Gold Standard News Daily - Real Money Blog
Posted M-F by 6pm ET
6.1.20 - Amid Protests, US Businesses Close
Gold last traded at $1,750 an ounce. Silver at $18.76 an ounce.
NEWS SUMMARY: Precious metal prices rose Monday on safe-haven buying and a weaker dollar. U.S. stocks struggled as investors digested the impact protests may have on reopening the U.S. economy.
Retailers and restaurants across the U.S. close their doors amid protests -Houston Chronicle
"It had only been two days since Lilliannia Ayers reopened her Queen Hippie Gypsy store in downtown Oakland, Calif., before her front window was smashed and her storefront was spray painted Friday. On Saturday night, she and neighbors stayed up all night to protect their stores - hopeful the protest movements across the U.S. would not destroy her business so soon after it suffered a devastating hit from the pandemic shutdown. Similar scenes of destruction have created chaos and concern along the path of the nation's protests over the death of a black man in police custody in Minneapolis. That's pushed brick-and-mortar retail and restaurant industries, already hard hit by the coronavirus pandemic, to the center. Retailers and other businesses in cities across the U.S., including the Bay Area, the District of Columbia, New York, Atlanta, Philadelphia and Minneapolis, experienced broken windows, thefts and other violence over the weekend. The actions prompted a number of businesses to shut their doors and raised questions about how exactly the actions relate to the protesters, many of whom were peaceful. Walmart on Sunday closed several hundred stores due to potential protests. Amazon said it had adjusted routes or scaled back delivery operations in some cities, while Apple closed an unspecified number of stores on Sunday. Target said it temporarily closed six stores in California, Minnesota, Illinois and Pennsylvania. The Mayor of Philadelphia ordered all retailers to shut down Sunday. Destruction is adding a new economic wrinkle for businesses already struggling. But the actions across the U.S. in protest of police brutality has also prompted many affected businesses to speak out in support of the protests."
In Gold We Trust -Incrementum AG
"As gold investors, we are naturally very interested in the question of how the gold price might develop over the course of the coming golden decade....We use two parameters to calculate the price target, namely money supply developments and the implicit gold coverage ratio. Our expectation for the gold price at the end of the decade is around $4,800. The distribution is clearly skewed to the right. This means that significantly higher prices are far more likely than lower ones. Of course, quantitative models of this kind always have a certain degree of fuzziness. However, we believe that we have taken a conservative approach to calibrating the scenarios. Not least because of the unique global debt situation described in detail in this year's In Gold We Trust report, growth figures for M2 in the decade that has just begun are not implausible at the same level as in the 1970s. In this case, the model suggests a gold price of $8,900 by 2030. As you have gathered from our comprehensive report, we expect significant upheavals in the new decade with positive effects on the gold price. What is the reason for our unbroken trust in gold? First and foremost, our fondness for gold is based on our understanding of monetary history. Milton Friedman put it aptly when he said that there is nothing more permanent than a temporary government program. Richard Nixon's announcement in 1971 that gold convertibility would be temporarily suspended turned out to be a seemingly permanent provisional solution. This temporary solution has now lasted for almost half a century....At 'The Dawning of a Golden Decade' we still say: IN GOLD WE TRUST.
Do You Feel $9,000 Richer, Punk? -Welch/Reason
"As Congress squabbles over the next multitrillion-dollar phase of coronavirus relief, it's worth asking the question: Do you feel $9,000 richer since March? Unless you were an early investor in the vaccine-chasing Moderna Therapeutics, the answer is likely 'no.' And yet the estimated $3 trillion price tag on the first four batches of COVID-19 stimulus, divided by 330 million increasingly underemployed U.S. residents, equals $9,000 per capita, which has ended up where government payouts usually go: to entities with better connections than you. There was the $50 billion to airline companies - $25 billion in loan guarantees, $25 billion in grants - which promptly slashed worker hours while burning fuel on empty flights at the government's request. There were the concierge-service clients of banking behemoths Citibank, U.S. Bank, and J.P. Morgan Chase, who got to the front of the line for the feds' $349 billion loan program for small businesses. And don't forget the Federal Reserve, which is propping up Wall Street by doing what Fed Chair Jerome Powell recently characterized on 60 Minutes as 'a multiple of the programs that were done during the last crisis.'....'Millions of Americans are seeing that the government spent trillions of dollars and still didn't get it right,' Rep. Justin Amash (L–Mich.) told me last month, during his brief flirtation with the Libertarian Party presidential nomination. 'They didn't get help to the people who need it most. Instead, most of the assistance went to people who have great connections, who run big corporations. Those people, they got it really fast.' Why does this happen every time? As economists like to say, incentives matter. Sure, Congress could have just mailed us each a $9,000 check - or maybe $7,000, spending the rest on medical system capacity. But then the two major parties wouldn't have been able to go back to their favored and most supportive constituencies and brag about their special treatment....So what does Congress do for an encore? House Speaker Rep. Nancy Pelosi (D–Calif.) wants to double down on another $3 trillion. No, we'll need $10 trillion to stave off another great depression, they tell us in The Atlantic."
Masks Versus No-Masks: Is This The New Symbol Of Tribalism? -Luther/Zero Hedge
"Masks have become a symbol of which 'side' you're on in the coronavirus debate in the United States and for some folks, whether you choose to wear one or not says a lot about you. If you don't wear a mask, you're seen as a callous brute who doesn't care whether you spread your germs and kill grandma. If you do wear a mask, you're seen as a quivering sheep, someone who has been willingly muted by the government. Rationally, we know there's a lot more to it than that, however, rational thinking is rarely at the forefront when tempers are flaring. Whether or not you choose to wear a mask is an incredibly visible sign that many will read as an alliance to one 'side' or the other. It's becoming almost tribal. There are a lot of folks who come down on the side of wearing a mask. Why? Most of them say it's to protect others from them in case they're unwittingly carrying and spreading the virus....The data regarding the cloth masks that most people are wearing doesn't really support their use....On the other side of the debate we have those who refuse to wear masks. Some folks won't do business in stores that require them. Others try to enter the establishments that require masks without adhering to the requests. Others just stay at home because they refuse to comply. Why won't they wear masks? Some of it goes back to the Surgeon General's early recommendation that masks were not helpful in stopping the spread of the coronavirus. There are a couple of other reasons, too. First, many feel based on the information above that the masks are not effective. If they don't work, why should they go through the discomfort and for some, the difficulty breathing that mask-wearing brings? Some see it as a symbol of weakness....I strongly believe we should be responsible for our own health and therefore make these choices ourselves. At the same time, I support the right for businesses to choose whether or not to serve people who refuse to wear masks. If you, as a customer, feel strongly about not wearing a mask, you should vote with your wallet and go to stores that don't require it. This is a purely libertarian point of view. It's about personal responsibility and the free market. Personally, I keep a mask tucked into my purse and wear it if the establishment I'm visiting has a policy requiring it."
5.29.20 - $5,000-$9,000 Gold Within 10 Years
Gold last traded at $1,751 an ounce. Silver at $18.53 an ounce.
NEWS SUMMARY: Precious metal prices rose Friday on safe-haven buying and a weaker dollar. U.S. stocks fell as traders braced for an upcoming news conference on U.S.-China relations from President Donald Trump.
Gold to see $5,000-$9,000 price levels in 10 years -In Gold We Trust Report/Kitco
"The yellow metal could be looking at nearing the $5,000 an ounce price tag in a decade and that is a conservative estimate, according to the annual In Gold We Trust Report published by Incrementum AG. The 14th annual report made some pretty bold predictions for the gold market, forecasting prices to, at least, approach $5,000 an ounce and possibly even push towards $9,000 an ounce by 2030, Incrementum AG fund managers and authors of the report Ronald-Peter Stoeferle and Mark Valek wrote on Wednesday. The difference between whether gold will be near $5,000 an ounce or $9,000 an ounce will depend on the global debt situation as well as inflation. 'The proprietary valuation model shows a gold price of $4,800 at the end of this decade, even with conservative calibration. Should money supply growth develop in a similar inflationary manner to that of the 1970s, a gold price of $8,900 is conceivable by 2030,' the report stated. The monetary systems in their current form all have an expiration date, the authors of the report said. 'Due to the expected economic and monetary turbulences, the coming years will hold many challenges for investors,' Stoeferle and Valek wrote."
COVID-19 Stimulus Packages Take Away Post-Lockdown Job Incentives -Bonner/Rogue Economics
"For the last 10 years - or longer - Wall Street and big business have been in high clover. But it's been barren ground for the average working man. Big banks, big business, and big investors have been able to get credit from the feds at or below the rate of consumer price inflation. The EZ money acted like Miracle-Gro in the stock market; prices rose 300%. But the economy, in which the little guys live and earn their money - suffered a long drought, growing only a piddly 50% in 10 years....And now, with 43 million unemployed… the grumbling gets louder. Menacing, even. In desperation and frustration, voters might even elect Joe Biden.But the feds are no dopes. They're applying the same techniques that worked so well with the cronies to silence the proletariat. That is, they are paying them off. As strange as it seems, the Paycheck Protection Plan does more than protect a man's income. Instead, it enhances it....State unemployment benefits of $400 per week, average, are already not bad for many of these workers. Add on the $600 per week that the feds are chipping in and you have an income which, in many cases, is more than double what the fellow was earning before the crisis. Many wage-earners are delighted to be laid off - they make more money!....Who will want to go back to work… and earn less? Workers will be reluctant to return to the office or the factory floor. (There might be germs there!) This will obviously delay a recovery. And they will expect higher pay (thus reducing employers' desire to take them back). What to do?....White House economic adviser Larry Kudlow recently said the administration is interested in back-to-work bonuses for the unemployed. He mentioned $450 per week in addition to any wages those individuals would make....More damaging in the long run, average Americans will now begin to see the feds - not honest work - as the best source of wealth."
Big Bankruptcies Sweep the U.S. in Fastest Pace Since May 2009 -Yahoo Finance
"In the first few weeks of the pandemic, it was just a trickle: companies like Alaskan airline Ravn Air pushed into bankruptcy as travel came to a halt and markets collapsed. But the financial distress wrought by the shutdowns only deepened, producing what is now a wave of insolvencies washing through America's corporations. In May alone, some 27 companies reporting at least $50 million in liabilities sought court protection from creditors - the highest number since the Great Recession. They range from well-known U.S. mainstays such as J.C. Penney Co. and J. Crew Group Inc. to air carriers Latam Airlines Group SA and Avianca Holdings, their business decimated as travelers stayed put. In May 2009, 29 major companies filed for bankruptcy, according to data compiled by Bloomberg. And year-to-date, there have been 98 bankruptcies filed by companies with at least $50 million in liabilities - also the highest since 2009. Few people believe bankruptcies have by any means hit a peak. 'I think we're going to continue to see filings of at least the level we're seeing for a while,' said Melanie Cyganowski, a former bankruptcy judge now with the Otterbourg law firm....'If you know someone at the bankruptcy courts, be sure to thank them,' Duston McFaul, a partner at law firm Sidley Austin, said in an email. 'They're already over-stretched and we're only in the first inning.'"
In virus chaos, some find solace, purpose in helping others -Associated Press
"In April, as the coronavirus was ravaging New York, Susan Jones learned her older brother had been diagnosed with a blood cancer. His supervisor at work launched a GoFundMe page to help with costs, and Jones shared it on Facebook...She was stunned to see scores of colleagues - some she didn't even know that well, and didn't even know she had a brother - donating, despite their own economic challenges in a struggling dance community. Jones found herself asking: Would the response have been the same just two months earlier, before the pandemic? She's fairly certain it wouldn't. Instead, she thinks the instinct to help shows, along with simple kindness, how people are striving to make a difference. At a time of helplessness, she says, helping others makes a mark on a world that seems to be overwhelming all of us....Helping others can feel good is not just an anecdotal truth but an idea backed by research, says Laurie Santos, psychology professor at Yale University and teacher of the school's most popular course to date: 'Psychology and the Good Life.' 'The intuition that helping others is the key to our well-being right now fits with science,' Santos says. 'There's lots of research showing that spending our time and money on other people can often make us happier than spending that same time or money on ourselves.'....When the pandemic struck, Blake Ross, a 37-year-old mother of a toddler in New York, was testing the waters to re-enter the job market - in the field of event programming, as it happens....She hit on the idea of a website to connect people who wanted to help with those who need it. Taking a cue from her theater-industry background, she called her site 'Kindness of Strangers' after the line in Tennessee Williams' 'A Streetcar Named Desire.' Some 500 people from New York and around the world have signed on...Ross has partnered with Enlivant, which runs senior homes in 20 states, and has set up an adopt-a-grandparent program. 'The essence of volunteering is that you feel wonderful after giving of yourself,' Ross says. 'You certainly get as much as you give.'"
5.28.20 - Jobless Stats May Not Tell Full Story
Gold last traded at $1,723 an ounce. Silver at $17.87 an ounce.
NEWS SUMMARY: Precious metal prices rose Thursday on safe-haven buying and a weaker dollar. U.S. stocks rose as traders see the latest data as a signal the economy may be nearing the bottom.
Gold gains as simmering US-China tensions boost demand -CNBC
"Gold prices rebounded on Thursday as deteriorating U.S.-China relations over Beijing's move to impose a national-security law in Hong Kong fanned concerns over quick economic recovery and drove investors towards the safe-haven metal....'The tensions between U.S. and China continue to be on the high side. Overall, the market is a bit worried about the situation geopolitically and also economically,' said Afshin Nabavi, senior vice president at precious metals trader MKS SA. China's parliament approved a national security legislation for Hong Kong on Thursday, fueling fears it could jeopardize its special autonomy and freedoms. The new security law on Hong Kong has lead to an escalation in trade tension between the United States and China amid Washington ramping up criticism of China over the origins of the coronavirus pandemic. The escalating tensions have increased interest in gold, which is seen as a safe investment during times of political and financial uncertainty."
Jobless Numbers May Not Tell Full Story -New York Times
"More than 40 million people - the equivalent of one out of every four American workers - have filed for unemployment benefits since the coronavirus pandemic grabbed hold in mid-March, the government reported on Thursday, an astounding tally that rivals the bleakest years of the Great Depression. The latest batch of claims - the 2.1 million people who filed a new jobless claim last week - may not be only a result of fresh layoffs, but also evidence that states are working their way through some of the choking backlog. 'We're still catching up,' Diane Swonk, chief economist at the accounting firm Grant Thornton, said of the newest claims. 'The lags have been long.' The Labor Department report marks the eighth week in a row that new jobless claims dipped from the peak of almost 6.9 million - but the level is still far above any other historical highs....'It's unclear if states are including duplicate claims due to error, fraud or the Pandemic Unemployment Assistance program,' Mr. Tedeschi said. That same system is most likely missing millions of other laid-off workers. Even now, three states have not put the pandemic unemployment insurance program into effect, and several others have yet to report any claims....The way 'initial claims' are counted may also vary by state, with some excluding claims that have not been processed."
The "future of work" is here, thanks to Covid-19 -Quartz
"As the Covid-19 crisis has unfolded, corporate leaders have scrambled to develop radical new strategies for accessing customers, maintaining supply chains, and salvaging revenue streams. Many of their solutions have been strikingly innovative. Yet when it comes to the ins and outs of the white-collar work environment - where, when, and how we work each day - the changes are exactly what I would've expected...In some ways, this crisis has merely catapulted them directly into a future we've all been inching toward for years: the so-called future of work. As dean of Columbia University's School of Professional Studies, and a professor of human capital management, my research and teaching both focus on the future of work domain...Though I never would've wished for a pandemic to be the catalyst, I do believe our suddenly new ways of working are here to stay. As leaders adjust to this, here are four future-of-work pillars...Pillar 1: Flexible hours - Since the outbreak of the pandemic, our definition of the word 'office' has changed dramatically...The definition of the 'workday' has changed, as well; it is no longer limited to a certain subset of hours that all employees share....Pillar 2: Data-based employee metrics - Leaders don't need to stop evaluating employee performance - far from it. They'll simply need to create new metrics of success...Once the metrics are set, leaders must make their new expectations crystal clear....Pillar 3: Social impact - Forward-thinking leaders will continue to prioritize corporate social impact. They will build long-term relationships with nonprofits, offering resources, funding, and volunteer opportunities, and will cultivate a workplace culture that invests in more than just the bottom line. Pillar 4: Authentic relationships -Now that we're experiencing a season of global crisis together, the last semblances of formality have been stripped away. The term 'business casual' has taken on new meaning, as we've literally seen into each other's homes and met each other's partners, pets, and children....I believe the smartest business leaders won't rush back to the constraints of unnecessary formalities, cubicles, or commutes. Instead, they will accept that the future of work has already arrived - and, in doing so, will prepare themselves and their teams for whatever comes next."
A Plainer People in a Plainer Time -Noonan/Wall Street Journal
"We're easing up. Good, it's time. Spring is here, summer's coming. You can pass any well-meaning restriction and do your best to enforce it, but great leaders work with human nature, not against it. People need to be together, out in the air, in the sun, and if you don’t let them they'll find a way anyhow, and then everybody will have to fight. All 50 states are to varying degree unlocking. How citizens do this will determine the size and severity of second and third waves. It's almost all in our hands....What we did - essentially shut down a great, complex, modern nation for two months out of concern that people would become sick - had never been tried before. It's something new in history. We will look back on it, however it turns out, with a certain wonder. In those two months we learned a lot. How intertwined and interconnected our economy is, how provisional, how this thing depended on that....But the biggest things I suspect we learned were internal. No matter what you do for a living, when you weren't busy introspection knocked on the door and settled in...They've been conducting a kind of internal life review, reflecting on the decision that seemed small and turned out to be crucial, wondering about paths not taken, recognizing strokes of luck. They've been thinking about their religious faith or lack of it, about their relationships....Here is what I am certain of. We will emerge a plainer people in a plainer country, and maybe a deeper one. Something big inside us shifted...We're getting pared down. We're paring ourselves down."
5.27.20 - The Real Reason Gold is Rising
Gold last traded at $1,711 an ounce. Silver at $17.78 an ounce.
NEWS SUMMARY: Precious metal prices traded mixed Wednesday on rising investor risk tolerance. U.S. stocks also traded mixed as traders grappled with the economy reopening and a big drop in tech shares.
Here's the Real Reason Gold Has Been Rising -Bloomberg
"Gold goes up when interest rates go down...If you adjust the price of gold for inflation, you see it falling in the early part of the past decade as the real yield on government bonds rose. (Real means adjusted for inflation.) More recently, the opposite has been happening: The inflation-adjusted price of gold has risen, while the real interest rate on 10-year Treasury notes has fallen. This relationship makes sense. Gold pays no interest, so it's unattractive at a time when the real interest paid on bonds is high. In economists' terms, the opportunity cost of holding gold is high at such times. In contrast, at times such as this, when the yield to be had from Treasuries is actually negative, gold looks pretty good. In short, gold isn't going up because of inflation. It's going up because the Fed and other central banks are slashing interest rates to fight the opposite risk - deflation caused by the deep Covid-19 recession. Of course, gold would also do well if inflation surged and the Fed went easy on raising rates as the economy regained steam. The fear of that scenario is probably behind some investors' gold-buying...Deflation, not inflation, is the motor behind gold's rise."
Coronavirus apps' fatal flaw: Almost everyone has to use them or they won't work -Fortune
"A team in Switzerland today became the world's first to introduce a contact-tracing app built on a protocol jointly designed by Apple and Google...Contact-tracing apps work by automatically recording other nearby devices that have the same app installed. Users who later test positive for COVID-19 can use the app to automatically send alerts to those other people they were in contact with, advising them to self-isolate for 14 days or to get tested themselves....But, unfortunately, there's a hidden flaw in these contact-tracing apps - in fact, in all contact-tracing apps - that means they are unlikely to live up to their promise: To work effectively, they require adoption rates of well over half the population, which few mobile apps, even the most viral and fun, ever achieve. The Apple-Google protocol is popular with civil liberties groups that fret about the Big Brother implications of governments collecting in a central database citizens' location information and records of everyone they've met. The Apple-Google solution works without holding this information centrally....A widely cited study by a team at Oxford University found that apps must be adopted by 56% of people to have a dramatic impact on coronavirus transmission rates....Assuming the app's use can't be mandated, privacy does become an important issue. If people are worried about the government having access to their location data and insights into their contacts, they will be less likely to download and use the app."
Getting A Sense of the Economy's Current Hole and How the Government's Measures To Fill It (Don't) Add Up -Snyder/Alhambra
"The numbers just don't add up. Even if you treat this stuff on the most charitable of terms, dollar for dollar, way too much of the hole almost certainly remains unfilled. That's the thing about 'stimulus' talk; for one thing, people seem to be viewing it as some kind of addition without thinking it all the way through first....Everyone forgets the last time when the government tried this, impressing markets and the media with its huge numbers, that after it was over its proponents complained how it wasn't big enough....What we are dealing with today is an economic disruption the proportions of which are an historical outlier. That means an unfathomable number of workers are not getting paid and therefore consumers not spending, businesses don't collect that revenue which destroys their profit levels, and then business investment which doesn't get done on top of both consumers and businesses far more likely to save and act differently than before....The stock market like many commentators are all saying the government's done more than enough, perhaps too much (inflation). That all depends first upon the scale of the hole....For Q2 alone, the gap is $2.1 trillion - as a starting point. Two point one TRILLION in lost direct economic output. Not an annual rate, not seasonally-adjusted, gross nominal dollars. If we tally up the rest of the year, quarters one through four, this scenario leaves us expecting just $18.9 trillion in total output compared to the $22.3 trillion under our 4% growth baseline - for a yearly difference in lost activity of somewhere around $3.4 trillion...Using less moderate estimates, the gap really does tally $4 trillion or more....Even if we assume dollar for dollar the government's spending hits the real economy in gross nominal output, that still leaves a deficit of substantially greater than $1 trillion."
The Healing Power of Proper Breathing -Wall Street Journal
"Breathing is not an activity that anyone is feeling confident about right now. We spend our days covering our mouths and noses with masks, struggling to inhale and exhale. We toss and turn at night, worried that we might be feeling a cough coming on or some tightness in our chests. Covid-19 has turned us into a planet of breath-obsessed people. But as hard as it might be to fathom now, there is a silver lining here: Breathing is a missing pillar of health, and our attention to it is long overdue. Most of us misunderstand breathing. We see it as passive, something that we just do. Breathe, live; stop breathing, die. But breathing is not that simple and binary. How we breathe matters, too...The way that we take in that air and expel it is as important as what we eat, how much we exercise and the genes we've inherited...Breathing properly can allow us to live longer and healthier lives. Breathing poorly, by contrast, can exacerbate and sometimes cause a laundry list of chronic diseases: asthma, anxiety, attention deficit hyperactivity disorder, hypertension and more....The first step in healthy breathing: extending breaths to make them a little deeper, a little longer. Try it. For the next several minutes, inhale gently through your nose to a count of about five and then exhale, again through your nose, at the same rate or a little more slowly if you can. This works out to about six breaths a minute...Just a few minutes of inhaling and exhaling at this pace can drop blood pressure by 10, even 15 points....The second step in healthy breathing: Breathe through your nose. Nasal breathing not only helps with snoring and some mild cases of sleep apnea, it also can allow us to absorb around 18% more oxygen than breathing through our mouths. It reduces the risk of dental cavities and respiratory problems and likely boosts sexual performance. The list goes on....It costs nothing and takes little time and effort. It's a therapy our ancestors self-administered for thousands of years with only their lips, noses and lungs."
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