I’m buying gold on the dip
If you have been looking for the moment to add to your exposure to gold, I think this 5% dip is a good opportunity.
GLD
Central banks are buying gold–the gold rally has room to run
Foreign central bank holdings of the precious metal have topped holdings of U.S. Treasurys for the first time since 1996, according to Bloomberg data
Gold continues to climb on Powell Fed jitters and speculation of early interest rare cuts
Gold futures rallied Monday for their best gains in more than a month and silver surged to its highest settlement in nearly 14 years, boosted by a solidly lower U.S. dollar index and a decline in U.S. Treasury yields to start the trading week. The rally in gold continued on Tuesday with gold on the COMEX closing at $3445.6 an ounce.
Wall Street sees gold going higher on rising buying from global central banks
Today Goldman Sachs Group raised its year-end target for gold to $3,100 an ounce. Central banks are buying gold at a faster than expected pace and flows into gold ETFs are accelerating.
Please watch my new YouTube video Hot Money moves: China buys gold
Today’s Hot Money Moves NOW is China Buys More Gold. Gold seems like a good asset to own right now but it’s also trading at record highs. So while gold is safe, especially if inflation goes up, how much higher do you expect gold to go? One thing to look at it is who is emerging as a buyer. Central banks have been buying gold to hedge risks and diversify, which has contributed to the record highs. Recently, the Chinese government announced that 10 big Chinese insurance companies will now be allowed to put up to 1% of their portfolios into gold. This hasn’t been allowed in the past and will provide about $27 billion for new gold buying. This is also just another sign that countries and businesses are looking to hedge risk by buying gold and it’s one of the safer places to be in an uncertain market.
Please watch my new YouTube Hot Money Moves video: Gold via 747
Today’s Hot Money Moves NOW is “Gold via 747.” It is extraordinary when big New York banks like Goldman Sachs have hired 747s to fly physical gold from London (where it’s cheaper) to New York. Most investors don’t own a 747 and may not be able to do this trade, but it is indicative of the high degree of uncertainty in the market. Flying gold from London to New York is a truly extreme move, and you wouldn’t see that without an underlying fundamental stress in the market. Gold is trading near all-time highs and you may not make a whole lot of money buying gold ETFs from here, but you would be avoiding some risk in the rest of the market. I have the GLD ETF in my Jubak Picks portfolio and will likely look for another to add.
Jobs surprise–economy delivers stronger than expected performance in December
In December U.S. economy in December added the most jobs since March and the unemployment rate unexpectedly fell. Nonfarm payrolls increased 256,000, exceeding all but one forecast in a Bloomberg survey of economists. The unemployment rate fell to 4.1%, while average hourly earnings rose 0.3% from November, a Bureau of Labor Statistics report showed Friday. For 2024 as a whole, the economy added 2.2 million jobs—-below the 3 million increase in 2023 but above the 2 million created in 2019. The data almost certainly assured that the Federal Reserve would not cut interest rates at its January 29 meeting. As of 11 a.m. New York time, the yield on the 10-year Treasury had climbed another 5 basis points to 4.74%.
China’s deflation problem got worse in December
China’s consumer price index rose 0.1% in December from a year earlier, in line with the median forecast of economists surveyed by Bloomberg. Factory deflation extended into a 27th month, though the producer price index recorded a slower drop of 2.3%, the National Bureau of Statistics said Thursday. For the full year, consumer prices only inched up 0.2% from 2023, well short of the 1.1% gain economists had predicted at the beginning of 2024.
Fed’s December minutes another nail in the coffin for early interest rate cuts
In minutes from the Federal Reserve’s December 17-18 meeting released on Wednesday, January 8, Federal Reserve officials clearly decided to move more slowly on cutting interest rates in the quarters ahead. “Participants indicated that the committee was at or near the point at which it would be appropriate to slow the pace of policy easing,” minutes from the Federal Open Market Committee showed. “Many participants suggested that a variety of factors underlined the need for a careful approach to monetary policy decisions over coming quarters.” Please note the reference to “quarters” and not “months.”
More bad news for stocks from the bond market today
The 20-year Treasury bond, a laggard on the government debt curve since its re-introduction in 2020, topped 5% Wednesday for the first time since 2023. The move looks to be fueled by concern that President-elect Donald Trump’s policies on tariffs and tax cuts will lead to wider deficits and rekindle inflation.
Stocks fall as they begin to price in no rate cut until July
The Institute for Supply Management’s index of services advanced 2 points to 54.1 last month. That show of strength in the economy–readings above 50 indicate expansion–was enough to push stocks lower as the markets began to price in a delay in the next interest rate cut from the Federal Reserve until July The measure of prices paid for materials and services rose more than 6 points to 64.4, suggesting that the drop in the inflation rate in the service sector–about 70% of the U.S. economy–might be over.
Special Report: “3 Strategies and 10 Picks for Juicy Returns in a Yield Drought”–first 6 picks
If you’re an investor looking for income, you’re facing what I’d call a Yield Drought. And this is no temporary dry spell. Things on the income investing front look they’ll get worse before they get better. Unless a financial crisis intervenes in 2025 to make everything else much worse and the yield story much better. Because, you see, there are two parts to the current Yield Drought.
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