There is an interesting story from Dow Jones this morning mentioning Venezuelan newspapers reports about a swap deal between that country's Central Bank and Goldman Sachs in which the bank will supply 1.45 million ounces, (around 45 tons) of gold up to October 2020 for cash. We are talking about a duration of about 7 years (depending on when the actual gold swaps would begin) so when averaged out it means a bit more than 6 tons per year. That is rather mediocre in my view but I do find this story noteworthy in the sense that perhaps some Central Banks are souring on gold in the present environment.
Also, Thomson Reuters GFMS, estimates that gold production will reach a record 2,920 tons this year. Their report, which draws on data from the China Gold Association, states that China has produced 253 tons of gold through the first nine months of this year, an increase of 4.9%.
Gold currently has several headwinds that it is having to contend with. Among these are the lack of inflation pressures (energy prices and food prices at the wholesale level are basically flat, according to the PPI which came out this AM.) Additionally, rising interest rates here in the US, in combination with the low, official stated rate of inflation, have produced POSITIVE REAL INTEREST RATES, always a barrier to upward progress in gold.
Until investors here in the West become concerned with inflation, gold and silver are going to struggle to maintain any rallies.
In looking at the VIX or the Complacency Index as I prefer to call it, it is once again down sharply today revealing the lack of fear among investors. Nearly every single dip lower in equities continues to be seized upon as the only fear out there is the FEAR OF MISSING FURTHER GAINS IN US STOCK MARKETS. It really is amazing watching this phenomenon. When it will finally end is anyone's guess at this point. In the meantime, one cannot fight the tape and expect to profit.
"When misguided public opinion honors what is despicable and despises what is honorable, punishes virtue and rewards vice, encourages what is harmful and discourages what is useful, applauds falsehood and smothers truth under indifference or insult, a nation turns its back on progress and can be restored only by the terrible lessons of catastrophe." … Frederic Bastiat
Evil talks about tolerance only when it’s weak. When it gains the upper hand, its vanity always requires the destruction of the good and the innocent, because the example of good and innocent lives is an ongoing witness against it. So it always has been. So it always will be. And America has no special immunity to becoming an enemy of its own founding beliefs about human freedom, human dignity, the limited power of the state, and the sovereignty of God. – Archbishop Chaput
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