Category: Market News

Authored by Adam Taggart via PeakProsperity6.com,

Central banks are killing our currency to protect the already-rich…

In our recent article It’s Time To Position For The Endgame, Chris Martenson explained how the US Federal Reserve and its sister central banks around the world have been engaged in the largest and most egregious wealth transfer in all of history — one that has been drastically exacerbated by the covid-19 pandemic.

The official response, tremendous monetary stimulus by the central banks paired with massive fiscal stimulus from national legislatures, has been pitched as “saving the system”.

Yet, in reality, it has merely served to accelerate the transfer of capital from the public into the pockets of the already-rich.

Anyone with eyes can see how the central banks have abandoned all pretense of monetary fiduciary responsibility and have simply cranked their printing presses up to “maximum”:

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The value or price of gold has risen since mid-March 2020, reflecting worries across the financial world about how much purchasing power major paper currencies hold. In light of the deep recession caused by the coronavirus pandemic, the world’s most powerful central banks have responded in two ways: with a combination of quantitative easing – essentially money printing – and lowering interest rates (to sometimes even negative rates). The combination of these two monetary actions could possibly lead to inflation. As a result, many people seek gold as a more reliable store of value than normally stable paper currencies.

The Current Basis for Gold’s Value

The price of gold has been rising – as of July 2020 it reached a seven-year high – since major central banks responded to the severe recession caused by the coronavirus pandemic with a combination of quantitative easing and low interest rates. Both initiatives of major central banks aim to support devastated businesses and alleviate widespread unemployment by stimulating economic activity.

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• Silver’s comeback from weekly lows loses steam.
• Is it a dead cat bounce amid dollar retreat?
• $26.50 barrier is a tough nut to crack for the XAG bulls.

Silver (XAU/USD) witnessed good two-way businesses so far this Wednesday, as volatility continues to play out amid fast-moving markets and dollar dynamics.

The white metal, initially, extended Tuesday’s tumble from near 7.5-year highs above $29 and dropped as low as $23.43 before staging a V-shaped reversal towards late Asia.

However, the rebound faltered, as the bears continue to guard the $26.50 level, which is the powerful confluence of the horizontal 200-hourly Simple Moving Average (HMA) and Fibonacci 50% Retracement (Fib) level of the recent correction.

Acceptance above that level, the buyers will aim for the next barrier aligned around $27.25, where the 61.8% Fib level of the same fall coincides with the bearish 50-HMA.

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US REAL YIELDS A KEY DRIVER FOR GOLD

Yesterday saw the precious metals complex come under significant selling pressure with the gold price dropping 5.7%, the largest fall since April 2013, while silver crashed 14.95%, marking its biggest plunge since October 2008. While arguably precious metals were in need of a correction given their sizeable rise, the fall coincided with a surge higher in bond yields, in particular US real yields, which have been the largest driver behind the move in the precious metals complex.

TOP IN US REAL YIELD MARKS SHORT-TERM TOP IN GOLD

WHY THE SURGE IN BOND YIELDS?

Among the key catalysts behind the push higher in US yields was the anticipation of a large supply of US Treasuries. Last week’s quarterly refunding announcement saw a record USD 112bln in borrowing for this week’s auctions. This is USD 16bln larger than the package announced last quarter and also marked an interim bottom in US 10yr yields (now 17bps higher since the record low). Alongside this, the surge in corporate issuance is another contributing factor behind the push higher in US bond yields as well as better than expected US data, most notably Friday’s US NFP report that signaled that the recovery remains intact.

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Courtesy of Market Watch By Andrea Riquier

Exchange-traded funds that track precious metals and miners slumped Tuesday in premarket trade, on track for their biggest daily decline since March, suggesting that a long run-up might be on track to reverse course. The SPDR Gold Shares ETF GLD, 0.94% was down 3.2%, while the VanEck Vectors Gold Miners ETF GDX, 2.11% lost 4.5%. The iShares Silver Trust SLV, 3.13% slid about 6%, and the Global X Silver Miners ETF SIL, 3.98% was down about 5.5%. Both precious metals GC00, 0.13%SI00, -0.17% have surged to record highs over the past several weeks, boosted by declining interest rates and geopolitical concerns.