Gold Holds Gains as Markets Digest Downgrades- Soren K.
Overnight Headlines
- GOLD AND SILVER BEING BOUGHT GLOBALLY AS CURRENCY CONFIDENCE WANES
- BILL GROSS: INFLATION EXPECTATIONS ARE TOO LOW- so movies arent going back to a nickel again?
- AUSTRALIA OUTLOOK CHANGED TO NEGATIVE FROM STABLE: S&P- and they are the solid country
- GOLD SHOULD DROP $300 AS MACRO CYCLE END IS NEAR: WELLS FARGO- if he's right its because some country had amargin call on Stock
- GLOBAL SOVEREIGN DOWNGRADES SET FOR A RECORD YEAR: FITCH
- SIX UK REAL ESTATE FUNDS PREVENT WITHDRAWALS- these are not money markets folks.
- EURO BANKS BREACH 2011 LOWS: BBERG- chart below. but no panic this time. The new Normal?
Looking at the above headlines, can you see which thing doesn't belong? More on Wells Fargo's Gold prediction later in the day. For now this is what happened overnight. Ratings agencies are starting to downgrade sovereign credit as a function of easy money and malinvestments. Italian banks are beginning to prohibit short selling in an attempt to quell reality. Euro banks are below their lows of 2011. Bill Gross of Janus funds and PIMCO before says US Bonds are pricing 30 yr inflation at 1.4% and that is " Too low". What did Gold think of all this? See for yourself.
Gold Is Money. That is all
Gold has had such a run up with inflows in Physical purchases in Coin form, US ETFs, and of course futures. It has benefitted from the uncertainty surrounding Brexit. And most recently the renewed Chinese interest is a direct by product of the Yuan being debased against other currencies. So when an analyst calls for a $300 drop in Gold, we do not worry. We welcome it as a buying opportunity if the world continues on its course. If it does drop, that is because more people are selling what is making them money to support what is not making money. Not unlike Germany during hyperinflationary times. They sold their Gold first, and regretted it later.But when Gold is called a "Commodity" by that same person, we respectfully disagree. Gold is money. And its behavior is saying as much. A Risk-Off asset? Gold is a risk-off asset like the USD is. They are both currencies that people put their savings in to avoid calamity on the other side of the globe. Always have, always will. But what happens when the last FIAT currency standing is the USD and it debases? What will it debase against? Gold.
GOLD: YOU STILL CAN'T PRINT IT
- interactive chart courtesy of Kitco- CHART POPS
EURO BANKS WORSE THAN IN 2011- guess it's ok this time
INFLATION IS SORELY MISPRICED DUE TO MISPLACED FAITH IN THE FED-but that is changing
Final notes:
The Gold chart above is at an inflection point. Most of the Asian shorts have covered. Funds are very long, and the headlines have been largely favorable to the yellow metal. We feel that creates an expectation of more rallies. But that also means vulnerability to surprise events that could drive money to stocks again. the trend is higher in macro and micro. The "tail risk" is to the downside near term.
The global Central Bankers have plenty of tricks left to keep their fantasy bubble intact a while longer. Dont fret if Gold sells off hard on news. it is just a pause for the cause.
China's Gold and Silver Activity Explained
Good Luck
- Soren K.
Read more by Soren K.Group
