Author: david@goldsilverdesk.com

December 13, 2019, Neils Christensen

(News) – Market anxiety has alleviated slightly as trade tensions between the U.S. and China have eased and the political outlook in Britain has stabilized, but one market analyst said that gold will remain on investors ’ radar as uncertainty is not going away in 2020.

A phase one trade deal, no new tariffs on Chinese imports, and a solid majority victory for Boris Johnson ’s Conservative Party in the U.K. has reduced some fears in the marketplace, but will still impact investor sentiment in 2020, George Milling-Stanley, chief gold strategist at State Street Global Advisors, said in an interview with Kitco News.

“Basically this phase one deal will bring trade negations back to neutral territory,” he said. “The real issues are far from resolved and that will continue to add uncertainty to financial markets and that will be good for gold.

“Trade tensions have eased but they are far from gone,” he added.

Looking at the U.K., Milling-Stanley said that although Johnson now has a majority to push through Brexit, investors still don ’t know the impact of leaving the European Union will have on the economy.

Milling-Stanley added that there is still plenty of support for gold in 2020 and he sees the yellow metal embarking on a long-term sustainable rally in a new era of uncertainty. For next year, Milling-Stanley said that he sees gold prices trading in a range, between $1,450 and $1,600 an ounce.

“We have entered an environment of sustainable moderate growth in the gold price for the foreseeable future,” he said. “Geopolitical volatility will continue to be part of the background of general uncertainty that has been very favorable to gold for several years now.”

Milling-Stanley ’s comments come as gold prices hold relatively steady into the end of the year. February gold futures last traded at $1,479.10, up 15% since the start of the year.

“If gold finished the year at current prices we would say that it has had a fabulous year with tremendous gains,” he said.

In a domino-style effect, Milling-Stanley said that market uncertainty will lead to episodic volatility throughout the year, which will force the Federal Reserve to maintain low interest rates, keeping real interest rates close to negative territory, which will make gold an attractive safe-haven asset.

Although the Fed has signaled that it is on hold for 2020, Milling-Stanley said that he is not convinced they will be able to maintain a neutral stance in the face of global economic weakness.

However, he added that even if the Fed does raise interest rates next year on improving economic conditions, the impact on gold would be limited.

“We have entered in a new era of low interest rates; that is the broad trend gold investors should focus on and that will remain in place despite the odd 25 basis point move from the Fed,” he said. “I don ’t think inflation is going to go lower so the interest rate environment in real terms is going to be even more favorable for gold.”

Milling-Stanley added that he is also bullish on gold as economists are expecting to see a recovery in emerging markets, which should lead to increased jewelry demand in critical gold markets.

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Decmber 2, 019

As we kickoff the month of December, gold may be set to shine once again but this should certainly trigger a monster rally in the gold market.

Gold Set To Shine Again?

December 2 (KWN) – Top Citi analyst Tom Fitzpatrick:  “On Friday Gold posted a bullish outside day with a setup very similar to when a bullish outside day was posted on the last trading day in May after a 3 month consolidation. This led to a double bottom and a triangle breakout in subsequent days. Ultimately a strong 3 month rally ensued…

Levels to watch this time, in that respect, are $1,479 and then $1,496. A break of this range, if seen, would suggest the potential for a similar development again (see chart below).

Breakout Above Key Levels At $1,479 And $1,496 Should Trigger A Monster Rally In The Gold Market

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November 14, 2019

With bonds and gold rallying and stocks pulling back, GaveKal just warned the US dollar is set to weaken, plus there’s no trade deal and the rest is all bullish*t.

Not A Good Start For The US

November 13 (KWN) – James Turk:  “Not a good start for the US governments new fiscal year. Its 1st month recorded a $134b deficit but debt in Oct actually jumped $289b to over $23trillion. A $1trillion deficit this year looks certain; question is how long before 12-month debt growth reaches $2 trillion?”

“There’s No Trade Deal”

Fred Hickey:  “There’s no trade deal. “Beijing balks at committing to specific purchases, resists U.S. requests for tech-transfer curbs, enforcement mechanism.” Stock market should be down big. But isn’t. Proof stocks at record highs for only ONE reason- Fed’s money printing.

There’s absolutely no connection today between the real economy (which is sinking) and the Fed”s-money-printing inflated stock market. As we saw in 2000 & 2007, eventually the two will reconnect and the result will not be pretty.”

“The Rest Is All BullSh*t”

Sven Henrich:  “The Fed manages the economy by managing the S&P 500. The rest is all bullshit. (See below).

Plus GaveKal says US dollar to weaken…

For the last five years, the world has lived with a consistently strong US dollar. Now, a wind of change is blowing through the world’s currency markets, warns Gavekal’s US economist Will Denyer, and the US dollar could be set for a period of weakness.

For much of the last five years, the US Federal Reserve was the tightest central bank out there, which helped to support the US dollar. But this year the hawk has turned into a dove, as the Fed has cut interest rates and begun to expand its balance sheet once again.

This U-turn not only means that the Fed is printing money again, but that it is now printing more money each month than other big central banks, notably the European Central Bank. This liquidity splurge suggests the US dollar may weaken relative to other currencies.

Meanwhile, risks such as an escalating trade war or disorderly Brexit which have caused investors to seek safety in US markets now appear to be receding, meaning less support for the US currency.

$1,650-$1,700 Gold

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10/26/2019

With the gold market taking the world by surprise this week breaking above $1,500, one of the most important interviews of 2019 has just been released with Michael Oliver, the man who is well known for his deadly accurate forecasts on stocks, bonds, and major markets.

One Of The Most Important Interviews Of 2019

October 26 (KWN) – Michael Oliver at MSA:  “The gold market has done something that probably surprised most people.  It moved up moved up hundreds of dollars since October of last year, and it did it without any encouragement or stimulation from the US dollar being weak.  And the stock market — the S&P 500 — if you go back to January of 2018, we are only about 5% higher almost 2 years later, which is trivial.  So there’s been no encouragement from outside major asset categories to drive gold upward, and yet it did.

And it was our view that the next stimulus for gold would probably need to be a weakening of the dollar and a breakout by the Bloomberg Commodity Index.  And sure enough, last week, the US dollar dropped below our major sell numbers and this week the Bloomberg Commodity Index broke above its starting gate to the upside.  We find that interesting but not surprising that these two asset categories are at their starting gates for a large downside move in the dollar and a large upside move in commodities, both of which will put massive wind at the back of the gold market.  But our message to our subscribers is…***KWN has now released Michael Oliver’s remarkable KWN audio interview and you can listen to it by CLICKING HERE OR ON THE IMAGE BELOW.

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By Pam Martens and Russ Martens: October 10, 2019 ~

No one can say with any certainty where the hundreds of billions of dollars that the Federal Reserve has been pumping into Wall Street since September 17 are actually ending up. The Fed is not releasing the names of which of its primary dealers (securities firms) are taking the lion’s share of the loans nor does anyone know if those borrowers are making further loans with the money (which is a core purpose of a central bank’s lender of last resort function) or simply plugging a whole in their own leaky boat. Astonishingly, Congress has yet to call a hearing to ask these critical questions.

Let’s say, hypothetically, that there is a bank with a large, interconnected footprint on Wall Street that’s in trouble and on top of that there’s a big hedge fund taking on water and listing on its side. The New York Fed (one of the 12 regional banks in the Federal Reserve system) in that situation might be expected to call all of the big lenders on Wall Street to a secret meeting at its offices and “suggest” (much like a consigliere makes a “suggestion”) that they bail out these entities for the good of the markets and financial system.

Could that really happen? Here’s a paragraph from a Wall Street Journal report dated September 25, 1998:

“Meeting Wednesday evening at the headquarters of the New York Federal Reserve Bank, 15 financial institutions agreed to chip in $3.5 billion to keep alive the Long-Term Capital Management L.P. hedge fund.”

The Long-Term Capital hedge fund was a five-year old firm with two Nobel laureates on board that fed exotic mathematical formulas into computers that then spit out the rationale for taking on insane levels of leveraged derivative bets. It all blew up spectacularly, of course.

Alan Greenspan, the Chairman of the Federal Reserve Board of Governors at the time, would later tell Congress that the decision to convene that meeting was done “on the judgment of the officials at the Federal Reserve Bank of New York.” In other words, the New York Fed typically believes it needs no outside approvals for its actions when it comes to Wall Street.

Fast forward to another crisis in September 2008, this time with a big, teetering investment bank. The Wall Street Journal reported on September 13, 2008:

“The Federal Reserve Bank of New York held an emergency meeting Friday night with top Wall Street executives to discuss the future of venerable firm Lehman Brothers Holdings Inc. and the parlous state of U.S. financial markets.”

In the case of Lehman, a solution was not obtained and the investment bank filed bankruptcy on September 15, 2008, bringing on the next leg of what would become the worst financial crisis since the Great Depression.

Last week Reuters’ David Henry reported that JPMorgan Chase may have contributed to the dangerous spike in overnight lending rates on September 17 by withdrawing liquidity from the system. The loss of liquidity triggered the New York Fed’s operation to pump billions of dollars of overnight and term loans into Wall Street each week since then. Henry wrote:

“Analysts and bank rivals said big changes JPMorgan made in its balance sheet played a role in the spike in the repo market, which is an important adjunct to the Fed Funds market and used by the Fed to influence interest rates…

“Publicly-filed data shows JPMorgan reduced the cash it has on deposit at the Federal Reserve, from which it might have lent, by $158 billion in the year through June, a 57% decline.”

The move by JPMorgan Chase, whose Chairman and CEO, Jamie Dimon, is the only person at the helm of a major Wall Street bank to have come through the 2007-2008 financial crisis, suggests that the bank is “getting closer to home” with its money, as the former CEO of Goldman Sachs, Lloyd Blankfein, phrased it during the last financial crisis.

This would not be the first time that JPMorgan Chase put its own interests ahead of the not so subtle nudges of the New York Fed.

According to the Financial Crisis Inquiry Commission (FCIC), the body created by Congress to deliver the official report on the causes and events of the 2007-2008 crisis era, JPMorgan Chase demanded large sums of cash collateral to protect itself from a potential Lehman Brothers collapse just days before Lehman’s bankruptcy filing on September 15, 2008. The report explains: 

“…JP Morgan demanded that Lehman post another $5 billion in cash ‘by the opening of business tomorrow in New York’; if it didn’t, JP Morgan would ‘exercise our right to decline to extend credit to you.’ JP Morgan CEO Dimon, President Black, and CRO Zubrow had first made the demand in a phone call earlier that evening to Lehman CEO Fuld, [Lehman] CFO Ian Lowitt, and [Lehman] Treasurer Paolo Tonucci. Tonucci told the JP Morgan executives on the call that Lehman could not meet the demand. Dimon said Lehman’s difficulties in coming up with the money were not JP Morgan’s problem, Tonucci told the FCIC. ‘They just wanted the cash. We made the point that it’s too much cash to mobilize. There was no give on that. Again, they said ‘that’s not our problem, we just want the cash.’ When Tonucci asked what would keep JP Morgan from asking for $10 billion tomorrow, Dimon replied, ‘Nothing, maybe we will.’ ”

As a major clearing bank offering services around the globe, no financial institution would be in a better position than JPMorgan Chase to see money outflows, warning signals, and a need to get its own liquidity “closer to home.

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