GOLD PRICES UP 5.5% YTD – CONCERNS OF “CALAMITOUS SELF-HARM” TO EU FROM BREXIT AND TRUMP DOLLAR COMMENTS SUPPORT GOLD
Gold prices extended their run of gains to a seventh session and added another $12 to $1,215 an ounce yesterday. Gold prices have consolidated on those gains today and are now up 5.5% in dollar and sterling terms and 5% in euro terms year to date.
Gold bullion has risen every day except one so far in 2017, building on the 8.1 percent gain in 2016. Investors are concerned about the huge uncertainty facing us from a ‘Hard Brexit’ and the potential for political and financial contagion in the EU as we head into the new year.
Although the pound bounced higher after recent sharp falls, the FTSE 100 fell 1.5% and suffered worst day since immediate aftermath of the EU referendum.
U.K. Prime Minister Theresa May confirmed the UK will have a “Hard Brexit” and will leave the European Union’s single market while seeking a new arrangement on the customs union.
We discuss the health care plan that Trump voters really want… and it’s not the one the Republicans in Congress plan on delivering. In the second half, Max interviews Obi Egbuna, the first US Correspondent to the Herald – Zimbabwe’s National Newspaper – and Co- Executive Producer of the BattleCry For Cuba and Zimbabwe. They discuss the embargo on Cuba and the sanctions on Zimbabwe and why he’s calling for a complete end to them.
While that opportunistic hit-job certainly caught my attention, I had no idea of the horrifying professional history of the man until today. Apparently he’s had an extremely successful career being promoted for screwing up over and over again.
Political agnostics who are skeptical about Big Government “solutions,” left or right, view the current hullabaloo about the Trump presidency with some detachment. What’s remarkable to us is the extremism, not just of those bitter about Clinton’s loss, but by insiders who are threatened by the possibility Trump may upset their insider skims and scams.
As an opening observation, I don’t recall bitter Nixon supporters issuing death threats to performers at John Kennedy’s inauguration in 1961–and the 1960 election was extremely close.
I also don’t recall bitter Gore supporters issuing death threats to performers at G.W. Bush’s inauguration in 2001–even though the 2000 election came down to a few hundred votes in Florida.
Trump is a lightning rod for a spectrum of people and organizations. Let’s see if we can separate the spectrum into socio-political groups.
Bitcoin and Gold – Outlook, Volatility and Safe Haven Diversification
- Recent performance of Bitcoin and Gold
– Price outlook
– Bitcoin, China and capital flight
– Exchanges of value? - Can bitcoin rival gold as a safe haven? - ‘Bitcoin vs Gold’ or ‘bitcoin and gold’? - Importance of diversification - Conclusion: A monetary and financial revolution?
Recent performance of bitcoin and gold
What does the recent volatility and surging price of bitcoin mean for the future of the crypto-currency and does its recent outperformance mean that it may supplant gold as a safe haven currency? Can bitcoin rival gold as a safe haven? Do bitcoin’s recent price gains herald gains for gold in 2017?
2016 was a pivotal year for both the gold price and the price of bitcoin. In dollar terms, both made new gains that have not been since in the last four years. However, the fledgling digital currency greatly outperformed gold.
Gold climbed 8.6 per cent in dollars last year, outperforming both US Treasuries and the US Dollar itself. Despite ending its four year decline and gold being higher in all major currencies, sentiment in the media and among investors remains tepid towards gold as it had a poor second half to the year and failed to end the year above its July high of $1,366.
Despite my refusal to self-identify, I am comfortable stating that I’m a firm supporter of populist movements and appreciate the instrumental role they’ve played historically in free societies. The reason I like this term is because it carries very little baggage. It doesn’t mean you adhere to a specific set of policies or solutions, but that you believe above all else that the concerns of average citizens matter and must be reflected in government policy.
Populism reaches its political potential once such concerns become so acute they translate into popular movements, which in turn influence the levers of power. Populism is not a bug, but is a key feature in any democratic society. It functions as a sort of pressure relief valve for free societies. Indeed, it allows for an adjustment and recalibration of the existing order at the exact point in the cycle when it is needed most. In our current corrupt, unethical and depraved oligarchy, populism is exactly what is needed to restore some balance to society. Irrespective of what you think of Donald Trump or Bernie Sanders, both political movements were undoubtably populist in nature. This doesn’t mean that Trump will govern as populist once he is sworn into power, but there’s little doubt that the energy which propelled him to the Presidency was part of a populist wave.
Anyone seeking clarity on the energy picture a decade or two out is to be forgiven for finding a thoroughly confusing divide. On the one hand, we have reassuring projections from the U.S. Energy Information Administration (EIA) that assume current production of fossil fuels will remain steady for decades to come. Coal will continue to decline as a share of total energy consumption, and renewables will rise modestly. In other words, everything’s hunky-dory, there’s nothing to worry about.
John Hathaway of Tocqueville Funds says the physical gold market will defeat the paper gold market leading to a much higher price for the monetary metal in the coming months and years in his Tocqueville Gold Strategy Investor Letter (Fourth Quarter 2016 Investor Letter):
Gold rose 8.5% for the year while gold-mining stocks (XAU – Philadelphia Gold and Silver Index stocks) rose 75%. On an annual basis, results were highly satisfactory. However, there was considerable drama beneath the surface that left precious metals investors in a state of anxiety by year-end. Precious metals and mining shares rose sharply through August, and then spent the rest of the year giving back much of the first-half gains. The second half downtrend accelerated into early December, following the unexpected victory by Trump and a hawkish statement after the December Federal Open Market Committee (FOMC) meeting.
The question of the hour is whether the 2016 gains were merely a countertrend rally following a four-and-a-half-year decline from all-time highs in 2011, or the beginning of a new leg in the secular bull market that began in 1999, during which gold rose from less than $300/oz. to $1900 in August 2011. We judge the weight of current sentiment, mainstream media opinion, and technical analysis to be extremely bearish, comparable to year-end 2015 just prior to the dramatic gains that followed. We believe that, based on prevailing negativity, the next big change in the gold price will be substantially higher. If so, the 2016 second-half correction will have established a durable higher low from the advance that began at year-end 2015, and would be the precursor to the continuation of the secular advance that began in 2000.
We discuss whether or not the Democratic party could ever again become the party of freedom. In the second half, Max interviews James Howard Kunstler of Kunstler.com about the wheels coming off Trumptopia.
The article is lengthy, and can be confusing at times given all the moving parts, but I highly encourage you to read it. Ukrainian interference in the election can be traced to essentially two sources. First, there was the apparent collaboration between the Ukrainian embassy in Washington D.C. and a highly paid Ukrainian-American DNC consultant, Alexandra Chalupa. The second angle is far more disturbing, and involves the publicization of a so-called ledger demonstrating corruption between Paul Manafort and pro-Russian elements in Ukraine, by a parliamentarian named Serhiy Leshchenko. Bizarrely, the investigation was effectively dropped after Trump won the election, making you wonder if there was anything really there in the first place.