(Bloomberg) Is Gold About to Become the Next Safe Haven Trade? “Todd Horwitz, founder at Averagejoeoptions.com, and Bloomberg’s
Scarlet Fu discuss the recent rebound in the price of gold in today’s Futures
In Focus on In The Loop: “Gold is in a real sweet spot here. . . Here is a
great spot to start buying gold again.” — Todd Horwitz”
Note: Obviously there is nothing new about gold being a
safe-haven trade, but given the macroeconomic and geopolitical risks
presently evident, demand for such a haven could explode with little or no
warning.
p style=”text-align: justify;”>Charles
Hugh-Smith (via ZeroHedge) If Everything’s So Rosy, Why Is This Happening? “The financial news is astonishingly rosy: record trade surpluses
in China, positive surprises in Europe, the best run of new jobs added to the
U.S. economy since the go-go 1990s, and the gift that keeps on giving to
consumers everywhere, low oil prices. So if everything is so
fantastic, why are new orders cratering? New orders are a snapshot of future
demand, as opposed to current retail sales or orders that have been
delivered.”
Note: Later in the week we saw retail sales drop for a third consecutive
month, consumer sentiment drop more than expected and a number of analysts
negatively revised their Q1 GDP expectations. Everything doesn’t seem very
“rosy” at all.
Michael J. Kosares (USAGOLD) Will
the Shanghai Fix fix the gold market? “That is not to say though
that the new gold market mechanisms will fall short of being transformative.
To the contrary, I would counsel to expect major changes in 2015. At the top
of the list I would put the likelihood of Shanghai forcing London to honor
its pricing by delivering real metal into the China market.”
Note: While a battle between east and west for control of the gold market
would certainly be exciting, in Mike’s view, China “seeks synthesis not
antithesis.” Mike goes on to say that “Time is on China’s side and on the
side of the gold accumulator who owns his or her metal outright and can
afford to sit back and watch the show,” however it plays out.
Dhara Ranasinghe (CNBC) Rate
cuts: 24 so far and there’s more to come “An interest rate cut
from South Korea Thursday takes the number of central banks that have stepped
up their monetary easing this year to 24 and that number is likely to rise,
analysts say.”
Note: The winds of global monetary policy are pretty clearly favoring the
doves, and yet many remain confident that the Fed is going to sail into that
headwind. I remain skeptical.
James Rickards (Daily Reckoning) Three
Catalysts for the Price of Gold “The total growth in global gold
supplies is about 1.5% per year and has been slowing lately. Compare this to
the 400% growth in base money engineered by the Federal Reserve since 2008,
and it’s easy to see how a lot more money chasing a small amount of gold will
cause the dollar price of gold to rise over time.”
Note: The supply differential in and of itself is compelling enough, but
Rickards lays out the reasons why “gold does well in inflation, extreme
deflation, panic, and an environment of negative real rates.”
Nathan Lewis (via USAGOLD) Greece’s
monetary options include a gold drachma “[E]conomist Nathan
Lewis (Gold: The Once and Future Money) outlines Greece’s currency options
with a clarity I have not seen elsewhere. After running through a number of
possibilities, he concludes by suggesting a drachma “linked to gold” – a new
and innovative approach but one firmly rooted in Greece’s ancient commercial
history.”
Note: A fascinating article with an introduction from our own Mike
Kosares.
