Nations globally begin to re-open businesses and return to the new normal

It seems highly probable that North America, as well as globally that new cases of the virus will begin to diminish day by day, week by week. Globally the data suggests that the world has hit the peak of new cases of Covid – 19. To date there has been 5.17 million confirmed cases of individuals contracting the virus, deaths reported 1.99 million individuals that have recovered, and 336,000 souls that have died.

The sad truth is that this pandemic will most likely fester for the next couple of years, there is still much uncertainty as to whether or not we see increases as the world begins to reopen businesses, and restart their economies.

This could last until a coronavirus vaccine is developed. Currently the top infectious disease experts in the United States, including Dr Anthony Fauci, believe it is conceivable that a vaccine might be available as early as December.

That being said, it will be the economic fallout from the massive expenditures that will be the dominate component or thread that will define the economic fabric for decades.

The massive expenditures are being made on two fronts, first by the Federal Reserve’s quantitative easing endeavors, and secondly by the U.S. Treasury Department’s responsibility to fund the rescue package which was voted into law on March 27.

According to Reuters on May 12 the United States reported a record $738 billion budget deficit in April. The rescue package voted into law will required $2.3 trillion to implement. However, it quickly became apparent that more aid was needed and the estimate of the relief and rescue packages will total approximately $3 trillion.

According to an economic report published in MarketWatch, yesterday the Federal Reserve’s balance sheet has now swelled to the highest level in history, now at $7.09 trillion for the week ending on May 20.

Collectively these massive debts will have to be paid back at some point, and no matter how slowly or quickly they begin to paydown this debt, this process could last far beyond the pandemic and a global return to whatever the new normal will be.

One result that is highly probable from the economic damage caused by these expenditures is the devaluation of the dollar which would cause gold prices to spike dramatically over the next 5 to 10 years.

What – We are still in a Trade War with China?

On top of the current health crisis in pandemic, today news began to surface about heightened tensions between the United States and China. It seems as though market participants and traders are now refocusing on the trade war, resulting in an extremely bullish sentiment for the safe haven asset class, specifically gold.

Collectively the massive increase in expenditures the United States to aid in recovery, and the renewed tensions between the United States and China could ignite gold pricing over the next couple of years. Our technical studies indicate that we could see gold rise as high as $2000 by the end of this year, or by the second quarter of 2021.

By Gary Wagner

Contributing to kitco.com

David

Gold, silver pull back on some profit-taking, normal consolidation

Gold and silver prices are lower in midday U.S. dealings Thursday, on routine downside corrections following recent gains. Some profit-taking from the shorter-term futures traders was also featured today. A rebound in the U.S. dollar index today was also a negative daily element for the metals. Once again, it appears the two metals are tracking the U.S. stock indexes, which are lower at midday. June gold futures were last down $27.00 an ounce at $1,725.00. July Comex silver prices were last down $0.556 at $17.47 an ounce.

Attitudes overall are still generally upbeat late this week as governments continue to reopen businesses that had been shuttered for weeks. Some sporting events have been scheduled to resume in the coming weeks and there are rising hopes autumn sports can be played.

Also supporting more positive trader and investor sentiment is the surprising rally in crude oil prices that sees Nymex crude oil trading above $34.00 a barrel Thursday morning. The strong rally in the oil market has caught most oil market watchers by surprise, given significantly reduced demand and still-burdensome global supplies. Just a few weeks ago Nymex May crude oil futures traded as low as -$40 a barrel just before the contract expired.

Global economic data for May is starting to improve from the dire numbers seen in April. The IHS Markit composite purchasing managers index (PMI) for May in the Euro zone rose to 30.5 in May from 13.6 in April. A reading below 50.0 suggests contraction. The U.K.’s PMI for the same period came in at 28.9 from 13.8. Japan’s PMI for the same period was 27.4 versus 25.8. Australia’s composite May PMI was 36.4 versus 21.7 in April.

China has begun its most important political event of the year, the National People’s Congress, after a delay because of the Covid-19 pandemic. The meetings signal what the government is calling its victory over the outbreak that began late last year, and will outline key economic and social goals for the year. U.S.-China relations have soured the past several weeks, amid the pandemic that the U.S. is blaming on China. President Trump tweeted late Wednesday that China’s “disinformation and propaganda attack on the United States and Europe is a disgrace.” The U.S. Senate on Wednesday moved to ban Chinese companies from trading on U.S. stock exchanges.

The other important outside markets see the yield on the benchmark U.S. Treasury 10-year note is currently around 0.67%.

Technically, June gold futures saw no chart damage occur today. The bulls still have the solid overall near-term technical advantage. Gold bulls' next upside near-term price objective is to produce a close above solid technical resistance at the April high of $1,788.80. Bears' next near-term downside price objective is pushing prices below solid technical support at $1,666.20. First resistance is seen at $1,735.00 and then at today’s high of $1,751.70. First support is seen at today’s low of $1,715.30 and then at $1,700.00. Wyckoff's Market Rating: 7.5

July silver futures saw a corrective and profit-taking pullback after hitting a nearly three-month high Wednesday. The silver bulls still have the firm overall near-term technical advantage. Silver bulls’ next upside price objective is closing prices above solid technical resistance at the February high of $19.07 an ounce. The next downside price breakout objective for the bears is closing prices below solid support at $16.50. First resistance is seen at $18.00 and then at this week’s high of $18.165. Next support is seen at today’s low of $17.26 and then at $17.00. Wyckoff's Market Rating: 7.0.

July N.Y. copper closed down 295 points at 243.05 cents today. Prices closed nearer the session low today and on profit taking after hitting a two-month high early on today. The copper bulls have the overall near-term technical advantage. Prices are in a two-month-old uptrend on the daily bar chart. Copper bulls' next upside price objective is pushing and closing prices above solid technical resistance at 255.00 cents. The next downside price objective for the bears is closing prices below solid technical support at 230.00 cents. First resistance is seen at today’s high of 246.80 cents and then at 250.00 cents. First support is seen at 240.00 cents and then at 237.50 cents. Wyckoff's Market Rating: 6.5.

By Jim Wyckoff
For Kitco News

David

Fed minutes reaffirms Powell’s testimony which supports higher gold price

Fed minutes reaffirms Powell's testimony which supports higher gold price

The hard truth remains, economic stimulus continues to be needed as both the Federal Reserve through their monetary policy, and the U.S. Treasury through fiscal policies has ballooned, and more stimulus will likely will be needed.

Today the minutes from the April FOMC meeting were released. They indicated that Federal Reserve members discussed being more transparent in regards to their future direction of interest rates. The Fed minutes coupled with yesterday’s testimony by Chairman Powell and Secretary of the Treasury Stephen Mnuchin continue to be highly supportive of gold prices.

The testimony along with the report by the Congressional Oversight Commission underscored the vast amount of monetary expenditures in response to the pandemic that has rocked the world on two fronts.

First is the effect on millions of individuals who have contracted the disease. According to BBC News the total number of cases of the Covid-19 virus currently stands at 4,891,785, and the death toll is currently at 324,496. The United States has reported that the total number of infected individuals now stands at 1,529,123, of which 91,992 souls lost their lives in the United States due to the pandemic.

The second effect is the economic repercussions because of the pandemic. At the onset of the pandemic it was reported more than 90% of the United States population was under mandatory lockdown. However, across the country, on a state-by-state basis, many states are now relaxing their stay-at-home orders, and our allowing certain businesses on a limited basis to begin to reopen.

Whether or not the move to relax the stay-at-home order or the reopening of businesses will ignite a second wave of new cases in the pandemic is unknown. However regardless of when this pandemic concludes, the economic repercussions have caused the world to face the worst recession since the Great Depression of the 1930s.

According to the International Monetary Fund the global economy will contract by at least 3% this year. According to the IMF’s chief economist, Gita Gopinath, “the crisis could knock $9 trillion (£7.2 trillion) off global GDP over the next two years.”

In other words, even after the pandemic has run its course the economic implications will continue to affect economies globally for years to come.

Gold has now gained value for six of the last seven trading days. With the exception of Monday’s strong decline, gold prices have shown gains since May 11th, when gold was trading at approximately $1700 per ounce. As of 4:05 PM EST gold futures basis the most active June contract is currently trading up $5.50, and fixed at $1751.10. That is approximately a $50 gain since May 11th.

By Gary Wagner
Contributing to kitco.com

David

The Daily Telegraph has report Vitamin D immune system boost?

The Daily Telegraph has report Vitamin D immune system boost?
The Daily Telegraph has reported that “vitamin D 'triggers and arms' the immune system”. It said that researchers believe that vitamin D plays a key role in boosting the immune system.

The study looked at human T cells in the laboratory, and found that vitamin D was part of a complex process in which T cells become 'primed' and help to fight infection. While these findings suggest that people with vitamin D deficiency are more susceptible to infection or that vitamin D supplements might boost immunity, such theories need to be tested further before drawing any firm conclusions.

It is important to have enough vitamin D to maintain a healthy body. Vitamin D forms in our skin in response to sunlight. However, care should be taken to avoid burning or over-exposure. Vitamin D is also found in foods such as oily fish, eggs, fortified margarines, some breakfast cereals and vitamin supplements.

Where did the story come from?

Dr Marina Rode von Essen and colleagues from the University of Copenhagen and Bispebjerg Hospital in Denmark carried out this research. The study was funded by the Danish Medical Research Council, the Lundbeck Foundation, the Novo Nordisk Foundation, the King Christian the 10th Foundation and the A.P. Møller Foundation for the Advancement of Medical Sciences. Some of the chemicals used in the study were provided by the manufacturer Bayer Schering Pharma AG. The paper was published in the peer-reviewed scientific journal Nature Immunology.

The study was reported in The Daily Telegraph, Daily Mail, and Metro . The newspapers give reasonable coverage of this complex research. Metro includes the study’s sensible warning that sunburn should be avoided.

What kind of research was this?

This laboratory research investigated what happens to human T cells when they respond to foreign molecules (called antigens). T cells are immune-system cells that recognise antigens (for example molecules on the surfaces of viruses) and kill infected cells. In particular, the researchers looked at the 'priming' of the T cells, a process by which T cells prepare to respond to antigens. When exposed to an antigen, primed T cells are able to multiply in number faster and produce more chemicals to help promote further immune response than naive T cells. They looked at the role of a protein called phospholipase C, which is involved in sending signals within cells. They also looked at how vitamin D and the vitamin D receptor are involved in this process.

This type of laboratory study helps researchers to unravel the complex events that occur in individual cells in the immune system. A better understanding of how the immune system works could suggest ways of boosting immune responses. In this case, if vitamin D was found to play a role in the immune system, this would suggest that people with vitamin D deficiency might be more susceptible to infection or that vitamin D supplements might boost immunity. Such theories would have to be tested in human research before any firm conclusions could be drawn.

What did the research involve?

The researchers took 'naive' (unprimed by exposure to antigens) human T cells from freshly drawn blood and grew them in the laboratory. They grew some in solutions containing immune system molecules: conditions that 'primed' them for activation.

The characteristics and behaviour of the 'primed' T cells were then compared with the 'naive' T cells. This included the cells’ response to being 'restimulated' through re-exposure to the immune system molecules that originally primed their activation.

The researchers were especially interested in how much the cells produced a particular form of phospholipase C, called phospholipase C-γ1, and how this was linked to the presence of the vitamin D receptor. They also looked at what happened if they blocked the cells from responding to vitamin D. They carried out experiments to investigate how the cells switched on the production of the vitamin D receptor.

What were the basic results?

The researchers found that 'naive' T cells that had not been primed produced only a small amount of phospholipase C-γ1. However, following priming by exposure to the activator immune system molecules, the T cells began to produce far more phospholipase C-γ1. For this to occur, the T cells needed to be in the presence of vitamin D and the vitamin D receptor.

They also found that naive T cells did not produce the vitamin D receptors, and that these receptors were only produced when the T cells were primed.

How did the researchers interpret the results?

The researchers conclude that T cells produce vitamin D receptors when they are primed to respond to antigens. Vitamin D then acts via the receptor to stimulate production of phospholipase C-γ1. These changes are necessary for the T cells to be activated.

Conclusion

This research indicates that vitamin D is involved in the activation of the T cells of the immune system. It is important to note that this is a laboratory study, and it is useful in helping researchers to understand what happens in specific immune system cells when exposed to foreign entities such as bacteria or viruses. It does not tell us how variations in vitamin D levels might affect people’s susceptibility to infection, or what the ideal level of vitamin D is for supporting immune system responses to infection.

Other studies will no doubt look into these questions. However, as with other vitamins, it is clearly important to have sufficient vitamin D to maintain a healthy body. Vitamin D forms in our skin in response to sunlight, but care should still be taken to avoid burning or over-exposure. Vitamin D is also found in foods such as oily fish, eggs, fortified margarines, some breakfast cereals and vitamin supplements.

Analysis by Bazian

David

Peter Schiff: Fed will âwipe out’ many investors; gold to return as reserve currency

Peter Schiff: Fed will ‘wipe out’ many investors; gold to return as reserve currency

The Federal Reserve is going to create an inflationary environment that is like a tax that will hurt society on all levels, according to Peter Schiff, chief executive officer of Euro Pacific Capital.

“I think most people are going to get wiped out by the inflation tax. All of this government is not free. This incredible increase in the size of government is going to cost somebody. Somebody has to pay the bill for all the bailouts and all the stimulus, and if we’re not raising taxes, then how are we doing it?” Schiff told Kitco News.

This “tax” is also going to devalue fiat currencies, and investors should be holding onto physical gold and silver, he continued.

“So what you’ve got to do to mitigate the damage, your share of that inflation tax, is before the dollar collapses, get rid of your dollars and use them to accumulate real money, gold and silver or to buy quality income-producing assets in other countries,” he said.

As the dollar loses value at an ever faster pace, gold will eventually supplant it as the de facto global reserve currency, he noted.

Schiff also recommends diversifying assets geographically.

“For more conservative investors, in addition to having an allocation of physical gold and silver, you should invest in countries that have much sounder economies, that aren’t destroying their currency to the degree that we are so that you’re able to get a more reliable income stream, and a lot of these dividend-paying stocks in some of the good markets around the world have come down due to the COVID-19 related crisis,” he said.

As well, gold stocks have the best return-to-risk profile, he said.

“I really think that that’s where the speculative money should be at this point, in these mining stocks and junior mining stocks, in particular where you have the most upside if you know what you’re doing,” he said.

However, U.S. stocks are still overvalued, according to Schiff.

On stock markets rallying this week following news that Moderna has released positive results from its phase one COVID-19 vaccine trials, Schiff noted that what investors really responded to was continuous monetary stimulus from the Federal Reserve.

“I think what’s really driving the market is the Fed. You had [Fed Chair Jerome] Powell on 60 Minutes [Sunday] basically committing to print an unlimited quantity of money and urging Congress to borrow and spend as much money as they want and that the Fed is standing ready to monetize an infinite amount of government spending,” he said.

Stimulus on this level will only destroy the economy further and devalue the dollar, he added.

“There is a limit to how much money the Fed can print, and that is when it collapses in value. What’s the point of printing money that doesn’t buy anything? I think we’re going to find out pretty soon,” he said.

The huge amount of inflation that the Fed is creating is going to hurt the working class severely, Schiff said.

“The amount of inflation that the Fed is going to be creating in the weeks and months ahead is actually going to be greater than the amount that it’s already created. This is never a good thing. Inflation is a tax, and it’s the most vicious tax because it hits the most vulnerable, it hits the lower class, the working poor, people who have savings, it destroys the value of a lifetime of savings. It destroys the value of wages and salaries that people earn,” he said.

By Kitco News
For Kitco News

David

Every time this happens, gold stocks explode – Frank Holmes

Major bull rallies in gold stocks have been preceded by generalist investors rushing back into the sector, and this is exactly what is happening right now, said Frank Holmes, CEO of U.S. Global Investors.

April saw historical highs in gold-backed ETF inflows, as well, record number of new online trading accounts have been opened during the last two months.

“This past quarter has been a game changer. We now have gold rally for three years, and we have many big gold producers promoting and telling the story, like Newmont and Barrick, that they have free cash flow,” Holmes told Kitco News.

Gold stocks have outperformed the broad equities index, with the VanEck Vectors Gold Miners ETF (GDX) up 23% year-to-date, while the S&P 500 has lagged with a -10% loss over the same period.

Holmes attributes this performance disparity on gold miners’ superior cash flows.

“We’re going to see falling cash flow, and no free cash flow [for the broad stock market]. Gold equities, on the other hand, look beautiful,” he said.

Holmes added that he likes royalty streaming gold companies.

“This past quarter, Franco Nevada, Wheaton Precious Metals, and Royal Gold, [posted] $300 million in the quarter for free cash flow. That’s really significant, because the S&P, in free cash flow, collapsed,” he said.

By David Lin

For Kitco News

David

Supply crunch pushing silver price to 3-month high

All eyes are on silver as prices are starting the week with some robust follow-through buying after Friday's breakout session.

In a comment to Kitco News, Phillip Streible, chief market strategist at Blue Line Futures, said that a perfect storm of increased investment demand and falling supply is expected to continue to push silver prices higher.

May silver prices last traded at $17.51 an ounce, up 2.5% on the day. Sunday's rally follows silver's 5.5% jump on Friday; silver futures are trading at their highest level since late February. The precious metal has now recovered all of its loss from the March selloff.

Streible noted that the silver's Friday rally picked up new momentum after the release of the Federal Reserve's industrial production data for April. The report showed that industrial production dropped 11.2% last month, the most significant drop in the report's century-old history.

One of the report's components showed that mining output, including gold and silver production, dropped 11.2%, the sharpest monthly decline in history.

"Nobody really talks about the mining numbers in this report, but someone was obviously watching it," said Streible. "The data points to tightening physical supply. Silver prices are going higher because the market is getting a lift from all different angles."

With silver prices back over $17 an ounce ounces, Ole Hansen, head of commodity strategy at Saxo Bank, said that the next critical resistance level to watch is $17.50 an ounce.

He added that silver has room to rally as speculative interest in the precious metal has been declining since early March as investors shed their bullish silver bets as the COVID-19 pandemic was impacting the global economy.

"We have to contemplate the risk of a second wave of the virus wave in the second-half of the year, together with a developing Trump versus China blame game," said Hansen. "With these developments in mind, we see the risk of renewed stock market weakness, a stronger dollar and Japanese yen on safe-haven demand… precious metals look set to rally further on safe-haven and diversification demand."

Although speculative investors have been reluctant to hold silver, Hansen said that investor demand in silver-backed exchange-traded products remains robust.

"Apart from a small dip in March, ETF investors have been continued buyers of silver ETFs since January. Total holdings have reached a record 98 million ounces," he said.

By Neils Christensen

For Kitco News

David

Eating too much salt seems to impair body’s ability to fight bacteria

Eating too much salt seems to impair body's ability to fight bacteria

Eating too much salt may impair the body’s ability to fight bacterial infections, according to studies in mice and in 10 human volunteers.

Christian Kurts at the University Hospital of Bonn in Germany and his team first showed that mice given a high salt diet were less able to fight kidney infections caused by E. coli and body-wide infections caused by Listeria monocytogenes, a common cause of food poisoning.

“The bacteria caused more damage before the immune system got rid them,” says Kurts

Next, the team gave 10 healthy women and men who were 20 to 50 years old an extra 6 grams of salt a day on top of their normal diet, in the form of three tablets a day. After a week, some of their immune cells, called neutrophils, had a greatly impaired ability to engulf and kill bacteria compared with the same tests done on each individual before they took extra salt.

The team didn’t examine the effect of high salt intake on the body’s ability to fight viral infections.

The World Health Organization recommends that people eat no more than 5 grams of salt a day to avoid high blood pressure, which can cause strokes and heart disease. In the UK, people eat 8 grams on average, suggesting many consume as much or more than the volunteers in the study.

Brian Jackson/Alamy

Boost your Immune system

David

The biggest bad news out there’: Gold eyes U.S.-China trade tensions next week

The biggest bad news out there': Gold eyes U.S.-China trade tensions next week

Gold prices are back in the rally mode Friday, rising above $1,750 an ounce, with analysts looking for more gains next week as U.S.-China trade tensions ramp up and the economic data worsens.

The rise in U.S.-China tensions is "the biggest bad news out there," and gold tends to rally on that, said Gainesville Coins precious metals expert Everett Millman.

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Trade tensions surged to new levels at the end of the week after U.S. President Donald Trump said on Thursday that he had no interest in speaking to Chinese President Xi Jinping while adding that he could potentially cut ties completely with China. Trump has been calling out China, stating that he is disappointed with its failure to contain coronavirus.

Tensions ramped up further on Friday when the Trump administration announced that it is moving to block shipments of semiconductors to Huawei Technologies from global chipmakers. In response, China said it was ready to place U.S. companies on an "unreliable entity list," which could include Apple, Cisco Systems, and Qualcomm. China also said it could suspend purchases of Boeing Co airplanes.

Going forward, the U.S.-China issue will once again become a big deal, Millman told Kitco News. "I don't see those tensions improving. If anything, the longer we have any kind of problem with coronavirus, the more it will ramp up that rhetoric between the U.S. and China," he said.

For gold, the next step is to reach the $1,800 an ounce level, which is now just a question of time, said FXTM market analyst Han Tan.

"The coming months remain paved with downside risks and the threat of chilling U.S.-China relations amid this global pandemic will only further inhibit global risk appetite," Tan noted on Friday. "Gold's path of least resistance remains to the upside, so hitting the $1,800 handle is just a matter of time. A host of potential positive catalysts for Bullion remain in the offing, including … a spike in US-China trade tensions."

The $1,800 target is even possible next week, if we see further outflows from the U.S. equity funds, said Blue Line Futures chief market strategist Phillip Streible. "Gold looks like it is starting to gain some momentum. We should continue to see investors pile in," Streible said.

At the time of writing, June Comex gold futures were trading at $1,756.90, up 2.5% on the week.

Anna Golubova
Kitco NEWS

David

$9,000 gold and triple-digit silver prices will come, but do this first – Midas Touch Consulting

vid

Long-term, investors can expect gold prices to climb multiple times its current value, and silver prices to rally into the triple digits, but they should not count on the precious metals to break out in the short-term.

In , a correction is due and investors should take this as a buying opportunity, said Florian Grummes, managing director of Midas Touch Consulting

“It looks like [gold will get] a consolidation on the higher levels, with one nasty, little pullback where all the weak hands are shaken off and then the next wave up towards $1,800 and then the all-time highs of $1,920,” Grummes told Kitco News. “Once gold sustainability takes out the all-time high of $1,920, it can run easily a few hundred dollars further.”

In the next five to ten years, gold prices could climb to $8,000 to $9,000, with silver following suit in this bull-run, due to the similar macroeconomic environment that we currently share with that of the 1970’s, when gold prices climbed several hundred percentage points, Grummes noted.

“If you look at it from a very long-term perspective, and you can only compare it to the bull market of the 1970’s. Once the bull market started again in 1976, it went up for four years and it went up basically from $100 to $890, so nearly nine-fold. If you use the same ratio to today’s numbers, we would end up having gold, at some point in the future, $8,000, $9,000 gold, but we’re talking five to 10 years, I think,” he said.

What makes our situation similar to the economic landscape of the 1970’s is the potential for stagflation to set in, Grummes noted.

Silver’s outlook is equally positive on a long-term basis, and investors should not worry too much about the entry point if their time horizon is sufficiently long.

“Silver has huge upside potential. It’s extremely undervalued in comparison to gold. It’s a very cheap inflation hedge. I think at some point over the next few years silver will run up against the $50 level again,” he said. “There will be another breakthrough over the next two to five years and once that happens, I think silver is off to three-digit numbers.”

On bitcoin, Grummes said that the largest cryptocurrency is like the digital version of gold in its hedge properties, and should be owned in the same portfolio as the yellow metal.

By Kitco News

David