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Gold & Precious Metals

July FOMC Minutes and Gold


Posted by Arkadiusz Sieron

on Friday, 18 August 2017 06:22

Yesterday, the minutes of the Federal Reserve’s July meeting were released. What do they say about the Fed’s stance and what do they mean for the gold market?

How can we summarize the recent FOMC minutes? Well, the FOMC members agreed that “the labor market had continued to strengthen and that economic activity had been rising moderately so far this year”. But the most important discussion concerned three other issues.

First, several participants noted uncertainty about the future course of the fiscal policy. A few of them even suggested that “the fiscal stimulus likely would be smaller than they previously expected.” The declining odds of significant fiscal stimulus imply less need for a more hawkish Fed. Thus, this is a bad development for gold.

Second, the several FOMC members pointed out further increases in equity prices. They argued that the rising valuations, together with continued low longer-term interest rates, are equivalent to an easing of financial conditions. Hence, the Fed could be potentially more hawkish as its tightening of monetary policy has been largely offset by other factors influencing financial markets. This is good news for the yellow metal.

Last but definitely not least, the U.S. central bankers discussed the recent low readings of inflation. Although many of them saw the softness in inflation as caused by idiosyncratic factors and thus temporary, the FOMC members noted the downside risks to the inflation outlook. The key paragraph is as follows:

“Participants discussed the softness in inflation in recent months. Many participants noted that much of the recent decline in inflation had probably reflected idiosyncratic factors. Nonetheless, PCE price inflation on a 12 month basis would likely continue to be held down over the second half of the year by the effects of those factors, and the monthly readings might be depressed by possible residual seasonality in measured PCE inflation. Still, most participants indicated that they expected inflation to pick up over the next couple of years from its current low level and to stabilize around the Committee's 2 percent objective over the medium term. Many participants, however, saw some likelihood that inflation might remain below 2 percent for longer than they currently expected, and several indicated that the risks to the inflation outlook could be tilted to the downside.”

Hence, the recent minutes showed rising worries about inflation. Therefore, the U.S. dollar fell after their release (however, it rebounded today against the euro), while the shiny metal rose, as one can see in the charts below.

Chart 1: EUR/USD exchange rate over the last three days.

1 3DDIwWP

Chart 2: Gold prices over the last three days.



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Timing & trends

Marc Faber and Jim Rogers Agree


Posted by Financial Tribune

on Thursday, 17 August 2017 07:24

Screen Shot 2017-08-17 at 6.48.14 AMMassive money printing to restart the global economy after the financial crisis has blown an even bigger bubble. Ten years after the last financial crisis, is the world due another one and will it be worse?

Despite US Federal Reserve Chair Janet Yellen saying last month that another financial crisis on the scale of the crash that enveloped the world in 2007/8 was unlikely “in our lifetimes”, several respected stock market commentators believe a new disaster could happen within months rather than years, DW reported.

Jim Rogers, co-founder of the privately owned Quantum group of hedge funds, told the news website Business Insider in June that a stock market crash would happen “later this year or next”. In a separate interview with the business channel CNBC, longtime Swiss investor Marc Faber, who has been nicknamed Dr Doom, predicted some stockholders would “lose 50% of their assets” during what he described as an “avalanche” of selling.



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Energy & Commodities

The Single Biggest Bullish Catalyst For Oil


Posted by OilPrice.com

on Thursday, 17 August 2017 06:36

99fb49f10a87138e349a6cb290191410One of the key objectives for OPEC is to bring down inventories, a goal that has been elusive this year. But if the oil futures curve is anything to go by, the oil market is showing signs of tightening.

Brent futures have recently begun to exhibit a state of backwardation, which is when near-term oil futures trade at a premium to contracts dated further off into the future. This is the first time in years that backwardation has occurred, and most analysts are taking it as a sign that the oil market finally could be getting closer to rebalancing. In the past, backwardations have accompanied a rebound in the oil market after a bust, while a contango (the opposite of backwardation) tends to occur when the market crashes because of a supply glut.

There are several reasons why backwardation is bullish, which has been discussed in previous articles. A declining futures curve makes it uneconomical to store oil, so backwardation could accelerate the drawdown in inventories. It also complicates the hedging strategies of shale producers, which could hold back expansion plans. It also is a symptom of tightening near-term supplies, although, to be sure, the flip side of that argument is that it could merely be a reflection of expectations that the supply glut will reemerge at some point in the future.



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Currency

CHINA, GOLD and the US DOLLAR...


Posted by Clive P. Maund

on Thursday, 17 August 2017 06:29

This article is not politically motivated – the writer has no political agenda or affiliation – and the motivation for producing it is to enable you to understand the pivotal role that gold will play in thwarting the Empire’s imperialist ambitions, and how this means that the price of gold – and silver – will skyrocket, and sooner than many think possible. When you know that this is set to happen, and you understand the key reasons why, you will be able to position yourself to profit greatly from this profound and seismic global shift.

....continue reading HERE



Energy & Commodities

Copper New Bull Trend? A correction first makes sense...


Posted by Jack Crooks - Currency Currents

on Thursday, 17 August 2017 06:22

After what appears as a 5-wave rally; a correction lower would make sense.  But, it also appears a new bull trend may be underway. 

Screen Shot 2017-08-17 at 6.21.48 AM

....also from Jack Crooks:

Don't Bury The Buck Just Yet



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