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12.17.18 - Gold Firm as Dollar Eases

Gold last traded at $1,251 an ounce. Silver at $14.75 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday as the dollar slumped ahead of the Fed meeting. U.S. stocks fell after all three major U.S. indexes closed last week in correction territory for the first time since March 2016.

Gold firms as dollar eases, markets brace for Fed -CNBC
"Gold firmed on Monday as the dollar eased from near 18-month highs, adding to bullion's appeal among holders of other currencies, with investors looking to a U.S. Federal Reserve meeting for clues on interest rate developments next year. Markets have priced in a rate rise by the Fed at its Dec. 18-19 Federal Open Market Committee meeting, so the focus will be on how many hikes will follow in 2019, analysts said. 'The market is gearing up for price-friendly news this week from the Fed and later, from China's annual Central Economic Work Conference,' Saxo Bank analyst Ole Hansen said, referring to a closed-door gathering of party leaders and policymakers. 'Based on the data released on Friday, we can see the hedge funds are net long in gold for the first time in five months. So, they are gearing up towards a dovish Fed rate hike stance on Wednesday,' he said."

santa U.S. Stocks Need a Santa Claus Rally to Avoid a Losing Year -Wall Street Journal
"Investors hoping to avoid the first annual decline for major U.S. stock indexes since 2015 are dreaming of a Santa Claus rally....Such a year-end boost will likely be necessary if the S&P 500 is to avoid finishing in the red. It is down 2.8% this year through Friday. But trade tensions with China, slumping commodities prices and concerns about the Federal Reserve’s pace of interest-rate increases have forced investors to reassess the global growth outlook....Economists have scaled back their predictions for 2019, calling for two rate increases next year rather than the three they expected when surveyed last month. Any change in that sentiment would likely rattle the already volatile stock market. 'If the Fed flips back to being more hawkish, that would be the thing that derails this,' said Jeffrey Hirsch, editor of the Stock Trader’s Almanac...Santa's failure to deliver typically doesn't bode well for stocks heading into the new year. The last six times the rally didn’t materialize were followed by three flat years in 1994, 2004 and 2015, two bear markets in 2000 and 2008 and a downturn that ended in February 2016, according to Stock Trader’s Almanac."

U.S. recession risks jump, Fed rate hike expectations slump -Reuters
"The risk of a U.S. recession in the next two years has risen to 40 percent, according to a Reuters poll of economists who also found a significant shift in expectations toward fewer Federal Reserve interest rate rises next year. What has fueled concerns of a downturn is the flattening of the U.S. yield curve - with the spread between two- and 10-year note yields falling to less than 10 basis points, the smallest gap since the run-up to the last U.S. recession....The last time such a high probability appeared in a Reuters poll was in January 2008, just eight months before the collapse of U.S. investment bank Lehman Brothers, which brought on the Great Recession....'The combination of a Fed that does not think that inverting the yield curve is a problem (along with) a global outlook that is not likely to improve in a sustained manner, is likely to lead to a monetary policy error that will push the economy into recession,' noted Philip Marey, senior U.S. strategist at Rabobank."

The Bond Market Has Frozen: For The First Month Since 2008, Not A Single Junk Bond Prices -Zero Hedge
"Late last week, we reported that in the aftermath of a dramatic drop in loan prices, a record outflow from loan funds, and a general collapse in investor sentiment that was euphoric as recently as the start of October, the wheels had come off the loan market which was on the verge of freezing after we got the first hung bridge loan in years, after Wells Fargo and Barclays took the rare step of keeping a $415 million leveraged loan on their books after failing to sell it to investors....The reason the banks were stuck with hundreds of millions in unwanted paper is because they had agreed to finance the bridge loan whether or not there was enough demand from investors, as the acquisition needed to close by the end of the year....'This is clearly more than year-end jitters,' said Guy LeBas, a strategist at Janney Montgomery Scott. 'What we’re seeing now is pretty typical for end-of-credit-cycle behavior.'....The trouble lenders have faced in the leveraged loan market has mirrored the exasperation felt by investors in other asset classes."

Home builder confidence hits 3 1/2 year low as housing crunch worsens -Marketwatch
"The National Association of Home Builders’ monthly confidence index tumbled four points to 56 in December. The December decline took the sentiment index to the lowest since May 2015. It followed a breathtaking plunge from October to November and brought the full-year 2018 average for the index to 67, one point lower than 2017. The buyer traffic tracker fell two points to 43, its lowest level since March 2016....The November sentiment plunge was followed by a new-home sales report that was the lowest in nearly three years....'Customers are hesitating to make a purchase because of rising home costs,' the industry group said, adding that confidence was lowest in parts of the country where prices are highest."

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12.14.18 - Bitcoin Wasn't a Bubble Until It Was

Gold last traded at $1,241 an ounce. Silver at $14.63 an ounce.

NEWS SUMMARY: Precious metal prices eased back Friday on profit-taking and a firmer dollar. U.S. stocks fell sharply after weaker-than-expected data in China and Europe exacerbated concerns of a global economic slowdown.

Gold - A Perfect Storm For 2019 -Seeking Alpha
"For gold bulls, 2018 was disappointing...Gold had to struggle against a rising dollar, whose trade-weighted index rose a net 3.7% over the same period, and as much as 9.4% from its mid-February low. Dollar strength has been driven less by trade imbalances and more by interest rate differentials....The world is awash with dollars to an extraordinary degree. The great dollar unwind is now overhanging markets, which will remove the principal depressant on the gold price. And when it begins, as a source of supply these hot-money dollars will be seen as the continuation of escalating supply, with the prospect of future US trade and budget deficits to be discounted....With the credit cycle turning and the addition of American tariffs, markets are at a growing risk of replicating the 1929-32 crash and the economic depression that followed. This time, instead of commodities and consumer products effectively priced in gold through a gold standard, they will be priced in fiat currency. Monetary policies will ensure liquidity is freely available to support the commercial banks, government spending and economic activity. This is a recipe for higher gold prices. Demand for physical gold continues to outstrip mine supply. In 2019, risk-weighting rules in Basel III open up the opportunity for commercial banks to augment their liquidity with allocated bullion, attractive to euro- and yen-based banks who face negative interest rates on short-term cash alternatives."

chart U.S. Stock Market Exodus Is Second-Biggest Ever, BofA Says -Bloomberg
"Investors rushed out of U.S. equity funds in the second-biggest weekly exit on record, according to Bank of America Merrill Lynch, as the market sell-off pushed traders to seek safe havens....The turmoil in stocks, which has erased as much as $4 trillion in U.S. equities since the end of September, continued this month as traders feared that a global economic slowdown will curb earnings growth and end the equity bull run....U.S. equities have fallen so much that the S&P 500 Index is now trading near the lowest valuation since early 2016. That's quite a contrast compared to a year ago, when the gauge was at the highest forward price-to-earnings ratio since 2002. The negative sentiment surrounding U.S. stocks showed no signs of dissipating on Friday as S&P 500 futures fell. Trade concerns were fueled by Apple Inc. saying a Chinese ban on sales of the iPhone will force it to settle a licensing battle with Qualcomm Inc., an outcome that may end up harming the country's smartphone industry."

Bitcoin Wasn’t a Bubble Until It Was -Wall Street Journal
"Bitcoin owners still holding on for dear life after an 82% decline are putting on a brave face, but there is no more denying that we have witnessed the popping of a classic bubble. Some believers in blockchain's vast potential agree and rue the gold-rush mentality. Others are in denial, characterizing the current rout as just another bump in the road for a transformative technology....Similar to the tech bubble, financially marginal companies could multiply their value through cryptocurrency association. Take Long Island Iced Tea Corp. The money-losing firm’s shares briefly surged by nearly 300% after it changed its name to Long Blockchain Corp. at the height of the frenzy last December. Buyers of bitcoin near the top weren't just overconfident - a hallmark of bubbles - but were dismissive of skeptics as Luddites who just didn’t get it. Bulls said the same thing in 1999 during the tech boom. The bitcoin bubble, following the housing bubble and the tech bubble, is the third in less than 20 years. Clearly, bursting bubbles don’t inoculate us against falling for another one."

Markets See the Gathering Downside That Powell Does Not -Real Clear Markets
"Though no one would ever state it outright...the Federal Reserve had utterly failed at every single thing it had tried....If ZIRP and QE were genius responses, how come things continued to go wrong? You never hear much about that nowadays, as much of a blackout as it was contemporarily....In 2017, they all said it was finally over. Globally synchronized growth was supposed to mean something, at least as a first perquisite for recovery aimed squarely at 2018. Those hopes have been blasted apart this year...Jay Powell is, or was, supremely confident about globally synchronized growth perhaps more than anyone this side of Mario Draghi. Both eurodollar futures and now US Treasury markets have called his bluff. There is and has been mild inversion in both. Markets see the gathering downside he would rather not admit is exceedingly possible. The President increasingly positions Jay Powell as scapegoat despite his (noticeably less frequent) claims of a domestic economic boom."

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12.13.18 - 50% of CFOs See 2019 Recession

Gold last traded at $1,247 an ounce. Silver at $14.85 an ounce.

NEWS SUMMARY: Precious metal prices held near 5-week highs Thursday despite a firmer dollar. U.S. stocks seesawed as investors digested the ongoing U.S.-China trade war creating rising market volatility.

Gold Is Still The More Stable Safe Haven Asset For 2019 -Streible/Kitco
"With fears of more volatility in stock markets ahead, investors could do well holding gold, which is still the reliable safe haven asset, said Phil Streible, senior market strategist at RJO Futures. 'Even if you look at bonds and interest rates, the volatility has been quite high in there. We’ve seen bonds tick up three, four, five handles within a short period of time. I think that gold has been a much better, a much more stable investment asset for a safe haven,' Streible told Kitco News."

spirits Most CFOs see a U.S. recession coming by 2020 -CBS News
"Considering that major corporations have been busy shedding workers, it follows that corporate finance leaders see a U.S. recession ahead. Evidence of a slowing economy has been popping up, including recent large-scale cuts in head count by U.S. corporations such as General Motors and Verizon. Eighty-two percent of chief financial officers polled believe a recession will have started by the end 2020, and nearly 49 percent think the downturn will arrive sometime next year, according to the Duke University/CFO Global Business Outlook, released Wednesday. 'The end is near for the near-decade-long burst of global economic growth,' said John Graham, a finance professor at Duke's Fuqua School of Business and director of the survey. 'The U.S. outlook has declined, and moreover the outlook is even worse in many other parts of the world, which will lead to softer demand for U.S. goods.' Worst-case projections would see capital spending drop in 2019, accompanied by flat hiring, found the survey conducted Friday of more than 500 CFOs, including 226 from North America."

Big Tech's Reckoning May Be Imminent After All -New Republic
"Sundar Pichai and House Republicans probably went to bed on Tuesday feeling satisfied with the result of the Google CEO's testimony before the Judiciary Committee...he didn't have to spend much time talking about even more uncomfortable subjects, like his company’s aggressive data collection and user tracking. But there were moments during the hearing that should have kept Pichai up at night....Committee Chairman Bob Goodlatte picked up the baton, saying 'most Americans have no idea the sheer volume of detailed information' being swept up by the search engine’s data collection efforts, which 'would make the NSA blush.' This is a far cry from a simple charge of political bias. Goodlatte's remarks suggest that he's concerned about the company’s monopoly on search and near-monopoly on targeted advertising not because of some unfounded censorship allegation, but because of the sheer market power concentrated in one company....House Democrats were even more persistent in questioning Pichai about his company’s data collection and privacy policies - a sign of what’s to come from the Judiciary Committee under Democratic leadership....After Tuesday, the question is no longer whether Congress will enact regulation, but just how severe it will be."

Paypal is thriving by defying conventional wisdom -The Economist
"In Silicon Valley people are besotted by the latest thing, which is why techies rarely give a thought to PayPal, a digital-payments firm that turns 20 this month. What PayPal lacks in terms of its profile, it has made up for in performance...This year it is expected to facilitate digital payments worth around $582bn, roughly four times more than in 2012....As e-commerce continues to grow, many firms that help with digital payments will thrive, including Square in America and Ant Financial in China. 'The real war is the war on cash,' argues PayPal's boss, Dan Schulman. About 40% of transactions in America are paid for in cash so there is room to grow....Wars are long and grueling affairs."

It is a "grueling" war indeed. The government's (and now big tech's) "real" war on cash has been going on for over two decades now - with zero concern about stepping on your financial freedom or privacy. In fact, they thrive on stripping Americans of their constitutional right to use cash by incentivizing the voluntary surrender of your rights. Find out where this "secret war on cash" is headed in our special report on the subject. Request a FREE copy of THE SECRET WAR, PART II: Weapons of Cash Destruction.

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12.12.18 - BofA: Gold To Hit $1,400 In 2019

Gold last traded at $1,250 an ounce. Silver at $14.85 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on safe haven buying and a weaker dollar. U.S. stocks traded higher as investors digested upbeat news related to the ongoing trade war between the United States and China.

Look For Gold To Hit $1,400 In 2019 -BoAML/Kitco
"Investors looking for a commodity to be bullish on in 2019 should look at gold, according to the latest research from analysts at Bank of American Merrill Lynch (BoAML), which is overweight the precious metal. In a teleconference presentation last week, Michael Widmer, metals strategist at the bank, said that a weaker U.S. dollar, rising inflation and low real interest rates will drive gold prices higher next year. In its year-end outlook, the bank sees gold prices averaging the year around $1,296 an ounce with prices rising as high as $1,400 an ounce during the year....'We are moving into an environment that will be very supportive for gold,' he said. Along with a turning tide in U.S. interest rates and U.S. dollar strength, the bank sees growing financial volatility driving gold prices in 2019. The bank sees higher volatility as global liquidity continues to tighten....'In our view, gold prices could spike quickly to a $1,400/oz high next year if global markets perceive that the Fed is about to blink in its dual monetary tightening policy.' Looking outside the U.S., the bank sees weaker Chinese growth as a positive factor for gold as it will prompt the Chinese central bank to loosen monetary policy."

"Can Silver Be 2019's Star Metal?" asks "Silver is like gold on 'steroids' and can potentially rally even more than the yellow metal in 2019", said Garrett Goggin, editor of GSA Silver. To get up to speed quickly on the potential of silver, read Swiss America's 2018 Silver Report.

panic Bernanke: U.S. has no system in place to deal with another financial meltdown -CBS News
"Wild swings in the stock market are fueling concerns over a potential new economic slowdown....It's been a decade since the last major economic crisis, when about 8.7 million Americans lost their jobs and some of the world's biggest banks collapsed. The men who worked behind closed doors in 2008 to stave off another Great Depression (they're nicknamed the "Three Amigos") are featured in a new documentary from HBO and Vice,"Panic: The Untold Story of the 2008 Financial Crisis. The film delves into what really happened during the financial market meltdown, a crisis caused by irresponsible mortgage lending and a subsequent bubble-burst in the housing market....'I felt very, very alone and very, very disconsolate,' former Federal Reserve Chairman Ben Bernanke told Alex Wagner. 'We really felt like we were kind of out on an island there.'....Wagner asked, 'Are you confident that if the next financial crisis was on America's doorstep, that this president and this Congress could handle it?' Bernanke said, 'I don't think we have a system in place to deal with the crisis once it happens...I think we have fewer fire hoses than we had even ten years ago.'"

Yellen warns of another potential financial crisis: 'Gigantic holes in the system' -CNBC
"Former Federal Reserve Chair Janet Yellen told a New York audience she fears there could be another financial crisis....'I think things have improved, but then I think there are gigantic holes in the system,' Yellen said Monday night in a discussion moderated by New York Times columnist Paul Krugman at CUNY. Yellen cited leverage loans as an area of concern, something also mentioned by the current Fed leadership. 'I do worry that we could have another financial crisis,' said Yellen. In the wake of the financial crisis, some agency regulatory powers were vastly expanded, but others, for example, the ability of the Fed to lend to an individual company in a crisis, were curtailed."

"Birds Of A Feather Get Plucked Together..." -Zero Hedge
"The important question now: 'Is the current uptick in correlations another sign of an impending bear market/recession, already signaled by faltering asset prices?'....We would offer up 3 points about rising correlations that are relevant regardless of market direction: #1. Higher correlations drive market volatility. When sectors move in closer lock step, diversification does less to limit daily price swings for the S&P....#2. Correlation tends to be 'sticky' absent an overwhelming catalyst. We’ve only had one dramatic shift in the last decade: the 2016 election of a Republican president and Congress....#3. High sector correlations are not necessarily negative for US stock returns. The 2010 – 2013 period of 0.83 to 0.88 average correlations saw the S&P gain 33.1%....Summing up: we see higher S&P sector correlations and incremental price volatility as a 'new normal'. Even a timely resolution in the US/China trade dispute will not likely change that. Too many other issues wait in the wings, from high financial leverage to worries over global economic growth and US corporate earnings."

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12.11.18 - Slower Fed Rate Hikes May Buoy Gold

Gold last traded at $1,250 an ounce. Silver at $14.80 an ounce.

NEWS SUMMARY: Precious metal prices steadied Tuesday despite a firmer dollar. U.S. stocks attempted a rebound amid signs that U.S.-China trade relations could be improving.

Gold buoyed by prospects of slower Fed hikes -Marketwatch
"Gold edged higher investors scaled back expectations about the pace of future interest-rate increases by the U.S. Federal Reserve. 'Gold prices, a barometer of economic and political news, are awaiting [the] Fed meeting Dec. 18-19 on rate hikes, which could have more dovish language and cautious approach to future hikes,' said George Gero, managing director in the senior consulting group at RBC Wealth Management. 'Brexit turmoil now also may be helping gold as a haven as postponing the vote is a sign of more headaches and headlines,' he added in a daily update. On Tuesday, global currencies were driven by news on the trade front. The U.S. and China have kicked off a new round of trade talks. That helped to lift some risk-sensitive currencies against the U.S. dollar."

Fed Jerome Powell Is Between A Rock And A Hard Place -Daily Reckoning
"Fed Chairman Jerome Powell has recently indicated again that he planned to go ahead with another 0.25 rate hike when the Fed meets Dec. 19, which would be the fourth increase this year....What has emerged is a growing fear that the future could be gloomier than many analysts, governments and central bank leaders anticipated. There are now two major factors that could curtail growth in the U.S. One is the Federal Reserve itself. If the Fed were to continue raising rates too quickly, it would cause government, corporate and consumer debt payments to increase. Second, while President Trump's estimated $1.5 trillion in tax cuts have contributed to boosting U.S. GDP this year, the same impact is unlikely to carry on into next year....The Wall Street Journal reported the Fed is mulling whether to 'signal a new wait-and-see mentality' on interest rates at their upcoming meeting in less than two weeks...The fact is that markets remain addicted to low interest rates and central bank credit. But that just keeps the Fed trapped in a catch-22. It wants to 'normalize' rates as much as possible after years of heavy support to the markets, but it’s now seeing how markets react without that support. The Fed can tolerate weakness in the stock market, but it fears a complete collapse, which is a very real possibility. So Jerome Powell is between a rock and a hard place."

The Debt Threat to the Economy -Wall Street Journal
"If the economy continues to grow at the normal postwar rate, growth-driven federal revenues will overwhelm the costs of the tax cut, paying for virtually all of its originally projected 10-year revenue losses in just five years. But if Treasury borrowing cost normalizes to 3.2% over the next five years, the cost of servicing the federal debt will more than double, from $316 billion this year to $666 billion in 2023. If borrowing costs rose to 4.8% over the next five years, federal debt-servicing costs would more than triple, reaching $1.1 trillion in 2023. In that scenario, the cost of servicing the $7.5 trillion increase in the public debt incurred during the 2009-16 period alone would cost $362 billion - more than the current cost of servicing the entire federal debt....Every dollar the federal government doesn't spend is a dollar it doesn't have to borrow. The caps on discretionary spending should not be lifted in 2019, and any new spending program should require a real spending offset....It’s time to make peace on trade and wage war on the deficit."

Follow the money behind climate alarmism and carbon tax proposals -Washington Examiner
"Media coverage of the recently released National Climate Assessment suggests that unless policymakers intervene to restrict the use of fossil fuels, catastrophic climate change could extract a hefty cost from the economy...But the report rests on several faulty assumptions that fail to account for technological innovations, the impact of robust natural gas development, and the costs associated with climate change policies....Updated scientific research demonstrates there is no firm consensus on the role human activity plays in climate change and that natural influences are largely responsible for warming and cooling trends. The NCA relies on theoretical climate trajectories known as 'representative concentration pathways' that are developed by the U.N.'s Intergovernmental Panel on Climate Change...Just last month, the Intergovernmental Panel on Climate Change proposed a carbon tax of between $135 and $5,500 by the year 2030. An energy tax of that magnitude would bankrupt families and businesses, and undoubtedly catapult the world into economic despair....There ought to be an open and vigorous debate about the merits of carbon tax, how much it will cost, and what kind of benefits could accrue to the environment. But it's important to know that the funding standing behind the groups, organizations, and studies that make the case for a carbon tax have common denominators in the form of left-leaning foundations."

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