Real time market

Largest Trade War in Economic History Begins - CNBC

Largest Trade War in Economic History Begins - CNBC

Release Date:  Friday, July 6, 2018

Gold and Silver Prices

Despite a modest drop in prices on Friday, gold prices remained in positive territory this week.

"Gold slipped on Friday ahead of key U.S. payrolls data and as global equities stood firm, though the precious metal was on course for slight gains for the week as the dollar drifts lower amid escalating Sino-U.S. trade tensions … 'It's mainly the dollar that's supporting gold this week, the dollar has stopped going up and there's hesitation before
the jobs report," said Fawad Razaqzada, an analyst at … Meanwhile, U.S. central bankers discussed whether recession lurked around the corner and expressed concerns global trade tensions could hit an economy that by most measures looked strong …." (Gold slips, but on track for gains this week on softer dollar," Reuters, 7/6/18.")

Gold ended the week up $2.10, closing at $1254.50. Silver ended the week down $0.08, closing at $16.01.

Largest Trade War in Economic History Begins - CNBC

The United States and China have commenced what is described as the "biggest trade war in economic history."

CNBC reports, "U.S. tariffs on $34 billion worth of Chinese goods kicked in on Friday, escalating a war of words between the world's two largest economies into a full-blown trade conflict … Beijing called it the 'biggest trade war in economic history.'

"It's unlikely to stop there. In fact, there will be probably be 'escalation upon escalation,' warned Geoff Raby, Australia's former ambassador to China. 'China has made it absolutely clear. It cannot show weakness in the face of the United States. ... So I think this comes to some sort of end once there's been a lot of damage done and people start to come to their senses…'

"Matthew Goodman, an Asian economics specialist at the Center for Strategic and International Studies, said that the White House hasn't considered the interest of American companies. 'There's a long track record of U.S. companies and others in the Chinese markets, so that's a real worry here …'

"China claimed Thursday that the United States is attacking the world with its threatened tariffs. 'U.S. measures are essentially attacking global supply and value chains. To put it simply, the U.S. is opening fire on the entire world, including itself,' said Chinese Commerce Ministry spokesman Gao Feng. According to the DBS note, South Korea, Malaysia, Taiwan and Singapore are the economies most at risk in Asia based on trade openness and exposure to supply chains. There is expected to be a drag on growth in 2018, and it could double in 2019." ("Trade War begins: US and China exchange $34 billion in tariffs," CNBC, 7/6/18.)

Current Gold Prices "Extremely Attractive" to Investors - Incrementum AG

Ronald-Peter Stoeferle, the fund manager at asset-management firm Incrementum AG, believes gold has reached its lows for the year, making the yellow metal "extremely attractive" for investors.

The fund manager told Kitco News "from a risk-reward perspective, gold looks extremely attractive. He added that he sees several factors that will lead to higher prices by the end of the year. 'I think we have seen the lows in gold for the year…Mark my words: The lows in gold is in!'

"The most significant factor driving gold prices higher is falling momentum in the U.S. dollar…Stoeferle added that growing global economic uncertainty because of rising trade tensions could even force the U.S. central bank to reverse course and loosen monetary policy…

"The second factor to drive gold prices higher in the second half of the year is growing volatility in developing and emerging markets … at current prices, gold is an attractive safe-haven asset. 'Everything right now is going into equities and the market looks strong, but below the surface, cracks are starting to show,' he said. 'I think the technical picture of the stock market doesn't look very healthy, especially in emerging markets. Emerging markets are a mess right now….'" ("Now Is The Time To Buy Gold As Negative Sentiment Is Exhausted - Incrementum AG," Kitco News, 7/5/18.)

Global Debt will Lead to "Weimar II" Inflation - von Greyerz

Egon von Greyerz, Founder and Managing Partner of Matterhorn Asset Management, is warning investors that global debt will lead to massive inflation similar to what Germany experienced under the Weimar regime.

"Can investors really be that wrong? Global risk is today greater than ever in history and at the same time the great majority of investors show no fear at all. There are so many potential catalysts that could shake the world economy out of its sweet dreams into a living nightmare that it is impossible to forecast where the trigger will come from. It could be a debt collapse in Japan, China, USA, Eurozone or emerging markets. Or it could be a currency collapse in any of those regions. Or it could be a stock market collapse …

"[A]s tax revenues decline and spending increases, I would not be surprised to see $28 trillion debt in 2021. That would put the US on course for a $40 trillion debt in 2025. That would mean a doubling of the debt from 2017 which is in line with the historical trend of a 100% increase every 8 years … So the US is on the cusp of a deficit and debt explosion of catastrophic proportions. And this forecast does not include major problems in the financial system, leading to additional money printing as well as a collapsing dollar …

"Another potential catalyst could be one of the world's biggest banks which has a balance sheet and share price which look extremely ominous. Deutsche Bank (DB) has fallen 90% from 2007. The chart looks very similar to Lehman in 2008 just before it collapsed … Since DB is virtually part of the establishment, the German government would do everything within its powers to save the bank. But how can they save a bank with a balance sheet of 50% of German GDP and a derivative portfolio of 14x GDP? Well they can't but they will probably try. And the consequences are very clear: Welcome to Weimar II with unlimited money printing.

"But no one must think that DB is the only bank in trouble. JP Morgan for example has $50 trillion in derivatives, 2.5x US GDP. And the Swiss banking system is 5x Swiss GDP, just to mention a few. The fractional banking system is soon coming to an end with the most massive bang. Holding physical gold seems like an excellent idea!" ("US Debt Explosion And Weimar II," Gold-Eagle News, 7/5/18.)

Gold to $1325 by Year End - Saxo Bank

Saxo Bank The head of commodity research for Saxo Bank, Ole Hansen, issued his September forecast calling for gold prices to close the year at $1325 per ounce.

""The deteriorating outlook during June has challenged but not destroyed our positive outlook for gold," he said … Nonetheless, Hansen put his end of year gold price at $1,325/oz…."  ("Saxo bullish on gold despite June lows," Mining Journal, 7/5/18.)