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Gold and Silver Prices
Gold had another solid week and closed slightly lower on Friday following a stronger than expected jobs report which caused the dollar to gain.
"The dollar index gained after data showed U.S. job growth rebounded sharply in October and wages recorded their largest annual gain in 9-1/2 years.
"'Strong data helped the dollar, which put some pressure on gold... the Fed will continue to hike interest rates,' said Tai Wong, head of metals trading at BMO.
"The U.S. Federal Reserve has raised interest rates three times this year and is widely expected to raise rates again in December. Gold is sensitive to higher U.S. interest rates, which increase the opportunity cost of holding non-yielding bullion, while boosting the dollar, in which it is priced.
"Attention is now turning to the U.S. congressional elections on Nov. 6, which will determine whether the Republican or Democratic party controls Congress, with some predicting increased market volatility on the outcome." ("Gold dips as US dollar gains on solid jobs data," Reuters, CNBC, 11/02/18.)
Gold ended the week down $0.70, closing at $1,232.10. Silver ended the week up $0.07, closing at $14.72.
Gold industry sees prices rising to $1,532/oz over 12 months - Hobson
Gold is forecasted to go much higher in the next year.
"The price of gold is expected to rise to $1,532 an ounce by October next year, delegates to the London Bullion Market Association's annual gathering predicted on Tuesday... also predicted higher prices in a year's time for silver, platinum and palladium.
"Spot gold has had a difficult few months, falling from a high of $1,366.07 in January to as low as $1,159.96 in August as the dollar strengthened and the U.S. Federal Reserve pushed ahead with interest rate rises.
"But it has since clawed back to around $1,225 an ounce as volatility on global stock markets revived interest in bullion as a safe place to store assets.
"A stronger dollar hurts gold prices by making it more expensive for buyers with other currencies. Higher interest rates make gold, which offers no yield, less attractive.
"The poll also showed that delegates expect silver prices to rise to $15 an ounce by the end of October 2019 from around $14.50 on Tuesday. Platinum prices were forecast to increase to $1,010 an ounce over the next year from around $835 on Tuesday and palladium was expected to rise to $1,195 from around $1,075.
"Analysts and traders polled by Reuters this month said they expected gold prices to average $1,300 an ounce in 2019, silver to average $16.40, platinum to average $875 and palladium to average $1,025." ("Gold industry sees prices rising to $1,532/oz over 12 months," Peter Hobson, Reuters, 10/30/18.)
Bolton Calls National Debt 'Economic Threat' to U.S. - Olorunnipa
National security adviser believes the budget deficit problem is discretionary spending.
"U.S. National Security Adviser John Bolton called the national debt a 'threat to the society' that requires significant cuts to the government's discretionary spending.
"Bolton, speaking Wednesday at an event hosted by the Alexander Hamilton Society in Washington, said he expects U.S. defense spending 'to flatten out' in the near term. He said he didn't anticipate major cuts to entitlements such as Medicare and Social Security.
"'It is a fact that when your national debt gets to the level ours is, that it constitutes an economic threat to the society,' Bolton said. "And that kind of threat ultimately has a national security consequence for it.'
"Discretionary spending is set by Congress each year, while spending on entitlements is twice as large and more automatic, generally dictated by demand for the services. Many budget experts say entitlement spending presents a larger long-term threat to the U.S. economy because of both its magnitude and increasing demand from an aging population.
"In the near term, the budget deficit problem is in the discretionary spending," Bolton said. "The entitlements come in a few years and that problem's going to have to be addressed. But right now, you can have significant impact on both the deficit and the national debt by cutting government spending on the discretionary programs."
"In President Donald Trump's first full fiscal year, the U.S. budget deficit grew to $779 billion, the highest level since 2012, despite an economy that Trump budget director Mick Mulvaney last week called a "Goldilocks moment" combining low unemployment and contained price growth. The deficit growth has been fueled in part by tax cuts and higher government spending since Trump took office, according to the Congressional Budget Office.
"The non-partisan Congressional Budget Office forecasts the budget gap will reach $973 billion in fiscal 2019 and exceed $1 trillion the next year. Goldman Sachs Group Inc. predicts the deficit will reach $1 trillion and $1.125 trillion respectively." ("Bolton Calls National Debt 'Economic Threat' to U.S.," Toluse Olorunnipa, Bloomberg, 10/31/18.)
Gold buying by central banks hits its highest level in almost three years - Reid
Central banks gold purchase has been at its highest since 2015.
"Central banks around the world have upped their spending on gold to the highest level in almost three years, according to the World Gold Council (WGC).
"More than 148 metric tons of gold were bought by the national banks in the three months to the end of September, a rise of 22 percent on the same period last year. Using the current spot price of $1,223 per troy ounce, the gold purchases by the banks added up to a $5.82 billion spending splurge on the precious metal.
"Russia's central bank led the buying, purchasing more than 92 tons of gold. This marked the country's biggest quarterly net purchase on records that stretch back to 1993.
"In May this year, the Russian central bank's First Deputy Governor Dmitry Tulin told lawmakers in the lower house of parliament that gold was 'a 100 percent guarantee from legal and political risks.'
"The WGC, a non-profit association of the world's leading gold producers, said other big buyers of gold during the third quarter were the central banks of Turkey (18.5 tons), Kazakhstan (13.4 tons) and India (13.7 tons).
"In Europe, the national banks of Poland and Hungary also ramped up gold purchases. According to the WGC, the latter has said the buying is to enhance the long-term stability of its reserves.
"Gold is often considered as a hedge against any fall in value of the U.S. dollar. During the third quarter, the dollar index ticked up by around 0.7 percent.
"Despite the appetite from several central banks, the price of gold fell around 4 percent during the period, slipping below $1,200 per troy ounce to hit its lowest level since January 2017. Bullion has since seen a positive month in October, rising by around 2 percent.
"The overall net effect was that gold demand in the third quarter was 964.3 tons, 6.2 tons higher on a year-on-year basis." ("Gold buying by central banks hits its highest level in almost three years," David Reid, CNBC, 11/1/18.)
BlackRock's Larry Fink warns a 'full-fledged' US-China trade war could happen if things don't change - Imbert
CEO of the largest asset manager in the world fears a full-blown trade war between US and China.
"The trade conflict between the United States and China could get much worse if things don't change, BlackRock's Larry Fink said Thursday.
"'I was in China a few weeks ago, and I do believe if the path remains the same in the next few weeks, we're going to have a full-fledged trade war,' the CEO of the largest asset manager in the world said at the DealBook conference in New York. 'Let's hope I'm wrong.'
"The U.S. has slapped tariffs on billions of dollars worth of Chinese imports. China has retaliated with its own levies on U.S. goods. This skirmish has been going on for most of 2018 and has investors around the globe fearing tougher trade conditions could diminish corporate profits.
"'China, a very strong, very proud nation, I think they're going to stand firm. Privately, I think they will negotiate, but I don't think that has worked for them at the moment,' Fink said. 'We had similar problems in our negotiations with Mexico and Canada. That was stalled and stalled and stalled until we came to a resolution.'
"Fink's comments come ahead of an expected meeting between President Donald Trump and Chinese President Xi Jinping at the Nov. 30-Dec. 1 G-20 summit of world leaders in Buenos Aires..." ("BlackRock's Larry Fink warns a 'full fledged' US-China trade war could happen if things don't change," Fred Imbert, CNBC, 11/01/18.)
'Godfather' of chart analysis says damage done to the stock market is 'much, much worse' than anyone is talking about - Decambre
The stock market is reminding prominent market technician of the 1987 crash.
"Prominent market technician Ralph Acampora says the stock market is in bad shape and it's worse than many on Wall Street investors appreciate.
"A pioneer in the field of chart-based trading, Acampora said the technical damage that has resulted in the Dow Jones Industrial Average DJIA, +1.06% and the S&P 500 index SPX, +1.06% erasing all of their gains for 2018, and the Nasdaq Composite Index COMP, +1.75% falling into correction territory-usually characterized as a decline of at least 10% from a recent peak-will take months to repair.
"'From a technical perspective, the damage that has been done technically to the stock market is much, much worse than people are talking about,' he told MarketWatch in a phone interview on Tuesday.
"Acampora cited a break down of so-called FANG stocks-a quartet of technology and internet-related companies that include Facebook Inc. FB, -1.29%Amazon.com Inc. AMZN, -1.93% Netflix Inc. NFLX, -2.14% and Google-parent Alphabet Inc. GOOGL, -0.92% -as the clearest sign that the worm has turned on the bull market.
"On Monday, those names, which have been significant catalysts for market sentiment and price moves, shed a combined $120 billion in market value. On top of that, Amazon became the most recent of that group to close in bear-market territory, defined as drop of at least 20% from a recent peak.
"'I've been a bull for a long, long time and like everyone, I was waiting for a correction but this is something different,' said Acampora, who many chartists refer to as the "godfather" of technical analysis. 'All the leadership is getting crushed,' he said.
"Acampora said he believed that the entire stock market itself would go into a bear market and said the current dynamic in the market was eerily similar to the stock-market crash of 1987, when the Dow slid a historic 22.6% in a single day on Oct. 19 of that year.
"'Honestly, I don't see the low being put in yet and I think we're going to go into a bear market,' he said. He speculates that the market may not be healed until around the first quarter of 2019.
"When reached on the phone, the market technician said he was painting his barn to avoid 'the agony of watching' the market's gyrations. 'I don't want to watch the market get sloppy again, so I figured that I'm better off painting.'
"Acampora isn't alone in his bearish view. Michael Wilson, Morgan Stanley's chief U.S. equity strategist, said he believes the market is undergoing a 'rolling bear market.' He was among the first to spot fractures in the market's uptrend." ("'Godfather' of chart analysis says damage done to the stock market is 'much, much worse' than anyone is talking about," Mark Decambre, Market Watch, 11/1/18.)