In Case You Missed it Week Ended October 24, 2015.
Stories from the week ended October 24, 2015.
Talk of a Federal Reserve interest rate hike was less frequent during the week ended October 24, 2015. The Fed meets next week and the “consensus” is there will be no rate hike announcement following that meeting.
Politics dominated the week’s news with Canada electing a socialist as Prime Minister, the right wing People’s Party of Switzerland (SVP)* scoring election gains Joe Biden announcing he would not run for President and Hillary Clinton testifying before Congress re her role in the attack on the U.S. Embassy in Bengazhi.
China’s dumping of U.S. Treasury Bonds seems to have limited or no impact on the treasury bond market.
Russia added 1.2 million ounces of gold to its reserves. (see chart below)
Gold and silver had an active week (see charts below)
The price of gold ended last week at $1177.70 and ended this week at $1164.00.
The price of silver ended last week at $15.82 and closed this week at $15.81.
Homebuilder sentiment soared.
*the SVP was behind last year’s failed “Save our Swiss Gold” initiative to force the Swiss National Bank to increase its gold reserves.
Here are the stories we wrote, followed or commented on.
October 17, 2015
While the price of silver has struggled in recent years, the value of numismatic silver coins have soared, along with other asset classes preferred by the wealthy like art, stocks and real estate.
1794 Silver Dollar Sells for almost $5 million
Russian news service comments on Russia’s accumulation of gold:
SputnikInt: Smart Move: Russia Buys Gold and Wins
October 18, 2015
Canadian elections not expected to produce clear winner/provide clarity.
Swiss People’s Party Scores Big in Swiss elections
European QE II?
European Central Bank President Mario Draghi hinted at extending the ECB’s quantitative easing program in December.
More QE for Europe?
October 19, 2015
Wall Street Journal analyzes the price of gold bringing out the tired argument that gold is not doing well because “it does not pay interest”.
“The precious metal doesn’t pay interest and has an easier time competing with Treasuries when rates are pinned near zero.”
Gold has NEVER paid interest and has risen during many periods when interest rates were not at zero!
Gold also does not default, threaten to default or shrink in bank vaults.
Chinese Bank to help fix silver price at LBMA
Economists: Greeks should get used to capital controls
U.S. Mint Sales Update
U.S. Mint sold 1.5K American Gold Eagles/699.5K American Silver Eagles today
MTD Sales 21.5K Gold Eagles; 2,704,500 Silver Eagles.
Last week we reported on the significant reduction in China’s U.S. Treasury holdings, through its Belgian proxy.
China’s selling of treasury bonds through Belgium has accelerated.
When the Fed ended its QE program last year under which they were buying 70-90% of the newly issued U.S. Treasury Bonds, many expected rates would rise as there would not be market demand for treasuries in sufficient quantities to cover the reduction in artificial demand of the Fed bond purchases. When the Fed ended QE, there was a masssive surge in U.S. Treasury Bond buying through Belgium that compensated for the lost demand of the Fed purchases.
A similar dynamic is occuring as China dumps a large portion of its U.S. Treasury Bonds. Many thought that if China ever started sellling off its massive treasury holdings, interest rates would rise as there would not be sufficient demand to compensate for any large scale selling of their treasuries.
Bloomberg noted this week, however, that while China has dumped a large portion of its U.S. Treasury holdings, demand has held constant as Americans are supposedly buying them.
Bloomberg: China Dumps U.S. Treasuries, Americans Buy Them
Gold and Silver at the U.S. Mint
U.S. Mint American Silver Eagle Allocation Set at 970K for Authorized Purchasers
Gold, Safe Havens and Interest Rate
The steady barrage of negative commentary from the main stream media continued today:
Reuters: Gold falls on “upbeat data” that boost interest rate hike prospects
Wall Street Journal- Gold losing role as safe haven investment
While new home starts remain about half of what they were a decade ago, home builder sentiment soared in the most recent homebuilder survey:
New home sales are less than half of what they were in 2005.
Homebuilder Sentiment at Decade High
N.Y. Fed President Speaks
NY Fed President- too early to raise interest rates
Negative Interest Rates for the U.S.
Italian news paper noted that NY Fed President Dudley remarked that negative interest rates may be instituted “if necessary”
….and negative rates if necessary
China Reports GDP
China GDP at 6.9% beats expectations of 6.7% but lowest since 2009
October 20, 2015
China calls for global currency
New Home Starts 1.206 Ex 1.15 up 6.5%
Building Permits 1.103 Exp 1.2 down 5%
QE II for Europe
ECB QE2 Coming
Canada Elects Justin Trudeau as Prime Minister
Justin Trudeau wins Canadian Prime Minister spot
CNBC covers gold positively, sort of
Russia adds 1.2 million ounces to its reserves in September
Russian gold reserves rose by 1.1 million ounces in September 2015.
October 21, 2015
U.S. Mint Sales Update
U.S. Mint sold 1K American Gold Eagles/186.5K American Silver Eagles today
MTD Sales 22.5K Gold Eagles; 2,891,000 Silver Eagles.
Gold and Silver ETFs
Gold and Silver ETFs attract investment
While there has been an uptick in gold ETF holdings recently they are off 50% since their peak in 2013.
Silver ET holdings have remained relatively constant the past few years.
Joe Biden Decides Not to Enter President Race
Joe Biden decides not to run for President
The Financial Times downplays the recent gold rally:
FT says that the gold rally will be brief
Goldman Sachs also downplays the gold rally:
Goldman Sachs- Don’t believe the gold rally
October 22, 2015
U.S. Mint Sales Update
U.S. Mint sold no American Gold Eagles/40.5K American Silver Eagles today
MTD Sales 22.5K Gold Eagles; 2,931,500 Silver Eagles.
U.S. Treasury Note Auction Postponed
US Treasury postpones 2-Year note auction due to uncertainty over debt ceiling
Another Chinese Bank joins the London gold price fixing mechanism
India and Gold
Indian festival gold demand said to be sluggish
More ECB QE2 Talk
ECB to launch QE2 in December? ECB QE ensures a relatively stronger $ -far less need to hike
Initial Jobless Claims 259K, Exp. 265K, Last 256K
October 23, 2015
We updated Shanghai Gold Exchange and Hong Kong Kilo Bar withdrawals:
Shanghai Gold Exchange Withdrawals for the week ended October 16, 2015
Shanghai Gold Exchange withdrawals are headed for a record in 2015.
IMF says Chinese Yuan May Get Reserve Currency Status
IMF says Yuan may get reserve currency status
Click here for an explanation of the International Monetary Fund’s Special Drawing Rights (SDR’s)
China Cuts Interest Rates
China cuts benchmark rate
Gold and silver immeditately soared, then inexplicably collapsed
Gold rose on news of the Chinese rate cut then collapsed.
Silver also rose then followed the same path down as gold.
Dave Kranzler of Investment Research Dynamics explains the price action.
US Manufacturing PMI 54.0, Exp. 52.7, Last 53.1
Reuters piles on the anti gold message:
Reuters on Gold says investors “eschew gold” yet gold is even with Dow this year.
Gold and the Dow have produced near identical returns in 2015.
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