More round bottoms were spotted in the global economic crisis overnight, than at the beach in Cap d'Agde, France, on an average summer day. Bottom-spotters include President Obama, who sees the US economy back on track quite soon, and China's pulse-takers at Merrill, Cantor Fitzgerald, and Credit Suisse, who see the last quarter as the nadir of the crisis as far as that country is concerned.
With diminishing worries about any imminent collapse of the global system, come;the rationales for diminished holdings of;gold among investors. Note that 'diminished' is not the same as 'none' before you sharpen your keyboards, those of you;over at the various tinfoil-hat clubs. Analysts at;German-based QCR;and NY's RBC Wealth Management Group note that net speculative long positions have 'eased' by a massive 17% as of a week ago. Kudos go to GoldMoney founder James Turk this morning, for his sage advice to his followers (and there are throngs of them) to consider gold as a savings vehicle, and not an investment.
Hallelujah. We have been arguing for years that if it is your hope/expectation/strategy to make a killing in gold you are in effect expecting a killing of another type: that of all of your other assets. Unless, of course, you and the nine others who expect the same outcome, are already holed up in your bunker, Remington at the ready, and MRE's on the stove. And 100% out of paper money.
That such a parade of economic cycle bottoms may/will occasionally be interrupted by less than attractive full frontal nudity displays among some members of the global economic community, goes without saying. It just comes with the territory. Fiji devalued its currency by- zap!- 20% overnight, in an effort to get a recovery going. Just an example. Not a pretty one, either.
As for New York gold, well it opened with a renewed (but thus far, failed) assault on the $900 citadel this morning. Chipmaker Intel has dropped a cold and wet blanket over markets this morning, and such malaise was seen as contributing to sporadic gold buys among spec funds. The dollar, meanwhile, was up to 85.05 on the index. Spot bullion gained $7.10 to start at $896.40 per ounce, while silver added 13 cents to open at $12.86 an ounce. Platinum turned up and added $19 this morning, to open at $1222 per ounce. Palladium rose $4 to start at $235 per ounce. The US may soon see a palladium bullion coin gracing the lineup of St. Gaudens and Eagle -themed offerings that the Mint already has on the shelf. About time, we say.
Actually, the greenback is now at risk of losing some of its gloss in the near-terms, if analysts over at Standard Bank have their periscopes lined up correctly. Dollar-beneficial capital inflows have slowed, and may show a flight pattern developing. Not the 'death throes' you are being offered by every Armageddonist pundit out there, but a retracement nonetheless. Oh, and such a leakage also does not guarantee four-digit price tags in gold.
Oil stalled under $50 per barrel. Shortly after the open, the market tanked and gold was showing a net $2 loss on the day, at $888 per ounce. Must be them wacky PPT/Crimex perpetrators, at it again. Has nothing to do with the aforementioned spec fund gambling, the net long positions cratering, etc. Try a dip in US consumer prices, buckaroo. Deflation, as led by energy costs, and food is what we see. And please, don't tell us about cigarette prices going up. They should be. Regardless of economic conditions.
Well, the certainty of global economic death is less certain today. However, taxes - as regards US subjects at least- are certainly on course to make an unavoidable appearance in the media today. A whole lot more of the same will be needed, and is thought to be in the pipeline, as US authorities will prepare to mop up the knee-deep amounts of liquidity that have been injected when this pandemic struck.
Between serious tax hikes and nearly as serious interest rate hikes, the process -it is hoped- will ensure that the adverse effects of inflation will be avoided when the pendulum swings. And, swing it will. And, while Fed targets of 2% desirable inflation levels might well be overshot by 2 or even 4 percentage points for a short while, there is no guarantee, no de facto promise (except, again from the aluminium headgear crowd) that a new Weimar era is upon us. So, save that wheelbarrow money and buy yourself a lawnmower instead.
And now, for something completely different. A picture of a naked gold bar - brought to you, courtesy of GoldBarsWorldwide.com - an excellent website at which to study the variety and beauty of the auric form. Enjoy!
Our April Playmate.
That's the roundup for the time being.
More juicy bits, later.
Bestest Wednesday, to All