— Bill Murray

Well if you ever wanted to know how bad a totalitarian government can get, you need an uninhibited imagination for only then can you reach reality. We already have programs where the government encourages fingerprinting infants for their own safety in the incident of a kidnapping. Well, government may try implanted chips so they know all lifeforms in their herd — yes you.  The technology discussed very quietly behind the curtain was employed in Sweden by a private firm. A company implanted chips in the hands of their employees so they could enter the office, use photocopy machines, and even pay for lunch. The next scam to fight terrorism is to claim citizens should have implants, and then you can get on planes without strip searches.

While government may see gold as the barbaric relic of the past monetary history, it still will serve as a hedge against them from the private individual side. Our biggest problem is the Hunt for Money. They are of the opinion it is not their fiscal mismanagement that is causing the instability, it is that we have money they see as their’s. This is the historical classic battle between Public and Private I have warned about. You may not be able to travel with gold any more as they close the corral and try to slaughter us for money. But history still demonstrates they will collapse. It is then when gold will provide its more historic base purpose as the hedge against government. It is not a hedge against inflation nor will it track with the increase in money supply. It is driven by confidence and the lack thereof. When the latter raises it head, then it is time for gold to rise. Keep in mind I would recommend real gold coins of bullion value common dates compared to bullion. At least then you can claim you are a coin collector. That worked before at least in the 1930s.

The insanity of NEGATIVE INTEREST RATES, instigated by Larry Summers, is based upon the stupid idea that lowering interest rates will stimulate borrowing and thus spending. The idea is that penalizing people by moving negative will FORCE them to spend their money and revitalize the economy. But what happens if they invest the money in equities and do not spend it on junk? The whole theory will meltdown.

A reader sent in a newsletter from Netherlands of a big Dutch insurance company informing all clients about the possibility of negative interest rates on savings. These people are out of their minds with NEGATIVE INTEREST RATES for they are wiping out pension funds and the elderly. Just what are they trying to do? Intentionally create revolution? Sometimes there is just no explanation for what they do other than pure stupidity, which has no limit or boundary, whereas genius certainly has its limitations.

Shanghai was following the heard (+1.5%) until the last few hours of trading when the index fell to close small down (-0.2%). Both the Nikkei and Hang Seng built on yesterdays gains despite (Japanese) economic data failing to live up to expectations (exports fell 12.9% against a market consensus of -11.3%). Worth noting also is that exports to China (one of its largest trading partners) decline 17%. The Nikkei off of its highs closed +2.35% but was up over 4% intraday.
A-side from UK’s FTSE all core European markets closed higher today with the DAX the best performer closing up 1%. UAE exchanges, Russia’s RTS and Istanbul 30 & 100 all closed 1%+ given the on-going energy rally. The big debate around BREXIT continues this evening although we were expecting news later today. As the US market comes to a close we still have no word from Mr Cameron and so we await overnight news.

 
In the US the DOW closes at the days low but it really has been a narrow range – especially considering recent moves. The DOW, S+P and NASDAQ have reversed recent gains and are closing down between 0.5 and 1%. We have heard a lot of voices claiming the US will be the next to consider rate moves as the global economy stalls but when looking at US 10yr yields (1.75%) we are a long way off zero rates. OECD has also cut its forecast for world growth by 0.3% to 3.3% for 2016 and 2017 – it remains to be seen if the FED changes course.

“The markets remain jittery” – that was given today by many for the revival of the gold price. Gold saw a hefty rally today (from $1200 up to the $1240 close) despite the talk of central bank liquidations and an extremely quiet equity market, as a safe-haven and protection play.

The US Bond market was another to reactive this evening as equities and oil reversed their gains. In the final hour of the days trading buyers have taken the US 10yr from 1.795% down to the days lows yield (high price) of 1.74%. This move has reversed yesterdays curve steepening with a 4bp curve flattening (2/10’s). 30yrs also rallied (price) in line to close 2.62% (7.5bp lower). European bonds were also better bid this evening with treasuries. 10yr Bund were last seen this evening at 0.215% closing the US/Bund 10yr spread at 152.5bp. European peripherals (obviously closed earlier) so the spreads will change upon tomorrows open. Given the uncertainty of the close peripherals will be wider.. Italy 10yr closed 1.55% (-5bp), Greece 10’s closed 10.18 (-40bp), Turkey 10yr closed 10.58% (-3bp) and Gilt 10yr closed 1.44% (-3bp).

QUESTION: Mr. Armstrong, your opening number for gold was 1199.50. Since it opened above and has rallied, is there a point above where it now must exceed to resume an uptrend?

Thanks for being there for free even

KW

ANSWER: Yes. That number is 1237.00-1238.50. If we can close above that area then gold is still in a bullish posture. Close beneath that level today and it moves into neutral position.