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8.14.19 - Gold Tells of Stock Market's True Condition

Gold last traded at $1,527 an ounce. Silver at $17.28 an ounce.

NEWS SUMMARY: Precious metal prices shot up Wednesday on safe-haven buying and recession fears. U.S stocks fell sharply after the U.S. bond market flashed a troubling signal about the U.S. economy.

Trump just blinked, giving China a possible edge in trade war -CNBC
"In backing off on tariffs Tuesday, President Donald Trump showed just how much pain the U.S. could tolerate, key voices on Wall Street say - and China may use that to its advantage. Markets rallied on the the U.S. announcement that certain items were being removed from the new China tariff list, while tariffs on others would be delayed until December....Some investors took Tuesday's announcement as a sign that the trade war was indeed hurting consumers. The products in the group exempt from tariffs include cell phones, some apparel, and video games - all of which are crucial to the U.S. consumer market. China meanwhile, has not publicly backed off. It announced last week that it would stop buying U.S. agricultural products as its latest weapon in the tariff battle and has retaliated with its own tariffs on U.S. goods. It also set off more worries about the trade war on Friday by letting its currency weaken....'The White House is now delaying the tariffs and removing some items. Did some acronym called the SPX cause someone to blink?,' David Rosenberg, chief economist and strategist at Gluskin Sheff & Associates, said in a tweet."

gold chart Gold Tells Us the Stock Market's True Condition -Bonner/Bonner And Partners
"Savvy traders are front-running the world's central banks. The gamblers know the score - Inflate or Die. They know central banks are preparing for more rate cuts. So they buy $15 trillion worth of bonds traded at negative yields... We reach for something more solid... something we can hold on to. Since January 2000, almost everything in the financial world has been queered by central bankers. The whole bull market - 2009-2019 - for example, was false... phony... a fake-out by central banks. Yes, stock prices rose impressively in dollar terms. But in real-money terms - gold - the bull market of the last 10 years looks like an average bear market bounce. In gold terms, the Dow merely retraced half of its losses. You could buy the Dow with 40 ounces of gold in January 2000. By January 2011, the Dow 30 stocks would cost you only 8 ounces. In other words, stock investors had lost 80% of their money. Then, in the following run-up - fueled by extravagant and nutty efforts to inflate asset prices - the Dow-to-Gold ratio rose to 22. At that point, stock market investors had recovered about half of what they lost - a classic bear market bounce. The feds can fool some of the people some of the time, and they can fool stock market investors almost all the time. But they can't fool gold. Gold is real money....Over time, it faithfully records what things are worth. And right now, it's telling us that the stock market is worth less than half of what it was worth 20 years ago. We will pause to let you absorb that info-grenade."

Big Signals From Gold And Silver -Luongo/Zero Hedge
"Gold and silver are back. The global political picture is spinning out of control quickly. And the precious metals are here to tell us just how quickly....Markets hate chaos...And that's why gold and silver put in weeks to remember....Gold is the peoples' hedge against government run amok. At home we have Trump fighting with the Fed. Trump fighting with China, the EU, Venezuela, Iran, Russia while fending off domestic attacks built on a foundation made of equal parts fear, loathing and basic corruption. Every day more people pull back from this show and ask themselves, 'What should I do now?' That's part of where this energy comes from. It's been building for years. And enough people are saying to them the same thing, 'Buy gold.' And, slowly the worm turns....Chaos, once it's unleashed, is impossible to control. When politicians talk and no one listens what do you think happens next?"

If China Is A 'Currency Manipulator', Then Every Country Is -Tamny/Forbes
"President Trump, Democrats like Sen. Chuck Schumer, along with countless other politicians, economists and pundits, believe that Chinese producers have gained a trade advantage by keeping the value of their currency (the yuan) artificially low. Supposedly this makes them more competitive. So if we ignore that the yuan has actually risen a fair amount against the dollar since 2005, it's easy to see why the accusations against the Chinese don't hold any water. They don't because money is a veil. It can't change the real price of anything....Chinese producers, like all producers, require voluminous imported inputs in order to manufacture the goods they aim to sell. If the Chinese are devaluing, any presumed competitive advantage gained by them is eroded by increased production costs....Not only is it naively asserted by the uninformed that the Chinese keep the value of the yuan artificially low, it's also said that they 'manipulate' their currency. In truth, China does what just about every country in the world does: it strives to maintain a tight relationship between the yuan and the dollar. The why behind the above is simple: the dollar is the world's currency....When the U.S. devalues the dollar, the tight relationship between the world's currencies and the dollar means that a devaluation stateside is generally a global event. Applied to President Trump, presidents mostly get the dollar they want, and Trump has been busy of late communicating to the markets his desire for a weaker dollar. This has revealed itself through a soaring gold price. Unsettling about all this is that it could get worse. Talking to reporters recently about further devaluation, Trump made plain that 'I could do that in two seconds if I wanted to.' Ok, but a weak dollar is tantamount to a weakening of currencies around the world....With his talking down of the dollar President Trump is introducing corrupted, faked returns and contracts into the world that producers can't fully protect themselves from, and the markets are responding. Devalued money is bad for investors, which means it's bad for growth. Someone should alert Trump to this."

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