Business activity declined sharply in December. It signals an upcoming recession – a time that suits gold particularly well.
The economic downturn is gathering pace. The flash US PMI Composite Output Index came at 44.6 in December, down from 46.4 in November. It was the sharpest decline in business activity since May 2020, excluding the initial pandemic period, since the Great Recession. The strong decrease in new orders drove the decline in business activity, as inflation and higher interest rates dampened demand.
Both services and manufacturing are suffering. The Flash US {{ecl-106US|Services}} Business Activity Index registered 44.4 in December, compared to 46.2 in November. The fall in the services was the fastest in four months and among the quickest in the series history that started in October 2009.
Meanwhile, the Flash US {{ecl-829USManufacturing PMI}} posted 46.2 in December, down from 47.7 in November. It was the fastest downturn since the initial pandemic period in 2020, which was driven by one of the sharpest declines in new orders since the global financial crisis of 2008-9.
This issue is one of the rarest New Orleans twenties. After the first four emissions of double eagles from the New Orleans Mint (in 1850, 1851, 1852, and 1853), there were considerably fewer coins made in 1854, producing a major rarity in the Liberty double eagle series. Only 70 to 80 pieces are believed to be extant today in all grades, with most falling in the Very Fine to Extremely Fine level of preservation (Douglas Winter, Gold Coins of the New Orleans Mint, 1839–1909). Just a handful of Uncirculated survivors have been certified. The NGC population is 12 with 10 graded higher. In hand, this particular example is lighter in color, as well as considerably more lustrous and eye-appealing than seen in our images.
Listed at $74,400 in the CDN CPG and $72,500 in the NGC price guide.
Offered at $67,500
Offered at $67,500 delivered. We do business the old fashioned way, we speak with you. Give us a call for price indications and to lock trades.(800) 257.3253 9:00 AM – 5:00 PM CST M-F Private, Portable, Divisible Wealth Storage
Price is based on payment via ACH, Bank Wire Transfer or Personal Check. Major Credit Cards Accepted, add 3.5% Offer subject to availability.
Gold bullion deposits were always small at the New Orleans Mint after the San Francisco Mint opened in 1854. As a result, mintages of double eagles were modest in later years and only 6,600 Liberty twenties were struck at the famous Southern facility in 1860. There was little numismatic interest in branch mint issues in general, and double eagles in particular, in 1860. Few 19th century collectors could afford to set aside extensive date runs of twenty dollar coins for their collections, and the few who could preferred to update their holdings by purchasing a gold proof set from the Philadelphia Mint every year. Accordingly, few high-quality examples were saved by contemporary collectors and the issue is elusive in high grade today. Doug Winter notes, “Properly graded AU55 and AU58 1860-O double eagles are very rare and I know of only one or two with claims to Uncirculated.” Unfortunately, the population data for this issue has been inflated by resubmissions and crossovers. Probably no more than 85 to 95 examples survive today in all grades.
While not apparent in pour images, this example exhibits strong luster with partially reflective surfaces at the peripheries of each side. The NGC population is 13 with 37 graded higher.
Listed at $64,800 in the CDN CPG and $70,000 the NGC price guide.
Offered at $61,300 delivered. We do business the old fashioned way, we speak with you. Give us a call for price indications and to lock trades.(800) 257.3253 9:00 AM – 5:00 PM CST M-F Private, Portable, Divisible Wealth Storage
Price is based on payment via ACH, Bank Wire Transfer or Personal Check. Major Credit Cards Accepted, add 3.5% Offer subject to availability.
Source: By Bart Melek, Global Head of Commodity Strategy, TD Securities
After over a decade scraping the bottom, 12-month gold lease rates have moved distinctively higher to trend above 50 bps, as US monetary policy started to tighten aggressively.
With the Fed continuing to take rates higher in the face of sky-high inflation, real interest rates will continue to rise at an accelerated rate across much of the short end of the Treasury curve. With that, speculative long activity will wane amid higher carry and rising opportunity costs. This implies that gold yields should reach multi-decade highs into 2023.
The widespread view that gold does not offer a yield is a misconception. While income generation from gold is generally not available to most private investors, central banks can actively manage their holdings to deliver returns. This can happen in two major ways: (a) bullion reserves can be lent out to earn the gold deposit rate, or (b) the metal can be swapped for dollars at the gold offered forward rate (GOFO) or the swap rate.
While central banks are also likely to capitalise on the higher gold yield environment by making gold available to the market, they are unlikely to reduce holdings. Gold reserves offer the benefit of being highly liquid holdings, which possess both pro and counter cyclical properties, are a well-recognised store of value for many millennia and are considered strategic assets which are no one’s liability. Physical holdings are also impervious to sanctions.Gold Interest Rate Mechanics
Central banks can generate material yield from gold holdings via uncollateralised loans to a bullion bank. Given that the yellow metal is a monetary asset for central banks, it can be lent out on a term deposit like any other currency in their reserve portfolio. Most commonly, a central bank will place gold on deposit with a bullion bank, in return for a deposit rate. Maturities can vary, but 1-month, 3-month and 12-month tenures are the most common. At maturity, the gold is returned with the interest paid either in gold or fiat.
Deposit rates are derived and set independently by bullion banks. Due to gold’s inherently lower risk (eg. no one’s liability), the yellow metal tends to deliver lower returns than corporate or even government bonds.
Yield from their gold holdings can also be generated via a gold swap, or more specifically, a repurchase agreement that simulates a swap. In this instance, a central bank sells its gold to a bullion bank with the promise to buy back the gold at a later date. The central bank pays interest equivalent to the GOFO rate (forward swap rate).
In this context, the GOFO rate is akin to a US dollar loan using gold as collateral. Formally, it is defined as the rate at which market-making members of the London Bullion Market Association (LBMA) will lend gold on swap against US dollars. The central bank is then able to reinvest the funds at LIBOR (more recently SOFR) and earn the premium between the dollar rate and GOFO, which amounts to the gold lease rate.
The gold lease rate is typically an over-the-counter instrument, it can be best comprehended through the interaction of the demand and supply of borrowed gold, which will be the focus for the purpose of discussion.
Entering a forward sale agreement
Exiting the forward sale agreement
Source: World Gold CouncilDecades-High Gold Yields – A Potential Boon For Central Banks
While volatile, we project that the market environment is conducive to delivering consistently higher positive lease rates, which should be quite accretive for central banks willing to deposit metal with a bullion bank in good standing.
Six-week-old ascending trend line acts as the key support.
Silver price (XAG/USD) fade the previous day’s recovery to around $23.25 during early Monday.
In doing so, the bright metal retreats from the 61.8% Fibonacci retracement level of March-August downside and the 10-DMA level. It’s worth noting that the stated Fibonacci level is also known as the golden ratio and is considered a strong technical resistance.
Not only the metal’s pullback from the strong resistance but the looming bear cross on the MACD, as well as the nearly overbought RSI (14), also tease the Silver bears.
However, a clear downside break of the 10-DMA support near $22.00 appears necessary to convince sellers.
Following that, an upward-sloping trend line from November 03, close to $22.60 by the press time, could challenge the XAG/USD bears before directing them to the 50% Fibonacci retracement level of $22.25.
If at all, the Silver bears keep the reins past $22.25, the odds of witnessing a slump toward October’s peak of $21.25 can’t be ruled out.
On the flip side, a daily closing beyond the 61.8% Fibonacci retracement level of $23.40 could recall the Silver buyers and can poke the monthly peak surrounding $24.15.
Source: World Gold CouncilDecades-High Gold Yields – A Potential Boon For Central Banks