Max Keiser explains why only gold, silver and bitcoin can save you now

 

During volatile market conditions, investors should be looking for assets that represent stores of value, like gold, silver, and bitcoin, this according to Max Keiser, host of the Keiser Report.

“The next alternative hard money, aside from silver, is bitcoin, and that’s why you see interest in bitcoin right now, it’s up this year. It’s one of the few markets in the world that’s up in 2020,” Keiser told Kitco News.

The notion that bitcoin cannot be a store of value due to its volatility is a myth that has been busted in 2020, Keiser said.

“For years, people said that bitcoin is so volatile, how could it ever be a store of value? Well, this year, bitcoin is the least volatile asset class of any asset class there is. It’s less volatile than stocks, it’s certainly less volatile than oil, it’s less volatile than many, many currencies out there. So bitcoin is coming into its own in 2020 and it is a store of value, it is gold 2.0, and it will achieve a market capitalization like gold in the many trillions of dollars,” he said.

Keiser’s target price for bitcoin is $400,000. Bitcoin is up slightly year-to-date, up 5% since January. It has come down from its 2020 highs of $10,000 in February, last trading at $7,344.

“I call it the Sistine Chapel of money. There’s never been money invented like bitcoin. It’s so gorgeous, so beautiful. Just study the design of it, the White Paper, it’s like looking at a fine Da Vinci art work or an incredible Swiss watch,” he said.

 

By Kitco News

 

David – http://markethive.com/david-ogden

Now is the time to hold a 'significant' position in gold – former Bear Stearns analyst

The first quarter saw gold prices massively outperform equity markets and this trend is expected to continue, according to one former Bear Stern’s analyst.

Jesse Felder, publisher of the Felder Report investment newsletter, reiterated his long-term bullish outlook for gold, saying in a recent report that gold prices could easily push above its 2011 all-time highs. Gold prices are starting a new trading week with relatively low volatility as prices trade above $1,600 an ounce. June gold futures last traded at $1,646.70 an ounce, relatively unchanged on the day.

Felder said that he sees two factors that should prompt investors to add a “significant portion” of gold to their portfolio. .

The first factor Felder said that he is watching is the value of gold compared to equity markets. He said that the signal to buy gold over equities was triggered in February when the gold:equity ratio turned positive.

“The 36-month rate of change in the ratio between gold and the S&P 500 has provided a pretty good signal in this regard. In the past, when it has crossed above the zero line it has been a good buy signal for gold and good sell signal for stocks,” he said

His comments come after a dismal first-quarter performance for the Dow Jones Industrial Average and the S&P 500.

For the first three months of 2020, The Dow dropped 21.8%, its worst quarterly performance since 1987. Meanwhile, the S&P 500 fell 18.7%, its worst quarter since the 2008 financial crisis. In comparison, future gold prices ended the first three months of the year with nearly a 5% gain.

Financial markets were hit hard last month as the global economy came to a virtual standstill because of the COVID-19 pandemic. Governments all over the world have forced nonessential businesses to shutter and people to stay at home in an attempt to slow the spread of the deadly virus.

The second factor that will continue to support gold prices, Felder said, is the massive amount of money that is being spent to combat the impact the coronavirus is having on the global economy.

“Gold prices tend to rise when the fiscal deficit as a percent of GDP is rising,” he said.

Last month, the Federal Reserve made three emergency announcements that bought interest rates to zero and introduced unlimited quantitative easing measures.

“Some expect the deficit to expand by a much greater degree in the current crisis than it did a decade ago as a result of the combination of record fiscal stimulus paired with falling revenue. If so, gold would very likely break out above the high it set in 2011,” he said.

Felder added that not only is gold a vital portfolio diversification tool, but in these times of economic uncertainty, it is also an essential asset for wealth preservation.

 

By Neils Christensen

For Kitco News
 

David – http://markethive.com/david-ogden

COVID-19 has profound impact on U.S. jobs which declined over 700,000

The long-awaited U.S. labor department’s jobs report was released today indicating that employment in the United States declined by 701,000 individuals last month. Along with payrolls declining by over 700,000 which was 600,000 above the estimate provided by economists which predicted 100,000 jobs would be lost last month, the jobless rate rose to 4.4%. The last time the unemployment rate was as high was back in 2017.

The numbers released is not what market participants fear the most it’s the fact that these numbers are expected to jump even higher next month. According to Bloomberg economics they believe that the rate will rise to 15%, they also reported that James Bullard the president of the Federal Bank of St. Louis said that this number might be as high as 30% this quarter.

Bloomberg economics also reported that the reason for the anticipated dramatic rise is that the numbers presented today all our already outdated because they reference a. Based on the 12th of the month which didn’t include nearly 10 million people who have filed for unemployment benefits in the last two weeks alone.

In other words, today’s numbers provided by the Labor Department are simply the tip of the iceberg. The coronavirus has affected economies across the entire globe and every industry, until a vaccine is created or the number of new cases begins to decline, we can expect this scenario to only magnify to a larger scale.

The number of cases of individuals who have contracted the coronavirus has now exceeded 1 million globally. The death toll has also risen to over 53,000 people worldwide, with 211,000 recovering from the most devastating pandemic crisis of recent history.

Recent data now confirms that 245,000 individuals have contracted the disease in the United States, this according to Johns Hopkins University. The University draws its information from a combination of data sources such as the World Health Organization, governments and media.

While this is definitively the largest factor which has turn market sentiment extremely bearish towards the equities markets, it is also turned market sentiment extremely bullish for the safe haven asset group with gold rising once again this week.

As of 5:30 PM EST gold futures basis the most active June Comex contract is currently up $11.10 and fixed at $1648.80. This while the other precious metals (platinum, palladium and silver) are trading lower on the day. The other precious metals are heavily used in industry and therefore affected by the recent major correction in U.S. equities. We can expect gold to continue to rise if this current pandemic continues to devastate economies globally.

Wishing you as always good trading,
 

By Gary Wagner

David – http://markethive.com/david-ogden

Market forces move gold lower

While we have gold, prices come under substantial pressure over the last two weeks it had still managed to hold above key level of $1600 per ounce. This is in conjunction with U.S. equities markets trading under great pressure as they have lost value throughout this month. According to Reuters, “Wall Street’s three major indexes tumbled on Tuesday, with the Dow registering its biggest quarterly decline since 1987 and the S&P 500 suffering its deepest quarterly drop since the financial crisis on growing evidence of massive economic damage from the coronavirus pandemic.”

Of course, the primary issue remains the social distancing used to battle COVID – 19 (coronavirus). While many medical analysts predict that it will take up to a year or a little bit more to produce an effective method to eradicate the virus. Currently there have been 854,039 reported cases of covid-19, with 42,014 reported deaths, and 176,000 906 individuals who have recovered from the virus. Of the remainder of individuals fighting this illness off 95% are experiencing mild to moderate symptoms with 5% having severe or life-threatening effects.

Due to the fact that by no means has this contagious disease shown signs off slowing its spread, infecting more individuals globally everyday it is unlikely we will see the global economy recover just yet.

Yet oddly enough the flight to gold has either been short lived or yet to be seen.

On a technical basis gold pricing broke through its 50-day moving average in trading today. This average currently is fixed at $1599.80. Today’s lower pricing indicates very strong resistance at that price point. The next level of support would come in at $1580, with resistance at $1640

For those who would like more information simply use this link.

Wishing you as always good trading,

 

By Gary Wagner
Contributing to kitco.com

David – http://markethive.com/david-ogden

Plenty of gold sitting in 'wrong location' and in 'wrong form' — Scotiabank

There is no shortage of gold out there, but there are some serious "physical bottlenecks" for certain gold products that are just sitting in wrong locations, Scotiabank said in its latest update.

"If there were a major shortage of physical gold, spot gold prices would be trading at a premium to futures prices, which is not the case," Scotiabank commodity strategist Nicky Shiels said on Friday.

This past week, economists have been busy answering traders' fears regarding a shortage of physical gold and silver. The issue escalated last week when an unusually wide spread between futures and spot prices developed, with the former being much higher.

"In gold, the impact [has] shown up [in a form of] major dislocations between physical and paper, and within physical pricing. The basis/premium between COMEX and OTC/physical gold (surprisingly) widened to almost $100, at a time when that premium should be tighter and closer to zero, given the supposed physical shortage. The Gold futures curve, which historically should always remain in contango market, showed intermittent signs of flipping into backwardation (April-June spread)," Shiels described.

Economists responded by citing April futures contract expiry, lack of flights available to transport the right type of gold bars from London and closure of major refineries in Europe.

Shiels has put current production problems into perspective:

"The current disruption to gold production is tiny (around 1%); more importantly, there are ample above-ground stocks that could be enticed out at a (higher) price. There's ~90m oz. sitting in known vaults (e.g.: ETFs) with approximately 6.3bn oz. (yes billion), or 60x the annual production of gold, being held in jewelry, official sector and private investments," she noted.

"Overall physical demand is strong in 'wrong' locations* or in the 'wrong' form** while metal is sitting where it's not needed (Asia, Africa), in a situation where airlines/transportation networks are disrupted," Shiels added. "*Wrong location: supply issues/refinery shutdowns in U.S. & Europe **wrong form: demand for limited 100 oz. or 1kg (not 400 oz. bars)"

When examining recent gold price action, Shiels wrote that the yellow metal has found its post-crisis bottom sooner than expected.

"Gold has found a bottom at $1,450," the commodity strategist said. "Gold is likely bottoming earlier because of a much faster and larger policy response than markets could ever have anticipated."

The metal should be trading closer to $1,700 an ounce, she added, explaining that gold is seeing "a perfect storm" from a macro perspective, which could push prices to new record highs.

"Gold [is likely] to begin an even more bullish longer-term trajectory vs. the 2008-2013 bull run," she said. "Positioning is clearly a lot cleaner, max macro fear has dialed back from extreme levels, risk appetite in U.S. equities has returned, US$ remains somewhat capped (Feds unlimited QE and U.S. taking top virus case spot) and funding pressures have alleviated somewhat."

Going forward, gold is bound to benefit from the massive monetary and fiscal stimulus that is extremely inflationary.

"Overall, as day follows night, so inflation follows deflation, and Gold is not waiting around," Shiels said. "If (when) equity market volatility subsides, and macro fear lowers from extreme levels, prices should find another leg higher, which it is attempting to accomplish."

 

By Anna Golubova

For Kitco News

David – http://markethive.com/david-ogden

Gold edges lower as investors opt for cash amid deepening virus fears

Gold prices edged lower on Monday as a flight to cash to cover losses in equities overshadowed measures by global central banks to contain the economic fallout from the coronavirus epidemic.

Spot gold was down 0.2% to $1,614.46 per ounce by 0346 GMT after Friday's 0.7% drop. U.S. gold futures fell 0.4% to $1,646.60 per ounce.

"The worse the situation gets the stronger the link between stocks and gold because if we see further economic deterioration that will drag gold down with the share markets," said Michael McCarthy, chief strategist at CMC Markets.

Asian shares slid and oil prices took another tumble as fears mounted the global shutdown for the virus could last for months.

The pandemic has already driven the global economy into recession and countries must respond with "very massive" spending to avoid a cascade of bankruptcies and emerging market debt defaults, the head of the International Monetary Fund warned on Friday.

The U.S. House of Representatives on Friday approved a $2.2 trillion aid package – the largest in history – to help cope with the virus-inflicted economic downturn.

The weekend brought more bad news on the virus front, with the global death toll reaching nearly 34,000. The United States has emerged as the latest epicentre, with more than 137,000 cases and 2,400 deaths.

The European Central Bank chief urged wrangling EU leaders to act more decisively to cushion the economic hit of the pandemic, three sources familiar with the matter said. Weighing on gold was a halt in the dollar's slide that came with a broader risk-averse mood, after the greenback surged amid a scramble for cash and then subsided as central banks launched unprecedented liquidity measures.

"The U.S. fiscal stimulus package is positive for the dollar and probably an element of that is coming through the moment. There is negative correlation between the dollar index and gold prices," IG Markets analyst Kyle Rodda said.

Holdings in the world's largest gold-backed exchange-traded fund, SPDR Gold Trust , rose 1.2% to 964.66 tonnes on Friday.

"I wouldn't say gold's status as safe-haven is over but if things continue to deteriorate economically it could become a funding source and that will offset its safe haven status," said CMC Markets' McCarthy.

Palladium fell 0.7% to $2,253.84 per ounce, platinum slipped 3.3% to $717.07, while silver slid 3.9% to $13.91.

 

By Asha Sistla
Monday March 30, 2020 01:37

 

David – http://markethive.com/david-ogden

Conditions are ripe for the price of gold bullion to double

Gold bullion has not done what it did during the past month since 2008.

The Midas metal GC00, +0.34% shows rapidly rising relative performance against the CRB Index as industrial commodities are crashing due to the coronavirus effect. Gold bullion is staying firm, close to a multiyear absolute high. This dynamic has caused bullion to register a relative all-time high compared with the CRB Index (see chart).

What happened to gold bullion after it registered its previous all-time high relative to the CRB in 2008? It doubled in absolute terms to peak above $1,900 in 2011 (see chart).

We have a similar environment at the moment. Interest rates have been dropped to zero at the fed funds rate level, and the federal deficit will be larger than 10% of GDP (larger than after the 2008 crisis) due to the $2 trillion bailout. Record deficit spending and the Federal Reserve’s quantitative easing (QE) with no preset limits is the perfect environment for gold bullion.

The difference with 2008 is that this is a government-mandated recession. The government has to stop the economy in order to stop the coronavirus. It’s like turning off the circuit breaker on a whole house and having backup power for part of the house only. Second-quarter GDP growth in the U.S. will be down double digits in the 20%-40% range. GDP numbers are reported on an annualized basis, so if U.S. GDP is down 10% from the prior quarter, it is reported to be down 40% on an annualized basis. Third-quarter GDP in the U.S. may be up in double digits because of the same calculation, if the U.S. government has managed to flatten the curve of the infection.

With record deficit spending and interest rates at zero, we may be faced with an environment where the Fed will keep interest rates below the level of inflation for some time until the economy normalizes after the outbreak is controlled. This would be the perfect environment for gold bullion.

Beware of other precious metals

Other major precious metals — silver, platinum and palladium — fell a lot more than gold bullion in the past month, even though they have rebounded some. This is because they are primarily used for industrial purposes; only gold bullion has the majority of it used for precious purposes like jewelry and store of value. If the government-mandated global recession is not over soon, the industrial precious metals should continue to underperform.

Of the industrial precious metals, silver is the most interesting. It is also at a record discount to gold bullion if one looks at the famous gold-silver ratio, which went to 125 at the March extreme, which is an all-time high. That means one ounce of gold could buy you 125 ounces of silver, although we have retreated some on that indicator as silver has rebounded.

Because silver is more industrial than precious, if the coronavirus recession lasts longer, it will take longer to rebound. Be that as it may, it probably offers an opportunity to investors with a two-year horizon. The silver miners exchange traded fund Global X Silver Miners SIL, -6.63% looks interesting on pullbacks, as well as the iShares Silver Trust SLV, -0.66%.

Stay away from leveraged ETFs

The March panic sell-off in the stock market serves as a painful reminder that leveraged ETFs are for short-term traders only, and not for buy-and-hold investors. Losses can cascade and get multiplied by a factor of three on a daily basis, and there will be no coming back for the leveraged investments like Direxion Junior Gold Miners Index Bull 3X Shares JNUG, -21.73% or the Direxion Gold Miners Index Bull 3X Shares NUGT, -16.02% (see chart).

On the other hand, non-leveraged ETFs of gold miners can be interesting. Both the VanEck Vectors Gold Miners ETF GDX, -5.72% and its junior-miner version GDXJ, -8.64% sold off near levels where they were when the price of gold bullion was near $1,200 an ounce.

If there ever was a case of throwing the baby out with the bath water, GDX and GDXJ would be it. But I have never believed financial markets are efficient, so this is an opportunity to use it to your advantage.

 

By Ivan Martchev
Published: March 28, 2020 at 1:54 p.m. ET

 

 

David – http://markethive.com/david-ogden

COVID-19's toll to rattle gold prices next week as U.S. becomes new epicenter

A massive three-day bounce in stocks has proven to be only temporary as equities tumbled Friday, once again dragging gold down with it.

One of the biggest news to drive markets next week will be that the U.S. has become the new epicenter for the COVID-19 outbreak, surpassing China and Italy with the number of people infected.

The number of cases in the U.S. surged to more than 100,000, with at least 1,500 deaths. Worldwide there are now more than 590,000 cases and at least 26,900 deaths.

"The spread of the virus will continue to be very important, especially with the U.S. becoming the epicenter now," said TD Securities commodity strategist Ryan McKay.

The world will be watching Italy to see if there will be a flattening of the curve there, McKay told Kitco News Friday.

"If we start to see a solid trend of slowing growth there, it could be a good sign that social distancing measures do indeed work and would sort of give us the timeline as to what to expect over here in North America potentially," he noted.

What makes the news of the U.S. being the new COVID-19 epicenter worrying is the extent of how the rest of the global economy relies on the U.S. market and the U.S. consumer, said Gainesville Coins precious metals expert Everett Millman.

"The fact that the Fed has to use all of its ammunition sets the stage for everywhere else in the world that easy monetary policy and stimulus measures will be the norm for at least several weeks, possibly next several months," he said.

There is still a lot of hope around the $2 trillion stimulus package, which the House passed by voice vote on Friday afternoon.

Stimulus aside however, what concerns the markets is the enormity of the economic damage to the U.S. economy.

"While the stimulus measures being rolled out around the world can mitigate the initial negative fallout from the coronavirus outbreak and help support the eventual recovery, COVID-19's economic toll could be more severe," said FXTM market analyst Han Tan.

And no matter how massive the fiscal and monetary stimulus packages will be, they are all about damage control, not growth, noted ING's Chief International Economist James Knightley. "The U.S. can only grow once the economy re-opens," he said.

U.S. jobless weekly claims were just a sneak peek of the real "data horror show" that's about to be revealed via all the other U.S. macro datasets scheduled for release starting next week, said Nomura Global Markets Research.

Thursday's jobless claims number saw a spike of more than three million, with many people getting laid off amid widespread shutdowns across the U.S.

Jobless claims remain the critical number to pay attention to next week with Capital Economics projecting a climb to five million

"Given that the jump in claims to more than three million appeared to capture only a fraction of the claims reported by some states, particularly California, we are braced for a surge to nearer five million," said Capital Economics senior U.S. economist Michael Pearce.

Friday's nonfarm payrolls data will be slightly less significant because March's survey was conducted before all major layoffs hit the U.S. "The March payroll survey was conducted in the second week of this month and therefore came too early to capture the full hit to the labor market from the pandemic," Pearce noted

David – http://markethive.com/david-ogden