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1.17.19 - The Real Cure for Economic Insecurity -WSJ

Gold last traded at $1,292 an ounce. Silver at $15.53 an ounce.

NEWS SUMMARY: Precious metal prices traded steady Thursday despite a firmer dollar. U.S. stocks traded mixed after Morgan Stanley's latest quarterly results disappointed investors amid growing uncertainty around the Chinese economy.

Why stock-market investors are starting to worry about the government shutdown -Marketwatch
"The partial government shutdown is now setting records, and investors might not be able to ignore it for much longer, analysts said. 'Two key risks that we highlighted in the past (Fed's monetary policy and trade war) have subsided, but new risks have emerged: U.S. government shutdown and signs of additional slowdown outside the U.S.,' wrote Marko Kolanovic, global head of quantitative and derivatives strategy at JPMorgan, in a note dated Wednesday....History shows past shutdowns have had a negligible impact on stocks. So far, that’s been the case with the partial shutdown that began on Dec. 21 and entered its 27th day on Thursday with no end in sight....The White House has reportedly doubled its own estimate of the shutdown’s impact on economic growth, news reports said Tuesday, forecasting it would trim first-quarter gross domestic product by 0.5 percentage points if it lasts through January....Meanwhile, the shutdown has deprived traders, economists and policy makers of at least 10 key government data releases so far, including figures related to housing, trade and consumer spending."

shutdown Who blinks first will matter in Trump, Democrats' wall fight -Associated Press
"Of all the issues at stake as President Donald Trump and Democrats wrangle over his prized border wall, the latest snag is whether bargaining over the proposal should come before or after shuttered government agencies reopen....If Trump blinks first and temporarily halts the shutdown so negotiators can seek agreement, the White House and some Republicans worry there'll be no incentive pushing Democrats to cut a deal. With 800,000 federal employees back at work and getting paid, why would Democrats agree to provide billions in taxpayer money for a keystone of Trump’s presidential campaign that they hate and that he promised repeatedly Mexico would finance? Yet Democrats fear that if they negotiate while the shutdown persists, it would encourage Trump to use such brinkmanship in the future. He’d think the pressure tactic had worked, and he’d have plenty of opportunities to do the same in the near future, they say....To strike a deal temporarily reopening government, the commitment from Democrats 'would have to be pretty strong to get something done' on the wall, Sen. Mike Rounds, R-S.D. said. Otherwise, he added about Trump, 'If it’s just seen as a weakening of his position, then he probably wouldn't do it.'....But majorities of Republicans polled agree with Trump that there's an immigration crisis at the Mexican border and blame Democrats for the shutdown. That means GOP senators abandon Trump at their own peril."

Gold Within Striking Distance Of $1300 -Kitco
"After trading to a high of $1295.40, gold softened a little bit, also trading to a low of $1287.60. What is important about this range is even with a respectable gain on the day, pricing is still caught within a tight and narrow band. That band created on Friday, January 4th was the net result of dynamic Price swings in which gold traded to a low that day of $1278, and a high of $1300.40. Since then gold has not been able to break above or below those price parameters. Investors have bid the precious metal up on multiple occasions since January 4th, however on each attempt $1300 has been an insurmountable price point to trade at or above. That being said there is no question that market sentiment in regards to gold still remains bullish. Beginning after a major climb in pricing at the end of November, when gold was trading at approximately $1213 per ounce....When it comes to the most expensive precious metal (gold, silver, platinum and palladium), palladium is now the most expensive metal. Palladium futures closed at $1327.00 after gaining $47.00, a full $27 above gold futures."

The Real Cure for Economic Insecurity -Editors/Wall Street Journal
"'The gig economy is simply the next step in a losing effort to build some economic security in a world where all the benefits are floating to the top 10%.' So declared Democratic Sen. Elizabeth Warren in 2016 amid an explosion of start-ups that facilitate freelancing by connecting workers with customers. Ms. Warren was echoing a liberal lament that jobs now come with fewer protections and benefits....Yet the Labor Department’s Contingent Work Survey last summer showed that a mere 10.1% of workers were employed in alternative work arrangements, about the same as in 1997. The government study contradicted other liberal claims. For instance, independent contractors earned more than traditionally employed workers and overwhelmingly preferred the flexibility of their jobs....Democrats also want to prohibit state right-to-work laws that let workers choose whether to belong to a union...But one reason the U.S. economy is growing faster than its friends across the pond is a more flexible labor market. The Trump Administration has eased the burdens on employers while giving non-traditionally employed workers access to more benefits...Turns out the best antidote to economic insecurity is less government and more growth."

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1.16.19 - Why Sanders' $15 Minimum Wage Is Irrelevant

Gold last traded at $1,293 an ounce. Silver at $15.63 an ounce.

NEWS SUMMARY: Precious metal prices rose Wednesday on safe-haven buying and a flat dollar. U.S. stocks rose as investors cheered strong quarterly earnings from major banks like Goldman Sachs and Bank of America.

Gold resumes climb toward $1,300 -Marketwatch
"Gold prices on Wednesday resumed their climb toward the psychologically important price of $1,300 an ounce, finding support from the turmoil surrounding the U.K.’s plan to leave the European Union and the upcoming vote of no confidence facing Prime Minister Theresa May’s government. Caution among traders has deepen 'ahead of a no-confidence vote on British Prime Minister Theresa May’s government and other geopolitical risks, including the U.S. government shutdown, loom large in investors minds,' said Mark O’Byrne, research director at GoldCore. 'Physical demand for gold coins and bars has picked up in the U.K. and Ireland, due to Brexit and U.K. political uncertainty,' he added....Gold appeared to gain more ground Wednesday following news that U.S. Speaker of the House Nancy Pelosi sent President Trump a letter to postpone the State of the Union speech, said Jeff Wright, executive vice president of GoldMining Inc. 'I think the sudden increase [for gold] is shutdown related, especially when it appears the Democrats have zero interest in engaging with the president or compromising,' he said. 'Also, as the partial shutdown is impacting Q1 GDP little by little.'"

gold chart Measured in 72 currencies, gold is at ... an all-time high -Mining-Journal
"'Well measured in 72 currencies, gold is at ... or within a few percentage points ... of being at an all-time high for people in those countries,' the CEO of Sharps Pixley said. His list started with the Afghan afghani, ended with the Zambian kwacha and included the Australian dollar, Russian ruble and South African rand. 'Not on the list are the British pound, the Swiss franc, the Euro and Chinese yuan - but we are not far off in all of those currencies too,' he said. 'Only in USD does gold lag - and not all of us live in the US.' Analysts have tipped a rising US dollar gold price this year given plateauing US interest rates and geopolitical uncertainties including Brexit. Norman said he remembered the same phenomenon - 'a stealth rally in minor currencies' - ahead of the last major gold bull run in dollar terms in the late 1990s. The bullion dealer said gold had seen an average year-on-year gain of about 10% compounded since 2000, which he believed meant it was a reliable yardstick to measure costs or wealth - and a useful thing to own."

Bernie Sanders' minimum wage proposal is irrelevant thanks to Trump's pro-growth policies -Pudzer/Fox News
"Predictably, Sen. Bernie Sanders, I-Vt., is introducing a bill to raise the minimum wage to $15 an hour. Since the Republicans control the Senate and the presidency, it has absolutely no chance of passing....Progressive hosts who interviewed me on cable news shows would often ask how our company and its franchisees (Carls Jr./Hardees) could hire people for less than a 'living wage' when they were trying to support families. I’d try and explain how increasing wages above the level at which business owners could afford to pay their employees would make it difficult for businesses to survive, let alone grow. I also tried to explain mandatory wage increases would reduce the entry-level job opportunities that young working-class Americans so desperately needed. I suggested that the best solution was for government to pursue policies that encourage economic growth, job creation and increased wages. I co-authored a book entitled 'Job Creation: How It Really Works and Why Government Doesn’t Understand It,' which advocated reducing taxes, slashing regulations, and encouraging domestic energy production....President Trump cut taxes, slashed regulations, and encouraged domestic energy production. Through his first six quarters in office, economic growth doubled from Obama’s 1.5 percent to 3 percent....Because of economic growth, employers can afford to pay higher wages, and they need to if they are going to attract the best employees. We call that capitalism....In 2014, President Obama advocated increasing the minimum wage to $10.10...Today, thanks to President Trump’s capitalist policies that encourage economic growth, we could raise the minimum wage to $10.10 an hour and few people would even notice. If Sen. Sanders and his 'Fight for $15' crowd stay out of the way, a $15 minimum wage may soon be as irrelevant as the bill he is about to introduce."

Falling wages, rising housing costs fuel homelessness among aging Americans -Chicago Tribune
"If current trends continue, the number of aging homeless people will more than double in three major metropolitan areas, straining social and medical services, a report released this week concluded. It said that improvements in housing plus services aimed at preventing medical crises could sometimes save cities money. The report was the work of researchers from several universities, including the University of Pennsylvania and the University of Delaware and was funded by four foundations. Data from New York, Boston, and Los Angeles County were analyzed. Philadelphia's homeless shelters also are struggling with an influx of older homeless people who have complex medical problems the shelters are not designed and staffed to handle...The report said the coming boom in aging homeless people stems from younger, less educated baby boomers who faced economic challenges in their youth: falling wages and rising housing costs. A disproportionate number wound up homeless, an effect that has persisted for decades. Now in their 50s and 60s, they are biologically older than most people their age and already facing the medical problems of aging....The researchers said the cities likely could save money, especially in the oldest, sickest group, by helping older homeless people find permanent housing and providing them with adequate medical and social support."

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1.15.19 - The Most Absurd Myth of the 21st Century

Gold last traded at $1,288 an ounce. Silver at $15.60 an ounce.

NEWS SUMMARY: Precious metal prices were steady Tuesday despite a stronger dollar. U.S. stocks rose as Netflix led a rally in tech-related stocks after news it would hike its monthly membership prices.

Gold steady as dollar gains on fears of economic slowdown -Reuters
"Gold prices were steady on Tuesday, pressured by a firm dollar on the back of concerns over slowing global growth, but well supported by expectations the U.S. Federal Reserve could refrain from raising interest rates this year. Asian shares were on the back foot on Tuesday as surprise falls in China’s exports stoked worries about the global economy, while the U.S. dollar was marginally higher against its peers....Market participants think that worries of slowing domestic and global growth as well as tame U.S. inflation will make Fed policymakers hesitant to raise interest rates in the world’s largest economy....Meanwhile, investors are still eyeing developments in trade between the United States and China, with U.S. officials expecting a visit by Beijing's top trade negotiator this month."

bear market What's next for the dollar, gold, stocks & bonds? -Merk/Merk Investments
"In assessing our crystal ball for 2019, the starting point is the Federal Reserve (Fed) because they provide an anchor for the price of risk-free assets (Treasuries) around which risk assets are priced....The Fed had been on a set course to let its large Treasury holdings run off (engage in so-called quantitative tightening or 'QT') and to raise rates...In a recent panel discussion, Powell implied the path of quantitative tightening is not set in stone, and the Fed would be flexible. Similarly, Powell suggested the Fed can be very flexible, even lower rates on short notice should it be required. What??? The key thing that had changed is that some markets have thrown a tantrum, notably the equity markets....After Powell flip flopped to suggest the Fed could also be easing, equity markets surged....My conclusion is that, at the very least, volatility is to remain elevated...exacerbated by the Fed’s lack of clear direction....As we are approaching the end of the economic expansion, will king dollar be de-throned? In favor of a weaker dollar is an expectation of lower rates ahead, especially given the run up in recent years....If my crystal ball is correct, the price of gold may break out further to the upside when we are closer to the end of the rate hiking cycle. As recent history suggests, though, the time to diversify is ahead of the unfolding of actual events....All of this doesn’t bode too well for equities. That said, historically, bear markets tend to mostly coincide with recessions...Investors have a certain risk tolerance; with volatility elevated and years of a bull market in equities, odds are their portfolios are riskier than they signed up for."

The Most Absurd Myth of the 21st Century -Bonner/Bonner And Partners
"Every era has its busted myths and failed dreams. Wall Street and Washington wallow in them. The practical challenge for us is not to be smarter than other investors or wiser than other voters… but merely to step outside the myth long enough to get a good look at it....Assets, markets, companies, and empires rise and fall. No single one, or group of them, ever dominates for long. But now comes the most absurd myth of all - that the feds can 'manage' and 'guide' the economy, not only to make it better, but to make sure nothing bad happens....U.S. monetary policy for the last 30 years is nothing more than the classic three mistakes over and over. Mistake #1 - keep interest rates too low for too long. Mistake #2 - raise rates to try to mitigate the damage from Mistake #1. Mistake #3- drop rates in a panic when Mistake #2 causes the economy to crash. And that’s just monetary policy. What about fiscal policy? The key concept of enlightened budget management is that fiscal policy should be countercyclical. You save (surpluses) when the gettin's good… and spend (deficits) when it ain't. Pharaoh did it 3,000 years ago - storing grain during seven fat years… and releasing it during the seven lean years. It's so simple, even a moron could do it....Since 1980, the feds have spent $20 trillion more than they have taken in. This year, spending will outpace tax receipts by roughly $1 trillion. And we’re still in a recovery. Where is the promised growth? Where’s the missing revenue? Of course, the idea is absurd. There is no plausible theory… and no observable case… where people get richer by borrowing more and more money, year after year. Instead, they go broke. It’s only by saving money and investing it wisely that it is even possible to get ahead. And the feds are unable to do either."

White House shifts shutdown strategy, tries to bypass Pelosi -Associated Press
"Shifting strategy, the White House invited rank-and-file House Democrats to lunch Tuesday with President Donald Trump, bypassing Speaker Nancy Pelosi and her leadership team in an effort to get centrist and freshman lawmakers on board with funding Trump’s long-promised U.S.-Mexico border wall. Pelosi approved of lawmakers attending the meeting, telling her team that the group can see what she and others have been dealing with in trying to negotiate with Trump to end the partial government shutdown, now in its 25th day with no resolution in sight....Lawmakers invited to the White House include centrist Democrats from districts where Trump is popular, including freshmen....Senate Majority Leader Mitch McConnell said on the Senate floor that it’s up to Democrats to get the country off the 'political carousel' of the shutdown fight. The Kentucky Republican said Democrats have turned Trump’s wall into 'something evil' and have engaged in 'acrobatic contortions' to avoid dealing with the security and humanitarian crisis at the southern border. With the government shutdown now in its fourth week, negations between the White House and Congress are at a standstill. Trump has demanded $5.7 billion for the border wall; Democrats are refusing but are offering money for fencing and other border security measures."

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1.14.19 - Goldman Predicts $1,425/oz. Gold

Gold last traded at $1,291 an ounce. Silver at $15.68 an ounce.

NEWS SUMMARY: Precious metal prices rose Monday on safe-haven buying and a weaker dollar. U.S. stocks fell led by losses in tech, lagging corporate earnings and concerns over an economic slowdown in China.

Gold prices edge higher on expectations of Fed pause -Reuters
"Gold prices inched up on Monday, supported by expectations that the U.S. Federal Reserve will not raise rates this year....Market participants think that worries of slowing domestic and global growth as well as tame U.S. inflation will make Fed policymakers hesitant to raise interest rates in the world’s largest economy....Meanwhile, investors were also worried about a partial U.S. government shutdown...which entered its 24th day on Monday, making it the longest shuttering of federal agencies in the U.S. history, with no end in sight....Markets awaited trade data from China later in the day, with recent signs Asia’s largest economy was losing momentum and the government planning to lower its 2019 economic growth target. Physical gold premiums rose in China last week as investment demand firmed on worries over global growth and a softening dollar."

Understanding Market Cycles -Zero Hedge
"I was digging through some old charts over the weekend and stumbled across this gem from AlphaTrends which explains the 'best time to buy stocks.' The Wyckoff theory is that the better an investor can identify these phases of the market cycle, the more profits can be made on the ride upwards of a buying opportunity."

chart

"2009-Present: So, here we are, a decade into the current economic recovery and a market that has risen steadily on the back of excessively accommodative monetary policy and massive liquidity injections by Central Banks globally. Once again, due to the length of the 'mark up' phase, most investors today have once again forgotten the 'ghosts of bear markets past.'....What gets lost during these bullish cycles, and is found in the most brutal of fashions, is the devastation caused to financial wealth during the inevitable decline. What you should notice is that in many cases bear markets wiped out essentially a substantial portion, if not all, of the previous bull market advance....Whether or not the current distribution phase is complete, there are many signs suggesting the current Wyckoff cycle may be entering its final stage of completion....The recent sell-off should have been a wake-up call to just how quickly things can change and how damaging they can be."

America’s richest are losing confidence in the stock market -New York Post
"The rich and famous want out of this volatile market. America's wealthiest people have lost investing confidence - and they may be right on the verge of a flight to the safety of CDs and other cash products as market losses mount, with a staggering $13 trillion estimated by ET Intelligence Group to have vanished in equities worldwide in 2018. 'In periods of uncertainty, the wealthy tend to be more concerned with asset protection rather than growth,' said Joseph Biondolillo, principal at financial planning firm Biond Financial. 'They tend to be defensive-oriented, and willing to wait for the dust to settle and for all the facts to be in.'....'Significant financial market declines in the first half of December, which have continued, are negatively affecting investor confidence,' said Spectrem President George H. Walper, Jr. And there’s more to come, he added, from fears of a slowing global economy to rising interest rates. Biondolillo says rich investors are now pulling up their stakes in securities. But 'although they do not like uncertainty,' he added, 'the wealthy understand the importance of asset allocation and diversification' in order to weather the storm."

Goldman Predicts Gold Prices to Climb to Highest Since 2013 -Bloomberg
"Goldman Sachs Group Inc. is leading a pack of bullish voices cheering for gold. The bank's analysts led by Jeffrey Currie raised their price forecast for gold, predicting that over 12 months the metal will climb to $1,425 an ounce - a level not seen in more than five years. Bullion has benefited as rising geopolitical tensions fuel central bank purchases, while fears of a recession helped boost demand from investors seeking 'defensive assets,' they said....Speculative interest in gold signals investors are not only closing bearish bets but are also adding to bullish positions, Suki Cooper, an analyst at Standard Chartered, said in a note. Gold is also getting a boost from mounting speculation the Federal Reserve may pause in raising borrowing costs, boosting the appeal of non-interest-bearing metal. 'We expect the safe-haven bid, and to a lesser extent, gold’s inflation hedge properties, to remain key drivers of the metal’s price in 2019, complemented by a resurgence of physical demand,' Cantor Fitzgerald analysts led by Mike Kozak said in a report. Gold and silver are 'looking good in 2019,' underlining a potentially positive indicators that 'should drive a bullish case' for both metals."

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1.11.19 - Russian Reserves Shift Away From Dollar

Gold last traded at $1,288 an ounce. Silver at $15.66 an ounce.

NEWS SUMMARY: Precious metal prices rose Friday on safe-haven buying and a flat dollar. U.S. stocks traded lower as the U.S. government shutdown dragged on and worries over a possible China slowdown also pressured equities.

Gold set for fourth weekly gain on softening dollar -Reuters
"Gold rose on Friday as the dollar slipped on expectations that brakes could soon be applied to U.S. interest rates, putting the non-yielding metal on track for a fourth straight weekly gain. The dollar slipped against other major currencies, impaired by Fed Chairman Jerome Powell’s comment that the central bank could be patient on rate policy. 'Gold rose on a somewhat weaker dollar, but at the moment it seems to be trying to overcome the $1,300 hurdle,' said Commerzbank analyst Daniel Briesemann. The precious metal was also supported by increasing market nervousness over U.S. President Donald Trump's demand for a wall to be built on the border with Mexico. Trump threatened on Thursday to use emergency powers to bypass Congress to pay for the proposed wall....Gold, which is used as a safe-haven investment during times of economic, political and financial uncertainty, is up about 0.6 percent for the week."

gold Times A-Changin’ – But Gold Permanent -Gold Switzerland
"Long term holders of gold have a different perspective of the world. They are not believers in instant gratification. Nor do they believe that a world based on money printing and debt can create sustainable wealth. They also know that the socialism which has spread like a plague in the Western world only works until you run out of other people’s money. What makes gold the most obvious wealth preservation investment and insurance against a false financial system is its permanence. The proof of this is indisputable since gold is the only money that has survived for 5,000 years. Ephemeral financial systems and currencies come and go, so do empires. But gold survives them all. As JP Morgan stated: 'Money is gold and nothing else'. Anybody who doesn’t understand gold, neither studies nor understands history. There is nothing magic about gold, it is just real money. But since it is the only surviving currency why bet against a 5,000 year record? Gold is not an investment, it is a store of value and at times a medium of exchange....The most important asset human beings have been gifted with is their brain and their genes, including their health. Anything material we can lose, however well we protect it. But survival depends mostly on how you use your brain, as long as you are healthy of course. Even the best plans can go wrong. Remember 'The times they are a-changing' and unforeseen events will happen out of the blue. Thus we must be prepared for the unexpected and react as necessary."

Russia Buys Quarter of World Yuan Reserves in Shift From Dollar -Bloomberg
"Russia’s central bank dumped $101 billion in U.S. holdings from its huge reserves, shifting into euros and yuan last spring amid a new round of U.S. sanctions. The central bank moved the equivalent of $44 billion each into the European and Chinese currencies in the second quarter, according to a report published on late Wednesday by the Bank of Russia....'Russia is making a strategic shift in its reserves towards holding fewer dollars and more assets in other currencies,' said Benn Steil, director of international economics at the Council on Foreign Relations in New York....Russia isn't alone in its bid to reduce reliance on the world’s reserve currency amid increasing attempts by Washington to use economic leverage for geopolitical ends. In a deepening trade war with America, China sold a large portion of its U.S. Treasury holdings last year....'We aren't ditching the dollar, the dollar is ditching us,' Russian President Vladimir Putin said in November. 'The instability of dollar payments is creating a desire for many global economies to find alternative reserve currencies and create settlement systems independent of the dollar.'"

Memo to Trump: Declare an emergency -Buchanan/WND
"In the long run, history will validate Donald Trump's stand on a border wall to defend the sovereignty and security of the United States. Why? Because mass migration from the global South, not climate change, is the real existential crisis of the West. The American people know this, and even the elites sense it....Whatever one may think of the face-off Tuesday with 'Chuck and Nancy,' Trump's portrait of an unsustainable border crisis is dead on: 'In the last two years, ICE officers made 266,000 arrests of aliens with criminal records, including those charged or convicted of 100,000 assaults, 30,000 sex crimes and 4,000 violent killings.'....What should Trump do now? Act. He cannot lose this battle with Pelosi without demoralizing his people and imperiling his presidency....Trump should declare a national emergency, shift funds out of the Pentagon, build his wall, open the government and charge Democrats with finding excuses not to secure our border because they have a demographic and ideological interest in changing the face of the nation."

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