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03-Jul (USAGOLD) — Gold surged definitively back above the $1600 level in overseas trading, underpinned my rising expectations of further central bank easing. The ECB is widely expected to cut its refi rate by 25 bps later in the week. Additionally, the BoE is likely to boost its asset purchase target by about £50 bln. While the FOMC doesn’t meet again until the end of the month, yesterday’s terrible ISM print (though offset somewhat by today’s reported rise in May factory orders) has once again raised the likelihood of some additional Fed measures as well.

This would all be in addition to the measures agreed to at last week’s EU Summit, which essentially amounts to a form of QE (using the bailout funds to buy sovereign periphery debt) and a European version of TARP (pumping bailout funds directly into the Spanish banking system). You may recall that QE1 and TARP in the US back in 2008 effectively ended the financial crisis inspired deleveraging sell-off in gold, catapulting the yellow metal from 681.65, back above $1000 for good, and ultimately on to the current all-time high of 1920.50.

With the yellow metal convincingly above the 20- and 50-day moving averages once again, a more constructive technical tone seems to be developing. The next significant resistance level to be watching is the early-June high at 1640.72, which is bolstered by the 100-day moving average at 1639.76. With gold still in the lower half of the broad 1920.50/1522.40 range, even with the recent gains, these prices may still prove to be the bargain of the summer.

• US factory orders +0.7% in May, above market expectations of unch, vs negative revised -0.7% in Apr; inventories -0.2%.
• UK M4 Money Supply – Final (sa) -0.1% m/m in May and -4.1% y/y.
• UK CIPS Construction PMI tumbled to 48.2 in Jun, vs 54.5 in May.
• Eurozone PPI slows more than expected; -0.5% m/m in May to 2.3% y/y, vs 2.6% y/y in Apr.
• Hong Kong retail sales value 8.8% y/y in May, vs 11.4% y/y in Apr.
• RBA holds Official Cash Rate steady at 3.5%, in-line with expectations.

02-Jul (USAGOLD) — Gold retreated in overseas trading on Monday as the euro fell and the dollar rebounded amid dissipating optimism about the ‘grand bargain’ reached at last week’s EU Summit. After all, what transpired last week was just another kick of the can down the road. And while one might argue that steps toward a tighter banking union are steps toward a more integrated Europe, the measures agreed to do little to address the underlying imbalances that precipitated the crisis.

By early New York trading however, the yellow metal was on the mend and had traded briefly back above the $1600 level. With the euro still under pressure and the greenback underpinned, it would seem that the safe-haven appeal of gold is reasserting itself. The 20 and 50-day moving averages have converged just below $1600, marking this area as important resistance.

With a new record high in the eurozone unemployment rate of 11.1% and inflation moderating, the ECB is widely expected to cut its refi rate by 25 bps on Thursday. There is also a camp that thinks the ECB will only adjust the deposit rate at this meeting, discourage banks from hoarding cash and keeping some powder dry in case the ‘europhoria’ from the summit completely evaporates.

• US manufacturing ISM fell to 49.7 in Jun, well below expectations of 52.0, vs 53.5 in May; prices 37.0, vs 47.5 in May.
• US construction spending +0.9% in May, above market expectations of +0.2%, vs positive revised +0.6% in Apr.
• Eurozone unemployment rate edged to a new record high of 11.1% in May, in-line with expectations, vs 11.0% in Apr.
• Turkey Q1 GDP 3.2% y/y, vs 5.2% y/y in Q4-11.
• Switzerland retail sales improves to +6.2% y/y in May, vs upward revised +0.2% in Apr.
• Switzerland SVME Manufacturing PMI rose to 48.1 in Jun, vs 45.4 in May.
• Eurozone Markit PMI – Manufacturing was revised higher to 45.1 in Jun, beating expectations of 44.8, vs 44.8 previously.
• UK CIPS Manufacturing PMI rose to 48.6 in Jun, beating expectations of 46.1, vs 45.9 in May.
• South Korea CPI slipped to 2.2% y/y in Jun, vs 2.5% in May.
• Japan Tankan Index (Large Manufacturers) -1 in Jun, vs -4 in May; Large Non-Manufacturers index rose to 8, vs 5 in May.
• China HSBC/Markit PMI – Manufacturing slipped to 48.2 in Jun, vs 48.4 in May.

02-Jul (Reuters) — Gold prices eased on Monday after the previous session’s sharp rally, surrendering gains along with the euro and other commodities as a bounce lent to the financial markets by European Union plans to tackle the debt crisis petered out.

Gold surged 3 percent on Friday, its biggest one-day rise since June 1, after euro zone leaders agreed at a summit on measures to cut borrowing costs in Italy and Spain and shore up the region’s banks, leading to a broad financial market rally.

It has since surrendered some gains, but lingering optimism over the summit’s outcome, reflected in gains in stock markets and falling Spanish and Italian bond yields, provided support.

[source]

June 29 – CNBC – VIDEO

Link

JK Comment: Rogers makes a pretty simple recommendation here: “Buy hard assets”. A must watch take on today’s news out of Europe and subsequent move in, well, everything.

by Mohamed El-Erian
Once again, after a painful learning process and motivated by the best of intentions, European leaders gather in crisis management mode. Important decisions are taken but, again, they appear to fall short of the dramatic breakthrough required to get ahead of a crisis that eats away at the integrity of the region’s historic integration project.

…Without additional measures, it seems inevitable it will only be a matter of time until European leaders gather again for a crisis management meeting; and they will find the challenges even more onerous.

[source]

PG View: The massive ECB LTROs bought a couple weeks of relief for beleaguered European markets, the initial announcement of the €100 bln Spanish bank bailout garnered support for a single trading day, so focusing the might of the EFSF/ESM bailout facility on the problem should be good for what? A month? Less?

Gold Eases as Dollar Firms

26-Jun (USAGOLD) — Gold has retreated into the range on renewed worries after German Chancellor Merkel was quoted as saying, “I don’t see total debt liability as long as I live.” This should not have come as any surprise to anyone as Germany’s objections to shared debt is pretty well documented at this point. Nonetheless, it sets a pretty adversarial tone for the EU summit and the euro fell to match the 3-week low at 1.2442. The corresponding rise in the dollar, put the yellow metal back on the defensive.

Spanish borrowing costs rose sharply on speculation that Moody’s plans to downgrade the country to junk status. Meanwhile the subordination issue related to the Spanish banking bailout continues to be debated and pressure is on Germany to forgo the senior status of any ESM loan to Spain because of the impact it would have on private bondholders and future attempts to sell bonds.

In the UK, pubic sector net borrowing was much higher than expectations in May, due to a drop in income tax receipts. BoE Governor Mervyn King was quick to blame the worsening of the UK economy on the eurozone crisis.

Any optimism associated with the first monthly rise in the Case-Shiller home price index in 8-months was offset by misses in the Richmond Fed index and consumer confident in June. As the US economy continues to founder, and the Obama administration continues to deflect by criticizing Europe, German Finance Minister Wolfgang Schäuble struck back saying, “Herr Obama should above all deal with the reduction of the American deficit. That is higher than that in the euro zone.”

Schäuble is understandably agitated by US kibitzing. While the US maintains the ‘exorbitant privilege’ of being able to print an endless numbers of dollars, the EMU was designed to have much tighter monetary controls. Europe can’t simply print its way out of debt as the US can.

• US Consumer Confidence falls to 62.0 in Jun, below market expectations of 63.2, vs negative revised 64.4 in May.
• Richmond Fed Index tumbles to -3 in Jun, below market expectations, vs 4 in May.
• US S&P Case-Shiller home prices index for 20-cities (nsa) +1.3% in Apr to 135.8, vs 134.1 in Mar.
• Germany GfK Consumer Confidence ticked higher to 5.8 for Jul, above expectations of 5.6, vs 5.7 in Jun.
• Italy retail sales (sa) -1.6% m/m in Apr, vs negative revised -0.8% in Mar; -6.8% y/y.
• UK Public Sector Net Borrowing rose to -£15.6 bln in May, vs downward revised -£19.9 bln in Apr.
• Singapore Manufacturing Production +6.6% y/y in May, vs positive revised -0.2% in Apr.
• Hong Kong Trade Balance -HK$35.6 bln in May, vs -HK$42.9 bln in Apr.

Yesterday we launched our Summer Special, “Angels & Kings”, featuring five different hard-to-find Pre-1900 European gold coins. Coins are offered in both Circulated Extra Fine and Brilliant Uncirculated options, in very limited quantities. Product is discounted well below normal pricing, and coupled with gold’s pullback to the lower end of its current trading range, makes for a nice buying opportunity. Several products are already sold out, so call our trading desk if you have an interest.

Click here

$100,000 income: No big deal anymore

By Craig Guillot | Bankrate.com – Mon, Jun 25, 2012

According to Labor Department statistics, the average inflation rate for 2011 was the worst since 2008, with consumer prices rising 3.1 percent, compared to an average of 1.6 percent in 2010. Much of this was fueled by energy costs (up 15.2 percent for the year) and food costs (up 3.7 percent for the year). Just to keep up with standard inflation, a $100,000 salary in 1990 would have to be $172,103.29 in 2011.

“What would have cost you $100,000 in 1976 would cost you $381,000 today. That’s just the inflation, and there are so many other things that have grown very expensive,” says Mari Adam, Certified Financial Planner and president of Adam Financial Associates in Boca Raton, Fla.

[Source]

JK View: No inflation? HA! Great article in terms of putting income vs. cost of living into perspective. This article points to the disconcerting trend that if you do happen to be an earner of more than $100K, its almost impossible to make meaningful contributions to savings. And what money you do manage to save can’t earn anything sitting in a bank. The stock market remains volatile, yet range-bound. And all the while, asset allocations to gold remain overwhelmingly small in terms of overall holdings of the general population. All told, not only are the majority of us losing ground in terms of what our income will buy, we’re losing ground over time in terms of what our savings will buy. So long as this paradigm remains in place, gold needs to be considered as a savings alternative. In the example above, if $100,000 was saved in gold in 1990, it would be worth just shy of $400,000 today, far outpacing standard inflation.