank executives.

They may have been referring to Nowak and/or Smith, though neither have been arrested or charged as yet. If charges are forthcoming, Nowak will be the highest placed executive to face the music thus far.

Should Nowak also plead guilty and provide evidence against his superiors, things will get even more interesting. It would signal the matter isn’t going to be handled in the usual way, i.e. with some lower level staffer taking the fall – and regulators pretending the problem has been addressed.

Traders at Bank of America and Deutsche Bank have also pleaded guilty to spoofing. Evidence shows them working together with their peers at other bullion banks, including JPMorgan, to cheat their respective clients.

The picture emerging is not one of traders at competing banks striving to serve clients well and win business, though that is what naive clients expected. Instead, bankers placed bets against their customers. Then they used their weight in the markets and called in favors with friends at other banks to assure they won those bets.

These and other schemes may have worked to push prices down, something long suspected by frustrated gold bugs.

The bullion banks are infamous for their massive short positions in gold and silver. Whether all those shorts are simply a natural by-product of selling contracts to any and all retail speculators, or whether they are piled up as part of a deliberate price suppression effort sanctioned by the Fed, is not certain.

Either way, the bullion banks’ incentive, generally speaking, is to profit from betting prices will fall.

All too often that entails rigging markets and defrauding clients.

The Justice Department and federal regulators might end up being the least of the bullion banks’ worries. Class-action attorneys and the victims they represent are readying civil lawsuits.

If they can provide proof to juries that traders at multiple banks spent years operating a large and well-coordinated racket, under the supervision and direction of very senior executives, the potential liability will be huge.

 


The Money Metals News Service provides market news and crisp commentary for investors following the precious metals markets.

Gold Weather Veins in Big Red

By The Gold Report

Source: Streetwise Reports   09/12/2019

The explorer recently released early-stage sampling results for its Golden Triangle property that identifies a “significant gold discovery.”

Streetwise Reports caught up with Ian Slater, the CEO of Libero Copper and Gold Corp. (LBC:TSX.V:, LBCMF:OTCQB). Slater is ramping up his international firm’s exploration program at its Big Red property in the Golden Triangle of British Columbia, Canada.

The Golden Triangle is difficult to mine, terrain- and weather-wise, but payoffs for tenacity have been consistent during the past 150 years. The region sports several of Canada’s most lucrative copper-gold mines, including Premier, Red Chris, Snip, Brucejack and Eskay Creek.

There is road access into Big Red, so the harsh winter is the main obstacle to working the area—the weather window is July through October. Big Red is a big patchwork: It covers 20 contiguous claims totaling 26,000 hectares.

Slater is fresh off of raising $3.7 million in a private placement for Libero. The placement found institutional support and was oversubscribed by $1 million. Slater said the expected proceeds are more than enough to finance Big Red exploration and general capital needs for the next two mining seasons in the Golden Triangle.

Slater’s team includes legendary geologist Leo Hathaway of Lumina Gold Corp. At Lumina, Hathaway’s historic discoveries resulted in a $1.6 billion buyout. Slater and Hathaway are pushing to commence the Big Red exploratory drilling program in a few days. They aim to finish the first round of drilling before the heavy snows of October.

“We spent the summer taking continuous rock samples, confirming the results from historical assays, which were gold-laden soil samples that date back to 1963. We took the new samples from the bedrock. Our plan is to start drilling in September; we are waiting for the final permit,” Slater said.

Slater pointed out that his workforce can drive through the wilderness to Big Red on a dirt road, which is a big plus in these rough-hewn mountains. The drive is worthwhile: Past and present surveys show that Libero’s exploration zone is heavy with porphyry copper and gold, epithermal gold and silver and volcanogenic sulfide mineralization.

The centroid of the Big Red targets is a large magnetic-high feature that coincides with a radiometric potassium anomaly, copper, gold and molybdenum anomalies and a mapped Jurassic aged porphyry intrusion. Epithermal gold targets lie to the south and west including the Poker target to the west of the porphyry targets.

On September 5, Libero released results from its early-stage sampling program, announcing a significant new gold discovery at the Copper Bowl target “where five contiguous 50 meter continuous rock chip samples returned intervals of 2.91 grams per tonne gold over 250 meters including 6.14 grams per tonne gold over 100 meters in two contiguous samples.”

The company also noted the sampling “confirmed the anomaly previously compiled from historical sampling campaigns conducted at the Ridge gold target. Continuous rock chip sampling results at the Ridge gold target included 5.14 grams per tonne gold from a single continuous chip sample taken over 50 meters.”

The company plans to target both Ridge and Copper Bowl in its upcoming drill program.

Slater said the newly raised capital will be used to work through the end of the next year’s drilling season. “We will be permitted for 15 drilling pads of multiple years. The lab results should turn around on three-week schedules.” He expects the samples to show mostly gold-copper porphyry. “We are focused on the gold,” he remarked.

“This is the first time that the Big Red project has been consolidated under one operator,” Slater noted. The company has invested in a series of affordable, structured options. “If the exploration does not work out to our liking, we can walk away with minimal losses,” he explained. Libero’s eggs are not all in one carton.

Libero’s business strategy is acquiring “high-quality copper and gold deposits with significant resources but without any fatal flaws or significant holding costs.” It looks for projects with known mineralization, but significant exploration potential. The plan is to sell at a premium when strong markets inspire the hunt for acquisitions, Slater said.

Buy cheap, sell dear fits the Libero’s plan for exploring its Big Red asset, as well as its 49 unpatented claims in the Tomichi deposit in southwestern Colorado.

Tomichi contains an inferred mineral resource of 711 million tons at a grade of 0.33% copper equivalent. Slater says that exploring Tomichi is currently on the backburner. That project awaits a change in market conditions. because the Tomichi metal, while abundant, is relatively low grade compared to the prospects at Big Red and Mocoa.

“There is a lot of metal in the ground, but it is not costing much to hold on to Tomichi until global supplies are reduced and the pricing changes,” Slater noted.

Libero’s “flagship” venture is a higher-grade deposit near the town of Mocoa, Colombia. It contains an inferred resource of 636 million tons at a grade of 0.45% copper equivalent. The deposit is accessible by road and it has an unusual history.

The Mocoa deposit was discovered in 1973 when the United Nations conducted a regional stream geochemical survey. Through 1983, explorers mapped the geology, did surface sampling and ground geophysics (IP, magnetics). It sank 31 diamond drill holes totaling 18,321 meters, resulting in promising, if preliminary metallurgical test work.

Four drill core composites, representing different rock and ore types, and a bulk composite of all these samples were processed at Dawson Metallurgical Laboratories in Murray, Utah. Standard grinding and flotation tests were completed. A bulk copper-molybdenum flotation concentrate was processed to produce copper and molybdenum concentrates.

According to contemporaneous reports, the copper concentrate has a grade of 24.2% Cu with a recovery of 85.9% and the molybdenum concentrate has a grade of 55.14% Mo with a recovery of 82.7%. Both concentrates are clean with no deleterious elements.

Majors have been circling Mocoa from afar, waiting for the juniors to strike. In 2008 and 2012, B2Gold executed diamond drill programs at Mocoa. Slater acquired the deposit from B2Gold Corp. (BTG:NYSE; BTO:TSX; B2G:NSX) in return for a 19% stake in Libero.

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Disclosure:
1) Peter Byrne compiled this article for Streetwise Reports LLC and provides services to Streetwise Reports as an independent contractor. He or members of his household own securities of the following companies mentioned in the article: None. He or members of his household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees. As of the date of this article, an affiliate of Streetwise Reports has a consulting relationship with Libero Copper and Gold Corp. Please click <href=”#consulting” target=”_blank”>here for more information. Within the last six months, an affiliate of Streetwise Reports has disseminated information about the private placement of the following companies mentioned in this article: Libero Copper and Gold Corp.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases. As of the date of this interview, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Libero Copper and Gold Corp., a company mentioned in this article.

( Companies Mentioned: LBC:TSX.V:, LBCMF:OTCQB,
)

Gold Speculators sharply pared their bullish bets after close to 3-year high

September 14th – By CountingPips.comReceive our weekly COT Reports by Email

Gold Non-Commercial Speculator Positions:

Large precious metals speculators sharply cut back on their bullish net positions in the Gold futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Gold futures, traded by large speculators and hedge funds, totaled a net position of 269,725 contracts in the data reported through Tuesday September 10th. This was a weekly reduction of -30,822 net contracts from the previous week which had a total of 300,547 net contracts.

The week’s net position was the result of the gross bullish position (longs) dropping by -31,271 contracts (to a weekly total of 334,114 contracts) while the gross bearish position (shorts) fell by just -449 contracts for the week (to a total of 64,389 contracts).

Gold bullish bets dropped this week by the largest amount in sixteen weeks after rising above the +300,000 net contract level last week. That was the first time bullish bets had been above that level since September 6th of 2016, almost exactly three years prior. Gold bullish bets have been on a remarkable run since this year’s low-point on April 23rd when the net position stood at just +37,395 contracts. Since that time, just twenty-one weeks ago, bullish positions have exploded higher by a total of +232,330 net contracts and have risen in fourteen out of the twenty weeks following the low.

Gold Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -305,611 contracts on the week. This was a weekly rise of 32,130 contracts from the total net of -337,741 contracts reported the previous week.

Gold Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Gold Futures (Front Month) closed at approximately $1499.20 which was a decrease of $-56.70 from the previous close of $1555.90, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article By CountingPips.comReceive our weekly COT Reports by Email

Silver Speculators edged their bullish bets lower for 1st time in 4 weeks

September 14th – By CountingPips.comReceive our weekly COT Reports by Email

Silver Non-Commercial Speculator Positions:

Large precious metals speculators slightly trimmed their bullish net positions in the Silver futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Silver futures, traded by large speculators and hedge funds, totaled a net position of 60,231 contracts in the data reported through Tuesday September 10th. This was a weekly reduction of -1,894 net contracts from the previous week which had a total of 62,125 net contracts.

The week’s net position was the result of the gross bullish position (longs) falling by -4,564 contracts (to a weekly total of 100,413 contracts) while the gross bearish position (shorts) declined by a lesser amount of -2,670 contracts for the week (to a total of 40,182 contracts).

The Silver speculative bets dipped this week following three straight weeks of gains that had added over +22,000 contracts to the overall net bullish position. Speculator sentiment has risen for ten out of the past fifteen weeks that has taken the net position from a total of -8,443 contracts on June 4th to a total of +60,231 contracts as of this week. Despite the small pullback, this week marked the first time since November of 2017 that the net position has been above +60,000 contracts for two straight weeks.

Silver Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of -84,768 contracts on the week. This was a weekly decrease of -90 contracts from the total net of -84,678 contracts reported the previous week.

Silver Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Silver Futures (Front Month) closed at approximately $1818.60 which was a loss of $-105.10 from the previous close of $1923.70, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article By CountingPips.comReceive our weekly COT Reports by Email

Copper Speculators sharply cut back on bearish bets after record high

September 14th – By CountingPips.comReceive our weekly COT Reports by Email

Copper Non-Commercial Speculator Positions:

Large precious metals speculators strongly reduced their bearish net positions in the Copper futures markets this week, according to the latest Commitment of Traders (COT) data released by the Commodity Futures Trading Commission (CFTC) on Friday.

The non-commercial futures contracts of Copper futures, traded by large speculators and hedge funds, totaled a net position of -41,186 contracts in the data reported through Tuesday September 10th. This was a weekly change of 17,655 net contracts from the previous week which had a total of -58,841 net contracts.

The week’s net position was the result of the gross bullish position (longs) increasing by 1,086 contracts (to a weekly total of 77,185 contracts) while the gross bearish position (shorts) dropped by -16,569 contracts for the week (to a total of 118,371 contracts).

Copper speculators cut back on their bearish positions by the largest one-week amount in the past twenty-eight weeks. The speculative position had risen to a new all-time record high bearish position for two consecutive weeks previously. Overall, the copper standing has now been in bearish territory for only twenty straight weeks but the strength of bearish sentiment accelerated quickly and resulted in record levels before this week’s turnaround.

Copper Commercial Positions:

The commercial traders position, hedgers or traders engaged in buying and selling for business purposes, totaled a net position of 40,421 contracts on the week. This was a weekly decline of -18,576 contracts from the total net of 58,997 contracts reported the previous week.

Copper Futures:

Over the same weekly reporting time-frame, from Tuesday to Tuesday, the Copper Futures (Front Month) closed at approximately $262.80 which was an increase of $10.00 from the previous close of $252.80, according to unofficial market data.

*COT Report: The COT data, released weekly to the public each Friday, is updated through the most recent Tuesday (data is 3 days old) and shows a quick view of how large speculators or non-commercials (for-profit traders) as well as the commercial traders (hedgers & traders for business purposes) were positioned in the futures markets.

The CFTC categorizes trader positions according to commercial hedgers (traders who use futures contracts for hedging as part of the business), non-commercials (large traders who speculate to realize trading profits) and nonreportable traders (usually small traders/speculators).

Find CFTC criteria here: (http://www.cftc.gov/MarketReports/CommitmentsofTraders/ExplanatoryNotes/index.htm).

Article By CountingPips.comReceive our weekly COT Reports by Email

When Will it be Safe to Jump Back into the Gold and Silver Pool?

By The Gold Report

Source: Streetwise Reports   09/12/2019

Bob Moriarty of 321 Gold discusses what the Daily Sentiment Indicator is saying about the precious metals markets.

Once again the DSI (Daily Sentiment Indicator) made an accurate call on a major top in gold and silver. The DSI reached nosebleed territory for gold about four weeks ago suggesting the metals were nearing shoal waters. Silver and platinum got stupid a week ago and I suggested a correction would be timely.

Investors should remember that when someone writes a recommendation or makes a comment no matter whom it is, they are expressing an opinion. I don’t give a damn how many facts or figures someone uses, it’s an opinion. But in my experience the use of the Daily Sentiment Indicator has proven very accurate calling the top in the stock market in 2018 and the bottom in late December. Now, once again it has identified a tradable top.

People got way too bullish on the metals. All I saw and heard was a ton of people talking about how high gold and silver were going to go. The number of outstanding contracts hit a record high. It always does at tops, that’s what makes it a top no matter how long it lasts. The weak hands buy at tops and sell at bottoms. They also are the biggest users of margin so once a decline gets serious they panic and start a cascading decline.

I am on record calling for a top in the overall market in September leading to a major crash starting in October. It’s just an opinion but I am getting my gas mask on and fixing to head to the nearest bunker.

Now many writers are talking about some minor correction before gold and silver once again bolt for the running rabbit. I don’t think so. With the record bullishness, you need both time and price to scare hell out of the weak hands and for sure that hasn’t happened.

When the DSI for gold and silver and platinum break under 10 you can put your life jacket back on and jump in. If the markets follow the traditional calendar, that will be about mid December.

In a different vein, I want to thank the hundreds of people who wrote to me expressing their sorrow at the news of the death of my wife. We knew she was ill, she was tired and wanted out but still when it happened it was the biggest shock of my life. I miss her so.

I’ve learned a lot and while it may seem callous of me to run the website with tears on my face, I need something to make it worth breathing. Now I realize that life is a teeter-totter. The opposite side of deep love is incredible pain. I loved Barbara deeply and I mourn her greatly. Thank you if you were one of those kind enough to share your thoughts.

Bob and Barb Moriarty brought 321gold.com to the Internet almost 16 years ago. They later added 321energy.com to cover oil, natural gas, gasoline, coal, solar, wind and nuclear energy. Both sites feature articles, editorial opinions, pricing figures and updates on current events affecting both sectors. Previously, Moriarty was a Marine F-4B and O-1 pilot with more than 832 missions in Vietnam. He holds 14 international aviation records.

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1) Statements and opinions expressed are the opinions of Bob Moriarty and not of Streetwise Reports or its officers. The auther is wholly responsible for the validity of the statements. Streetwise Reports was not involved in any aspect of the article preparation. The author was not paid by Streetwise Reports LLC for this article. Streetwise Reports was not paid by the author to publish or syndicate this article.
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Media Hypes Recession while Trump Proposes a Tax on Savings

By Money Metals News Service

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

Coming up, Axel Merk of Merk Investments joins me for a conversation on the latest central banking shenanigans, why he believes the economy may heat up again in the near term, and why the war on cash and the move to digital money will continue to drive people into gold. So don’t miss another great interview with Axel Merk, coming up after this week’s market update.

Gold and silver markets are testing support levels this week. Gold has been hanging around the $1,500 level while silver trades sideways through Thursday’s close at just above $18 an ounce.

As of this Friday recording, gold prices come in at $1,498 per ounce, down 0.7% for the week. Silver, meanwhile, now shows a weekly loss of 2.0%, with most of that loss coming here today, to bring spot prices to $17.89.

The bright spot in the metals space this week is palladium. The catalytic metal pierced through $1,600 an ounce on Thursday to record a new record high. Palladium prices now check in at $1,609 after gaining $60 or 3.9% on the week.

As for platinum, it is putting in a slight weekly gain of 0.2% to trade at $956 an ounce.

Metals investors will await the market’s reaction to next week’s FOMC policy meeting. It wouldn’t be surprising to see an attempt in the futures markets to smash gold and silver prices down to lower support zones in the trading around the Fed’s decision.

Flushing out some more speculative longs and late comers with weak hands would be a healthy development in setting up the next rally. Those who got left behind in this summer’s big moves in metals markets should certainly consider taking advantage of favorable buying opportunities as they present themselves ahead of a possible seasonal push higher in the sector this fall.

Conventional financial markets could become volatile as uncertainties surrounding America’s economy and political future weigh on investors. We are potentially only one election away from falling into socialism and one quarter’s GDP report away from falling into recession.

Lately, the mainstream media has been fixated on the possibility of the Trump economy heading toward recession, as heard in the following montage:

President Trump: Certain people in the media are trying to build up, because they’d love to see a recession.

News Report Clip 1: Why are people talking about a recession? And, you say it’s here.

News Report Clip 2: There are indicators that the US could be headed for a recession.

News Report Clip 3: … could be headed for a recession.

News Report Clip 4: … be inching toward a recession.

News Report Clip 5: They see a potential recession on the horizon.

News Report Clip 6: Happening now, recession fears.

News Report Clip 7: What are the odds that you see of a recession?

News Report Clip 8: A recession.

News Report Clip 9: Recession.

News Report Clip 10: Recession.

News Report Clip 11: At some point, there’s going to be a recession.

Yes, at some point there will be a recession. But it’s not here yet. And economic forecasters as a whole have a terrible track record when it comes predicting major turns in the economy.

All the recession talk now spewing from the media is speculative at best – politically calculated at worst. Let’s face it, some anti-Trump partisans in the media are giddy over the potential for a recession to bring down the President’s poll numbers.

That said, we do see signs of an economic slowdown of at least some magnitude. Despite a low official unemployment rate, jobs are being created at the slowest pace since 2011. Corporate earnings growth is also weakening. And GDP growth in the in the second quarter fell from 3% to 2%.

Other indicators suggest recession fears are overblown – or at least premature. Household purchasing power remains strong. The stock market is trading up near record highs. And the yield curve is no longer inverted. Long-term bond yields spiked this week as the latest CPI report showed core inflation picking up.

However, copper and other industrial metals are struggling to gain ground as the PMI manufacturing data has slumped to a multi-year low. Weakness in industrial output comes largely as a result of the ongoing trade war between the U.S. and China.

This week, the Trump administration touted some potential breakthroughs with China. Beijing will reportedly agree to buy more agricultural products from U.S. farmers. That news sent grain futures surging.

If more progress is made in resolving trade disputes, then the economic growth numbers could tick up and spoil the recession hopes and dreams of Trump’s Democrat rivals.

The biggest wild card for President Trump’s re-election prospects could be the Federal Reserve. Although Fed officials are finally cutting rates, they aren’t doing so rapidly enough as far as Trump is concerned.

This week he called Jerome Powell and company “boneheads” for keeping rates too high. Trump suggested the Fed should take rates down to zero, or even into negative territory, to bring the U.S. more in line with the rest of the world.

On Thursday, the European Central Bank lowered its rate on deposits from banks down yet another notch to negative 0.5%. The ECB also announced it would restart its bond-buying program and pump 20 billion euros a month into government and corporate bonds.

Next week the Federal Reserve will make its move. It is widely expected to cut rates by 25 basis points.

The race to depreciate national currencies is on. Central bankers and politicians will be undeterred as long as they see no major inflation consequence to their actions. But inflation can creep up slowly before it spirals out of control like it did in Zimbabwe.

Former Zimbabwean dictator Robert Mugabe passed away last Friday. His heavy-handed socialist policies turned what was a prosperous and stable country known as Rhodesia under British rule into a hyperinflationary hellhole. The central bank of Zimbabwe began issuing its common currency in trillions of dollars per note.

Of course, none of the “trillionaires” created by the Zimbabwe hyperinflation actually gained wealth as a result. Instead, they lost purchasing power minute by minute while they held their rapidly depreciating Zimbabwe dollars.

Nothing better encapsulates the distinction between inflation-prone fiat money and sound money than our Silver versus Zimbabwe Dollar Display. It features a genuine silver American Eagle coin and an authentic Ten Trillion Zimbabwe dollar banknote that is now worthless as a medium of exchange. The display poses the essential question – “Which Has Real Value?”

It makes for a thought-provoking gift or addition the desk of anyone who appreciates sound money and is available at MoneyMetals.com.

Well now, without further delay, let’s get right to this week’s exclusive interview.

Axel Merk

Mike Gleason: It is my privilege now to welcome in Axel Merk, President and Chief Investment Officer of Merk Investments and, author of the book Sustainable Wealth. Axel is a well-known market commentator and money manager and is a highly sought-after guest at financial conferences and on news outlets throughout the world, and it’s great to have him back on with us.

Axel, it’s a pleasure as always. Thanks for joining us again.

Axel Merk: Great to be with you.

Mike Gleason: Well, Axel, we recently took a look at the September US Business Cycle Chartbook and for those that are interested, they can download that for free at MerkInvestments.com and click on research. But in there, Axel, you put together a number of great charts on a variety of factors and ultimately the outlook is a bit mixed for the U.S. economy.

You think the odds favor continued expansion in the months just ahead, but there are some warning signs as well. Can you give our listeners a couple of the pros and cons? What are some of the important signals of continued growth and what are some of the things that could throw a wrench into the economy in the months ahead?

Axel Merk: Sure. And let me try not to be too academic about it. Everybody knows we’ve got some global headwinds, trade tensions and whatnot. And the question is going to seep it over to the U.S. consumer. And just to take a step back, the U.S. consumer is obviously a huge chunk of the U.S. economy. And then the things that get us into recession sometimes would be inventory adjustments or the lack of business investments. And nobody should be surprised if inventories gyrate based on the Presidential tweets, people are trying to avoid goods or deplete them. So, there might be some technical adjustments. Business investments going down, that is of course a bigger concern. Now all that said, as you’re aware, unemployment rate is low, and the people have jobs, right. And so that’s all good.

What’s really not good is the manufacturing industry and globally, that’s gotten a huge stand, and in the U.S. that’s also soft. And so, the question really is: Is it going to spill over to the U.S. economy? And one has to always put that in a context of the Presidential tweets. I have argued and as we speak and as we publish this, there’s going to be probably another tweet, the thing is how is this going to play out? And obviously I don’t have a crystal ball, but there’s a huge incentive for both the Chinese and the President to ease trade tensions between October and December. That’s really the window.

President Trump like any president would like to get reelected for that, you need to have a strong economy. And so if, and I’m not saying trade issues are going to be all resolved, that’s not in the President’s interest. He wants to keep it in news. He might want to have it on something less important like wants tariff on French wine. But he needs business investment to pick up, and there is an opportunity to make that happen in the coming months.

And then what you are faced with, is very low unemployment. You are faced with easing of trade tension, and low interest rates. And so you’ve got the perfect recipe to have a strong economy heading into the election. Now referring to the chart book, obviously the chart book have hindsight and it’s precisely to avoid this sort of crystal ball thinking that I’m doing with you on the, you know. So we go back several decades and look at what has worked in the past. One of the things we can talk about is the yield curve, which I think is overrated.

Mike Gleason: Yeah, it kind of leads me into my next question, there. Bonds very recently began selling off and yields have been rising. This created some headwinds for precious metals, but perhaps we will see the yields moving downward again. The consensus is for the FOMC to cut rates again next week. The President has been all over Fed Chairman Powell to do more to stimulate. He suggested earlier this week that rates should be zero or even less. What are you expecting from the Fed over the next year, Axel? Are we going to see a steady string of rate cuts back to zero or even negative? Or maybe the FOMC will take former New York Fed President William Dudley’s advice and avoid stimulus. He says the Fed should not enable the President’s trade war with China. What do you think about all that?

Axel Merk: How many hours do we have here? First of all, the market is pricing in one rate cut this coming meeting. I think that’s pretty clear cut. The challenge really is – with both the Fed and also what’s happening in Europe – the Fed cannot solve the problems that we have. We have plenty of access to credit both in the U.S. and the Eurozone. People are not borrowing. And if you look at bond yields, bond yields rise, meaning interest rates move, as we have changes in the perception of the business environment. So, interest rates come down when trade tensions flare up, that’s because there is less opportunity to invest. The long end of the yield curve is not controlled by the Fed. They tried to sometimes with QE and whatnot. And so, this idea that, “Oh the yield curve is inverted, and therefore we have to cut rates.”

No, long term rates are low and therefore something needs to be resolved on trade. If we want those rates to be higher. On the short end, the Fed cannot predict the next tweet. I mean I just gave you my crystal ball. I have no idea whether I’m right. But when Fed Chair Powell says, “Policy is now dependent on political developments,” that’s a tweet dependent Fed. It just doesn’t work. Now the criticism, if you were just to sit on the sideline is that he’s going to be late. Well of course he’s going to be late. The Fed is always late, and that’s kind of the job in this sort of environment. But trying to preempt what might happen. And again, more importantly, a trade war cannot be won by lowering interest rates. They have nothing to do with one another.

And to just make a comment on the Presidential tweet in general on the Fed, when the most effective monetary policy is one where a Fed official utters a few words and rates move, it’s more expensive to cut rates, more expensive to have QE. So, when you have somebody outside of the Fed who is influential, like the President, interfere, that makes Fed policy more expensive. That means the Fed has to move more to achieve the same thing. So, that’s an academic way of saying why it is not helpful for the President to meddle with the Fed.

Now obviously politically it’s helpful, right? If you have a weakened economy, why not have the Fed as a punch back. So, politically it kind of makes sense. But from an actual monetary point of view, rates will be higher, long ends on interest rates will be higher when the President tweets. The bonds often fall when the President tweets and so it’s not helpful for what the Fed is trying to achieve.

Mike Gleason: Let’s talk about Europe for a minute. The ECB just announced a bit more stimulus, but European growth forecasts are not very encouraging, lke the U.S., or perhaps even more so. European economies are stagnating under mountains of debt and the prescription is to lower rates and try to entice even more borrowing. Then there are some geopolitical events. For example, the British people are still wrestling over Brexit and it is far from clear how that matter will be resolved now – more than three years after UK citizens voted to leave. So do you see any solutions coming for some of the big problems over in Europe?

Axel Merk: Well, I guess Madame Lagarde is the solution because Mr. Draghi has thrown in the kitchen sink and he’s going to retire in a few weeks. Same as in the U.S., we have, and you mentioned a few of the issues: Brexit, you cannot solve that with interest rates. Exports. One is trade tensions. The other one is actually exports to Turkey. Eurozone interest rates don’t fix those issues. Germany not getting its act together quickly enough, in getting onto electric cars and re-engineering its automotive industry. You cannot fix that with interest rates. Access to credit is abundant. And the banks, they’ve tried to help them a little bit with a new tiered interest rate system but doesn’t really help them. And so again, they’re trying to use the wrong tool to fix the problems of the day, but it hasn’t stopped them.

And offline we talked briefly about metals going up. Well, what happens when you lower rates everywhere, but it doesn’t really have an impact? Well it does have an impact on the metals. And one thing we should talk about maybe is Madame Lagarde succeeding Draghi. I think she can do something. Ever since she has been nominated on, I believe it was July 3rd, the spreads in the Eurozone, so the premia that Italy and Greece pay for example versus German bunds have come down.

And the media have attributed that to fantastic new policies in Greece and Italy and maybe the most recent action at the ECB. But I think Lagarde may well take the Eurozone to the next level and socialize that debt more, meaning making Germany be on the hook for Italian and Greek debt more, to keep those spreads down. So, that’s where I think Lagarde can do more. But as far as growth is concerned, what we need is visibility on investments, we need less regulation, those sorts of things. And just printing money is not the solution to the ills of the world.

Mike Gleason: Seems like they’re moving in the opposite direction there. Obviously we’ve been reading a lot about all the negative yielding bonds out there in Europe, specifically Japan as well. Do you see that coming to the U.S. is that going to spread here in the bond market?

Axel Merk: Well the President tweeted yesterday that interest rates should be low or less. I then cynically said, “Wait a second, the President is proposing a tax on savings,” because that’s what it is. Negative interest rates on cash would be a tax on savings. It is increasingly talked about in central banking circles. That’s why many central bankers, would like to move to digital money. They may not like the Libra project but they are toying with that idea. Who knows what’s going to happen down the road? I think it’s going to be very unhelpful to how the U.S. financial system is structured, but let’s keep in mind that we don’t have markets anymore. People at the New York Fed, Williams who came from the San Francisco Fed, is an academic. And so, they play with these models and who knows how far they’ll push them?

In the short term, in the very short term, as I indicated earlier, I think these trade tensions will ease and the Fed will have less of an inclination to cut down the road. I think the market was pricing in too much of a rate cut. But yeah, in the long run all bets off, how where the central bankers are going to take things.

Mike Gleason: And leads us then into gold. Obviously that’s a good environment for gold. The war on cash, you kind of alluded to that, should drive more safe haven demand into gold. Gold and silver have performed well this year despite the recent pullback. It appears there is some appetite for safety and there’s this general acknowledgement that the rate hiking cycle at the Fed is over, at the very least. We’d like to get your thoughts as we approach the final quarter of the year. Do you think metals can hold on here and is there still room for more gains? What is your short term outlook for metals, Axel?

Axel Merk: There is room but it’s not going to be a straight line. As I indicated to you, I actually think trade tensions are going to ease and we might end up with a hot economy, when this is all said and done. That’s clearly an outlier scenario right now. I’d be the first one to admit that. But the Fed is going to be late in that sort of environment. And that’s going to be good for gold. As long as we are in the late stages of this economic cycle, there will be people looking to diversify. You have a lot of people who want to hold onto the gains and equities and rather than move to cash, they want to diversify with something else. And gold and gold mining, you can do that with a fairly small portion added to the portfolio. If people are really scared, they would move to cash probably much more than they do right now. And so, but at the same time, if indeed we do have a better outlook, yes, that might provide some headwinds to gold.

And so, it’s not going to be a straight line how this unfolds and obviously the slowdown scenario is a very real one that’s continuing to unfold. And obviously the Eurozone appears to be willing to cut rates. I think in the U.S. we’ve kind of over done it with those rate cut expectations for the time being, but it’s going to certainly remain interesting. And again, it doesn’t really matter how it plays out. It matters how the risk is always playing out. So, for people do buy gold, they need to see the risk of certain scenarios happening and those risks, I think will continue to be around.

Mike Gleason: Well, as we begin to close here Axel, as we usually do, we’ll ask you to give us any of your final thoughts, topics or events that maybe we haven’t talked about yet. Or perhaps give us a sense of what you’re going to be watching most closely that you believe will have an impact on financial markets moving forward.

Axel Merk: Well, maybe you should buy some French wine. The reason I say that is that my assumption is that the trade tensions will move from where it matters on GDP to less relevant things. So, if Trump imposes tariffs on French wine, it will make the headlines. Lots of people will be outraged, but it’s not going to affect global GDP, because trade needs to be in the news for the President because it’s an important topic for him. But the economic damage, so to speak is, going to be less.

With regard to investing, I say the thing I frequently say, investors should stress test their portfolios, because this can go in many different ways. And obviously we talked about gold, gold mining, we like them; we invest in them. But those are certainly volatile. And for those who have invested in those over the years, they know that the volatility we have seen of late is really nothing compared to the sort of volatility when one could see.

Mike Gleason: Yeah, it’s certainly going to be interesting. A lot of different directions this could go. And we’ll be watching to see how it all unfolds.

Well, thanks Axel. We appreciate the time as always and enjoyed the conversation once again. Now before we let you go, please tell folks a little bit more about your firm and your services and then also how they can follow you more closely, please.

Axel Merk: Sure. MerkInvestments.com is the website. I’m on Twitter @AxelMerk and we do all kinds of things. We have some public products. We do provide some customized advice as well to high net worth individuals. And importantly, we publish research reports as well where we have unbiased charts where we dive into things. So come to our website, browse around and if you want to be in tune with the latest and greatest, follow me on Twitter.

Mike Gleason: Excellent. Thanks again Axel. Have a great weekend and enjoy the fall and we’ll look forward to catching up with you again down the road. Take care of for now.

Axel Merk: My pleasure. Take care.

Mike Gleason: Well that will do it for this week. Thanks again to Axel Merk, President and Chief Investment Officer of Merk Investments, Manager of the Merk Funds. For more information, be sure to check out MerkInvestments.com.

Mike Gleason: And check back here 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.

 


The Money Metals News Service provides market news and crisp commentary for investors following the precious metals markets.

Trade Hopes Weigh On Gold

By Orbex

Despite some two way action, gold prices are ending the week in the red, as of writing. Earlier in the week, gold prices were weighed down by a firm recover in risk sentiment. It had improved in response to better relations between the US and China. Equities initially rallied on the news that the next set of Trump’s tariffs are postponed for two weeks. This was in line with reports that China was considering US agricultural purchases.

Later in the week, this theme developed further. Reports highlighted that the Trump administration is now considering offering China a limited trade deal. This would postpone further tariffs and even roll back some of the tariffs already in place. This would be in exchange for a commitment to intellectual property as well as agricultural purchases.

On Wednesday Trump announced that a 5% levy increase which was due to take effect as of October 1st, would now be postponed for two weeks. Trump said that China had asked for the delay and are also making plans to remover some of the tariffs on US goods. China released a list of 16 US imports which will now be exempt from tariffs. This includes anti-cancer drugs and animal feed.

Writing on Twitter, Trump said:

“on October 1st, we have agreed, as a gesture of goodwill, to move the increased Tariffs on 250 Billion Dollar’s worth of goods (25% to 30%), from October 1st to October 15th

News of Trump’s postponed tariffs comes ahead of the next round of US/China trade talks due this month. The markets are now hopeful that a deal (even a partial deal) can be done. The negative impact of the nearly two-year-long trade war has been clear around the globe. As central banks roll out fresh easing to deal with the global downturn there is even more pressure on both sides to return to normal trading conditions.

Technical Perspective

xauusd

The sell-off in gold this week, which saw the rejection from 1522.75 continue, has now taken gold back below the upper line of the bullish channel running from 2015 lows. While gold remains capped by the 1522.75 level, a further retracement lower could be in store. While above the 1434.81 highs, the focus remains on a further grind to the upside.

Silver

Silver prices have broadly tracked the moves in gold this week. Prices have come under pressure as risk sentiment improves, though are fighting to stay in the green as of writing. Indeed, expectations of a Fed rate cut this month and the potential for a weaker USD, are offering some support in the near term.

Additionally, downside linked to its relationship with gold is being partially offset by higher equities prices. This is given silver’s frequent industrial usage. Optimism over an interim US/China trade deal is helping keep equities prices well bid into the end of the week, lending some support to silver also.

Technical Perspective

xagusd

The burst above 18.6404 last week proved short-lived with price quickly retreating back below the level. However, the subsequent downside move has not broken back below the 17.6936 level. Above here, the focus is on a further push to the topside in the near term.

By Orbex

US Retail Sales to be a trigger from the Fed, to push Gold next week?

By Admiral Markets

Source: Economic Events September 13, 2019 – Admiral Markets’ Forex Calendar

With the continuous signs over the last few days that the US and China are set to return to negotiating on trade, 10-year US Treasury yields kept on bouncing from their lows of around 1.5%, while Gold saw a corrective move and dropped below 1,500 USD.

Today’s release of the US Retail Sales data could, in fact, trigger further bearish momentum in the precious metal if and surprises like the ones we saw last month, are repeated again this month. In August, Retail Sales numbers came in at 0.7% against 0.3% (MoM), and are expected to come in this month at 0.2%.

Still, we shouldn’t expect volatility to shoot up significantly with all eyes already being on the Fed Rate decision next Wednesday.

From the technical perspective, on a daily time-frame, the latest drop back below 1,500 USD is in our opinion no big deal.

As long as Gold trades above 1,380 USD, we consider the precious metal to be bullish with a potential mid-term long trigger around 1,440/450 USD and with an overall potential target around 1,650/700 USD in the weeks to come.

Source: Admiral Markets MT5 with MT5-SE Add-on Gold Daily chart (between June 14, 2018, to September 12, 2019). Accessed: September 12, 2019, at 10:00pm GMT – Please note: Past performance is not a reliable indicator of future results, or future performance.

In 2014, the value of Gold fell by 1.7%, in 2015, it fell by 10.4%, in 2016, it increased by 8.1%, in 2017, it increased by 13.1%, in 2018, it fell by 1.6%, meaning that after five years, it was up by 6.4%.

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