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By Money Metals News Service

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Coming up we’ll hear from Dr. Lucas Engelhardt, associate professor of economics at Kent State University and well-known Austrian economist and regular guest lecturer at the Mises Institute.

Dr. Engelhardt enlightens us on some of the major flaws in our current monetary policy and the dangers and economic trouble it will eventually produce. He also discusses a couple of different ways we could reintroduce a gold standard to save us from what appears to be an inevitable economic catastrophe. Don’t miss a fascinating interview with Dr. Lucas Engelhardt, coming up after this week’s market update.

Investors got hit with new reports of economic sluggishness this week as the Federal Reserve vowed patience on interest rates.

On Wednesday the Federal Open Market Committee released details from its most recent policy meeting. Monetary planners backed off on a rate hike and gave a more dovish outlook for the rest of the year. Fed officials offered up the word “patient” to describe their approach to policy decisions.

They’ve been trying to normalize interest rates and pare down their $4 trillion balance sheet for a few years now, so nobody doubts their patience. However, there are doubts about their resolve to continue with additional rate hikes given the pressure on them from Washington and Wall Street to maintain easy money.

Fed chair Jerome Powell insists the central bank is above politics. But it’s impossible to separate political concerns from concerns over the economy.

Disappointing economic data continues to roll in. The Atlanta Federal Reserve cut its forecast for gross domestic product growth. The latest durable goods report came in weaker than expected. On the housing front, the National Association of Realtors reported existing home sales fell 1.2% in January to post a third straight month of declines. Consumer confidence is also beginning to slip.

All this raises the prospect that the Fed’s next interest rate move could be a cut rather than a hike. Former Fed chair Janet Yellen said a rate cut is possible if the economic growth outlook continues to contract.

The current president of the Federal Reserve Bank of St. Louis, James Bullard, said Wednesday he thinks monetary policy is too tight. He would like to undo the last rate hike.

The Fed raised rates four times in 2018 up to a range of 2.25 to 2.5%. It wanted to get up to at least 3% ahead of the next recession so it would have ample room to cut. Unless the economic numbers start improving, though, it’s doubtful policymakers will have the stomach for further hikes.

Whether investors have the stomach to keep bidding up pricey stock market indexes remains to be seen. Lately they have shown some interest in precious metals.

Metals markets rallied strongly early this week before giving back some of their gains on Thursday. Gold ran up to the $1,350 level before encountering selling pressure there. As of this Friday recording the yellow metal checks in at $1,330 an ounce, up 0.7% on the week.

Turning to the white metals, silver shows a weekly gain of 1.2% to trade at $15.95 an ounce. Platinum showing some signs of life, up 4.2% this week to trade at $844. And finally, palladium continues to shine, hitting another new record high this week. The catalytic metal currently trades at $1,494 on the heels of a 3.3% weekly advance as of this Friday morning recording.

Well, gold continues to be at the center of controversy surrounding the rightful ownership of Venezuelan gold. As we reported previously, the Bank of England refused to return $1.2 billion in gold bullion it held on behalf of the Venezuelan government. Now Citibank is consulting with U.S. Treasury Department officials to determine what to do about a $1.1 billion gold swap contract with the embattled Maduro regime.

U.S. sanctions on Nicolas Maduro’s government prohibit companies from dealing in Venezuelan gold. U.S. backed opposition leader Juan Guaido wants Citi to safeguard the gold assets in question on behalf of the Venezuelan people until Maduro is ousted.

It’s remarkable how much trust Maduro’s government officials placed in global financial institutions, especially with their own gold reserves. Gold is supposed to serve as an ultimate, tangible form of money that doesn’t depend on foreign currency exchange rates or foreign banking counterparties.

A nation’s gold reserves must be able to be quickly deployed during a financial emergency. When that emergency came for Venezuela, much of its gold held outside its own borders became inaccessible.

To be sure, Maduro and his socialist regime brought the financial emergency upon themselves with their crazy policies. But an obvious lesson for investors is to not entrust precious metals holdings to the custodianship of any bank. Not even a bank safe-deposit box should be trusted.

In fact, some banks specifically prohibit various forms of money including gold coins from being stored in safe-deposit boxes. If you hold precious metals in a bank safe-deposit box, you run the risk of them being subject to government edicts covering banks. And you run the risk of the bank running into financial trouble and going bust, potentially making your holdings inaccessible.

One of your main objectives in owning physical bullion should be to have some significant portion of your wealth held entirely outside the banking and brokerage systems. Don’t defeat that objective by converting your precious metals into vulnerable financial products.

Well now, without further delay, let’s get right to this week’s exclusive interview.

Mike Gleason: It is my privilege now to welcome in Dr. Lucas Engelhardt associate professor of economics at Kent State University. Dr. Engelhardt is an Austrian economist who has been a guest lecturer at the Mises Institute and in his teaching specializes in macro-economics in the examination of the business cycle, and it’s certainly a real pleasure to have him on with us today. Lucas, thanks so much for taking the time and welcome.

Dr. Lucas Engelhardt: Well thank you for having me on.

Mike Gleason: Well, I’m excited to have you on today because there is a lot to discuss with you. For starters I think a good place to begin is the business cycle. Now, but before we get into the misunderstandings that the Keynesians seems to have about this, explain the business cycle if you would and why it’s important in order to have a proper understanding of monetary policy.

Dr. Lucas Engelhardt: Sure. Now, as you mentioned, I come from the Austrian economic framework. And Austrian economics describes the business cycle as the consequence of manipulations happening in the money supply, specifically in credit markets. So starting from that point, so how the business cycle happens is that we have somebody in the banking system. We know in modern America it would be the Federal Reserve is generally responsible for this. Decides to push down interest rates, normally to stimulate the economy.

Austrians, we definitely do not deny that this actually does work for a while. That the lower interest rate does actually encourage investment, especially in very long structures of production. The types of things that won’t pay off maybe for five, 10, or even more years. We see lots of research and development, lots of construction, these types of things happening when interest rates get pushed down.

The problem is that the way that the Fed pushes interest rates down, as I suspect most of your listeners know, is by adding additional money into the economy through the banking system. Eventually this money gets out into the economy and prices start going up. You have more money, the money loses value, the flip side of that is that prices are higher. It takes more money to buy anything.

Now, there are a couple ways this can go. The central bank could just ignore this fact and continue with the low interest rate policy, just pumping out more and more money to the point where the money is worthless. We see that happen right throughout history, and we see that happening today in places like Venezuela. Now, what the Fed has done historically most of the time is get nervous about this rise in prices and start tamping back on the increase in the money supply. Of course, as soon as they do that interest rates go up. Once interest rates go up, all these investments that looked great when interest rates were low, that research and development, building new houses and what have you, stop looking as good.

So, we see all of these areas that expanded then start contracting, and that’s where we see the bust of the business cycle come in. We see there it’s really all centered on what the Federal Reserve in modern America is doing in interest rates.

Mike Gleason: Now, you come at things from an Austrian viewpoint as you mentioned. I’m curious if sometimes you feel like a lone wolf in the wilderness, because nearly everyone in the mainstream financial world and among the central bankers and central planners throughout the globe seems to have that Keynesian mindset where government and a tight management of monetary policy is the answer to every economic problem. So, why is it dangerous in your view, expand the point if you would about a centrally planned economy instead of letting the free market forces dictate things. What are they so afraid of?

Dr. Lucas Engelhardt: Yeah, that’s a funny question. I think, like to me, a lot of the error that’s out there is because somewhere along the lines economists, and I think people more generally have gotten into their mind that money is somehow totally different from other goods. You ask almost any economist out there, for most goods, things like shoes and shirts and whatever, they’re generally perfectly happy to have the government stay out and let the market be in charge of deciding what kinds of shoes are being produced for whom and what have you.

But, then money suddenly, even people who are relatively free market, like Milton Friedman for example, they feel like money’s different in some way and the government needs to have more of a role there. I’m not entirely sure where that comes from to be perfectly honest. It’s this odd inconsistency. But, in terms of the danger of that, I think we already described the business cycle is something we see precisely because we’ve put the central bank in charge of the money supply, and them interacting with the credit markets.

Whereas, we wouldn’t see the same type of process play out if instead we had private money producers using some kind of commodity, probably something like gold or silver historically, just producing as people want the good. Like we do with anything else. We don’t really find that to be necessarily problematic.

Honestly, I don’t have any great explanation for why most of my profession does seem to have this weird hang up when it comes to having markets in money.

Mike Gleason: Obviously, a lot of mal-investment does happen as a result of low interest rate policy. As you mentioned, as interest rates rise that no longer is a good way to use funds, and then the whole thing sort of implodes. Talk about that a little bit more if you would, and why it is that an economy really does need to go through these contractive periods, that it doesn’t seem like central planners really want to allow nowadays.

Dr. Lucas Engelhardt: I think probably the best explanation of it I’ve seen of this comes from Ludwig Von Mises. The analogy that he gives is the analogy of the home builder. So you imagine that we have this home builders building this neighborhood, and they’ve been reported to them that there are a certain number of bricks available for them to use.

So, they then begin laying foundations and building these various houses in this neighborhood. But, then they discover part way through that there are not as many bricks available as was believed. The question is then, what are the lessons we can pull out of this?

First, the earlier we learn that the better. So, if we’ve just laid the foundations and then we find out we don’t have as many bricks as we thought, we can salvage most of what we’ve done. On the other hand, if we get to the point where we’ve already built the first floor of every single house and then we find out we’re running out of bricks, that totally changes our plans in a way that’s much more destructive. So, the earlier we learn the better.

Also, it tells us that the closer we were to right at the beginning the better. The less error there was in that initial report is better. So, what in the world does this have to do with business cycles?

So then, we back up and think about in a free market economy where we don’t have manipulation of interest rates, what does the interest rate mean? Well, the interest rate then would come out of peoples willingness to save for the future. If you’re willing to save a lot then interest rates are going to generally be fairly low. We don’t have to convince people to save if they’re already will to. On the other hand, if people are not willing to save very much, then interest rates will generally be very high.

This in turn means that those low interest rates are a signal to investors that they can undertake these long processes of production. They can start doing things like mining, construction, research and development. These people are willing to save up for that eventual product that will come far in the future.

On the other hand, high interest rates send exactly the opposite signal. People are not willing to save for the far future, and that signals to investors that they won’t have the resources to complete these very long investment products. So, that’s where the signaling role of interest rates is absolutely key in getting the economy to work properly. And that’s something that we lose when we have something like the Federal Reserve in charge of determining what interest rates are going to be.

The more they manipulate interest rates; the worse things are going to be. So, the more they try to keep interest rates really, really low in order to try to stimulate the economy, the longer we’re going thinking we have more bricks than we do. Or, believing that people are willing to save up for the future when they’re not actually willing to do that, and the further we get in more and more of these investments that aren’t going to pay off.

So, the sooner we can hit that point where we’ve realized the error we have made, the smaller the error actually is. I think that’s the way it is with most things in life. The earlier we catch ourselves making a mistake, the better off we are because we can fix it before things have gotten too bad.

Mike Gleason: Very well put. Talk about this idea of inflation targeting that the Federal Reserve seems to be holding so dear. This magic number of two percent inflation that they so desperately want to achieve. Talk about the flaws in that practice and then maybe also discuss some of the dangers of inflation in general, which is really just a hidden tax on the citizens at the end of the day, isn’t it?

Dr. Lucas Engelhardt: Oh yeah. So, inflation targeting, the idea is, and this is actually something, it’s kind of an interesting idea. The first place I know that implemented this was New Zealand a few years ago, where they were having this problem where they had very high rates of price inflation. So, they decided what they were going to decrease inflation to some more reasonable level. Something like three percent. I don’t remember the exact number they were going.

They found that they actually managed to pull it off. Prices fell, they didn’t have a horrible recession as would often be the case if you tried to pull this off some other way, because people seemed to believe them. So, after this example from New Zealand, it seems to have caught on as this great idea that everybody needs to do.

What’s then the problem with this, it seemed to work at least that time. Well, to me the fundamental problem is how do we measure the thing? So, we know that here that the most common measure that we would use in the U.S. is the Consumer Price Index. We have this basket of goods, right, things we think normal people would buy, and we look at how the cost of this basket changes over time.

Now, there are a number of errors that can show up in this index, which really anybody who takes the first semester of macroeconomics gets taught the weaknesses. It doesn’t matter who’s teaching it, you learn the weaknesses of this particular index. Things like it totally ignores relative price changes.

So, if say both apples and oranges are in this consumer basket, and apples go up in price, but oranges drop, that is not taken into account when we’re calculating the cost of the basket in the future… despite the fact that I would guess that basically most normal people if apples are getting more expensive and oranges are getting cheaper, are going to change what they buy. So, we get things like that. Or people will change where they shop based on what prices are doing. So, if prices are going up a lot in specialty stores they start shopping more at big box stores, or vice versa.

So, we can see all of these little changes at the micro level that people will actually make in their lives, we just don’t catch. So, the CPI is the most common way we would measure this, but it’s not the only one. There are other measures of inflation out there, and all of them have various weaknesses attached to them.

Then, the question is if we know that all of our measures are going to be mis-stating the thing that we’re actually trying to shoot for in some way or another, and it’s not always predictable which direction or how much, then what’s really the point in having a target for this thing? We won’t actually ever know if we’ve hit it. So, that to me is a rather significant problem.

Another issue is, it feels like an abusive language to me. Because, if you read the act that… I’m trying to remember the name of the most recent one that influences the Federal Reserve’s targets, I forget exactly what it was called. But, they’re supposed to aim for price stability, and bizarrely this means prices increase on the average two percent per year.

I don’t know about you, but if my height increased by two percent two year, I would not consider it to be stable. I’d say that I was actually growing. Similarly I’d say with prices if they’re going up two percent per year, that’s not stability that’s actually an increase in prices.

Mike Gleason: Right, the opposite of stability.

Dr. Lucas Engelhardt: Right, exactly. Okay, maybe they’re not flying all over the place unpredictably, but it’s still not stable. But, in any case, what does this do even if it is predictable? Well, this does change people’s behavior. If for example we have prices are increasing overtime, that changes the way we decide to hold money versus invest in riskier financial assets, for example.

Where we know that if we’re under a much more stable currency, we know that over the long run the gold standard was very stable. If you look at prices when you try to compile what these price indices might look like in 1650 and you compare that to 1900, the basket of goods basically costs the same amount. Over the course of a 250 year period we saw very little change in terms of an overall trend. What that means then is that holding money itself is not necessarily a terrible investment in that type of society.

That makes it very easy for people who are relatively low income, actually. You don’t have to know a lot about stocks, you don’t have to know a lot about how financial markets work. You just hold onto your gold coins until you want to use them and that’s going to work pretty well for most people. But then, when you have a system like ours where every single year, if the Fed accomplishes its goal, all the money you have has just lost two percent of its value. You don’t want to do that.

You have to start searching out other things that are actually going to pay you something. And we know that with interest rates being what they are right now, just sticking the money into a savings account, being a relatively safe, easy thing to do, well that’s not going to help at all. I know my savings account I believe pays .01%, which they may as well just round that down to zero. So, you have to start searching out things that are riskier, at which point knowledge about financial markets becomes much more important.

It turns out, I would suggest inflation, and I’m not the only one suggesting this, inflation does play a big role in driving things like inequality. It makes it much more difficult relatively for those with lower incomes than for those with higher incomes. Precisely because it’s taken away all of these relatively easy, relatively stable sorts of investments that were available under more stable currency.

Mike Gleason: Yeah, it certainly does create a bigger divide. The wage earner seems to be the one that is most harmed by this inflationary policy, for sure. Now, the Austrians talk a lot about the gold standard, you referenced that in your previous answer. It’s a good way to keep politicians in check, keeping government debt in check. So, in a perfect world, how would a gold standard be reintroduced at this point, Lucas, and what problems do you believe it would correct, or would some other type of monetary reform be better to solve our issues for instance?

Dr. Lucas Engelhardt: Yeah, that’s kind of a tricky question of, “Okay, if we have this system we like how do we possibly get there?” Well, there are a couple different plans that some of the big name Austrian economists have come up with to try to move us back towards say a gold based currency. Ludwig Von Mises, his plan was, the first step is we stop issuing additional paper dollars. Then, whenever the price of gold stabilizes, we just declare that that is going to be the parity between dollars and gold, and then we have a conversion agency that will guarantee conversion in either direction from these.

So, say that the price of gold stabilizes at, I don’t know, $2,500 an ounce. In that case, you can go to this conversion agency, if you have $2,500 they guarantee providing you with an ounce of gold. If you provide them with an ounce of gold, they guarantee providing you with $2,500. So, in that way, the paper currency we’re all using now would become as good as gold again, because it would in fact be backed by gold.

He also suggests eliminating any larger bills, which at the time he was writing this was several decades ago, he considered a large bill to be five dollars and up… which tells you something about what prices have done over the past few decades if that’s a large bill.

He said we need to eliminate all these large bills and instead use gold coins. Get people used to the idea that gold is in fact money, and so we have this psychological connection with the metal itself.

So, I did some math just to find out, say if we had a dime that was made of gold how much that would be worth. Turns out, it would be about $120 roughly, right, would be a gold dime. Which, makes sense looking at gold prices. One ounce of gold is around $1,200, a dime is about a 10th of an ounce of gold.

Mike Gleason: Yeah, we often talk about that in the 10th ounce of gold products that we sell…. very close in size to a dime.

Dr. Lucas..

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By Money Metals News Service

Welcome to this week’s Market Wrap Podcast, I’m Mike Gleason.

Coming up we’ll hear from Dr. Lucas Engelhardt, associate professor of economics at Kent State University and well-known Austrian economist and regular guest lecturer at the Mises Institute.

Dr. Engelhardt enlightens us on some of the major flaws in our current monetary policy and the dangers and economic trouble it will eventually produce. He also discusses a couple of different ways we could reintroduce a gold standard to save us from what appears to be an inevitable economic catastrophe. Don’t miss a fascinating interview with Dr. Lucas Engelhardt, coming up after this week’s market update.

Investors got hit with new reports of economic sluggishness this week as the Federal Reserve vowed patience on interest rates.

On Wednesday the Federal Open Market Committee released details from its most recent policy meeting. Monetary planners backed off on a rate hike and gave a more dovish outlook for the rest of the year. Fed officials offered up the word “patient” to describe their approach to policy decisions.

They’ve been trying to normalize interest rates and pare down their $4 trillion balance sheet for a few years now, so nobody doubts their patience. However, there are doubts about their resolve to continue with additional rate hikes given the pressure on them from Washington and Wall Street to maintain easy money.

Fed chair Jerome Powell insists the central bank is above politics. But it’s impossible to separate political concerns from concerns over the economy.

Disappointing economic data continues to roll in. The Atlanta Federal Reserve cut its forecast for gross domestic product growth. The latest durable goods report came in weaker than expected. On the housing front, the National Association of Realtors reported existing home sales fell 1.2% in January to post a third straight month of declines. Consumer confidence is also beginning to slip.

All this raises the prospect that the Fed’s next interest rate move could be a cut rather than a hike. Former Fed chair Janet Yellen said a rate cut is possible if the economic growth outlook continues to contract.

The current president of the Federal Reserve Bank of St. Louis, James Bullard, said Wednesday he thinks monetary policy is too tight. He would like to undo the last rate hike.

The Fed raised rates four times in 2018 up to a range of 2.25 to 2.5%. It wanted to get up to at least 3% ahead of the next recession so it would have ample room to cut. Unless the economic numbers start improving, though, it’s doubtful policymakers will have the stomach for further hikes.

Whether investors have the stomach to keep bidding up pricey stock market indexes remains to be seen. Lately they have shown some interest in precious metals.

Metals markets rallied strongly early this week before giving back some of their gains on Thursday. Gold ran up to the $1,350 level before encountering selling pressure there. As of this Friday recording the yellow metal checks in at $1,330 an ounce, up 0.7% on the week.

Turning to the white metals, silver shows a weekly gain of 1.2% to trade at $15.95 an ounce. Platinum showing some signs of life, up 4.2% this week to trade at $844. And finally, palladium continues to shine, hitting another new record high this week. The catalytic metal currently trades at $1,494 on the heels of a 3.3% weekly advance as of this Friday morning recording.

Well, gold continues to be at the center of controversy surrounding the rightful ownership of Venezuelan gold. As we reported previously, the Bank of England refused to return $1.2 billion in gold bullion it held on behalf of the Venezuelan government. Now Citibank is consulting with U.S. Treasury Department officials to determine what to do about a $1.1 billion gold swap contract with the embattled Maduro regime.

U.S. sanctions on Nicolas Maduro’s government prohibit companies from dealing in Venezuelan gold. U.S. backed opposition leader Juan Guaido wants Citi to safeguard the gold assets in question on behalf of the Venezuelan people until Maduro is ousted.

It’s remarkable how much trust Maduro’s government officials placed in global financial institutions, especially with their own gold reserves. Gold is supposed to serve as an ultimate, tangible form of money that doesn’t depend on foreign currency exchange rates or foreign banking counterparties.

A nation’s gold reserves must be able to be quickly deployed during a financial emergency. When that emergency came for Venezuela, much of its gold held outside its own borders became inaccessible.

To be sure, Maduro and his socialist regime brought the financial emergency upon themselves with their crazy policies. But an obvious lesson for investors is to not entrust precious metals holdings to the custodianship of any bank. Not even a bank safe-deposit box should be trusted.

In fact, some banks specifically prohibit various forms of money including gold coins from being stored in safe-deposit boxes. If you hold precious metals in a bank safe-deposit box, you run the risk of them being subject to government edicts covering banks. And you run the risk of the bank running into financial trouble and going bust, potentially making your holdings inaccessible.

One of your main objectives in owning physical bullion should be to have some significant portion of your wealth held entirely outside the banking and brokerage systems. Don’t defeat that objective by converting your precious metals into vulnerable financial products.

Well now, without further delay, let’s get right to this week’s exclusive interview.

Mike Gleason: It is my privilege now to welcome in Dr. Lucas Engelhardt associate professor of economics at Kent State University. Dr. Engelhardt is an Austrian economist who has been a guest lecturer at the Mises Institute and in his teaching specializes in macro-economics in the examination of the business cycle, and it’s certainly a real pleasure to have him on with us today. Lucas, thanks so much for taking the time and welcome.

Dr. Lucas Engelhardt: Well thank you for having me on.

Mike Gleason: Well, I’m excited to have you on today because there is a lot to discuss with you. For starters I think a good place to begin is the business cycle. Now, but before we get into the misunderstandings that the Keynesians seems to have about this, explain the business cycle if you would and why it’s important in order to have a proper understanding of monetary policy.

Dr. Lucas Engelhardt: Sure. Now, as you mentioned, I come from the Austrian economic framework. And Austrian economics describes the business cycle as the consequence of manipulations happening in the money supply, specifically in credit markets. So starting from that point, so how the business cycle happens is that we have somebody in the banking system. We know in modern America it would be the Federal Reserve is generally responsible for this. Decides to push down interest rates, normally to stimulate the economy.

Austrians, we definitely do not deny that this actually does work for a while. That the lower interest rate does actually encourage investment, especially in very long structures of production. The types of things that won’t pay off maybe for five, 10, or even more years. We see lots of research and development, lots of construction, these types of things happening when interest rates get pushed down.

The problem is that the way that the Fed pushes interest rates down, as I suspect most of your listeners know, is by adding additional money into the economy through the banking system. Eventually this money gets out into the economy and prices start going up. You have more money, the money loses value, the flip side of that is that prices are higher. It takes more money to buy anything.

Now, there are a couple ways this can go. The central bank could just ignore this fact and continue with the low interest rate policy, just pumping out more and more money to the point where the money is worthless. We see that happen right throughout history, and we see that happening today in places like Venezuela. Now, what the Fed has done historically most of the time is get nervous about this rise in prices and start tamping back on the increase in the money supply. Of course, as soon as they do that interest rates go up. Once interest rates go up, all these investments that looked great when interest rates were low, that research and development, building new houses and what have you, stop looking as good.

So, we see all of these areas that expanded then start contracting, and that’s where we see the bust of the business cycle come in. We see there it’s really all centered on what the Federal Reserve in modern America is doing in interest rates.

Mike Gleason: Now, you come at things from an Austrian viewpoint as you mentioned. I’m curious if sometimes you feel like a lone wolf in the wilderness, because nearly everyone in the mainstream financial world and among the central bankers and central planners throughout the globe seems to have that Keynesian mindset where government and a tight management of monetary policy is the answer to every economic problem. So, why is it dangerous in your view, expand the point if you would about a centrally planned economy instead of letting the free market forces dictate things. What are they so afraid of?

Dr. Lucas Engelhardt: Yeah, that’s a funny question. I think, like to me, a lot of the error that’s out there is because somewhere along the lines economists, and I think people more generally have gotten into their mind that money is somehow totally different from other goods. You ask almost any economist out there, for most goods, things like shoes and shirts and whatever, they’re generally perfectly happy to have the government stay out and let the market be in charge of deciding what kinds of shoes are being produced for whom and what have you.

But, then money suddenly, even people who are relatively free market, like Milton Friedman for example, they feel like money’s different in some way and the government needs to have more of a role there. I’m not entirely sure where that comes from to be perfectly honest. It’s this odd inconsistency. But, in terms of the danger of that, I think we already described the business cycle is something we see precisely because we’ve put the central bank in charge of the money supply, and them interacting with the credit markets.

Whereas, we wouldn’t see the same type of process play out if instead we had private money producers using some kind of commodity, probably something like gold or silver historically, just producing as people want the good. Like we do with anything else. We don’t really find that to be necessarily problematic.

Honestly, I don’t have any great explanation for why most of my profession does seem to have this weird hang up when it comes to having markets in money.

Mike Gleason: Obviously, a lot of mal-investment does happen as a result of low interest rate policy. As you mentioned, as interest rates rise that no longer is a good way to use funds, and then the whole thing sort of implodes. Talk about that a little bit more if you would, and why it is that an economy really does need to go through these contractive periods, that it doesn’t seem like central planners really want to allow nowadays.

Dr. Lucas Engelhardt: I think probably the best explanation of it I’ve seen of this comes from Ludwig Von Mises. The analogy that he gives is the analogy of the home builder. So you imagine that we have this home builders building this neighborhood, and they’ve been reported to them that there are a certain number of bricks available for them to use.

So, they then begin laying foundations and building these various houses in this neighborhood. But, then they discover part way through that there are not as many bricks available as was believed. The question is then, what are the lessons we can pull out of this?

First, the earlier we learn that the better. So, if we’ve just laid the foundations and then we find out we don’t have as many bricks as we thought, we can salvage most of what we’ve done. On the other hand, if we get to the point where we’ve already built the first floor of every single house and then we find out we’re running out of bricks, that totally changes our plans in a way that’s much more destructive. So, the earlier we learn the better.

Also, it tells us that the closer we were to right at the beginning the better. The less error there was in that initial report is better. So, what in the world does this have to do with business cycles?

So then, we back up and think about in a free market economy where we don’t have manipulation of interest rates, what does the interest rate mean? Well, the interest rate then would come out of peoples willingness to save for the future. If you’re willing to save a lot then interest rates are going to generally be fairly low. We don’t have to convince people to save if they’re already will to. On the other hand, if people are not willing to save very much, then interest rates will generally be very high.

This in turn means that those low interest rates are a signal to investors that they can undertake these long processes of production. They can start doing things like mining, construction, research and development. These people are willing to save up for that eventual product that will come far in the future.

On the other hand, high interest rates send exactly the opposite signal. People are not willing to save for the far future, and that signals to investors that they won’t have the resources to complete these very long investment products. So, that’s where the signaling role of interest rates is absolutely key in getting the economy to work properly. And that’s something that we lose when we have something like the Federal Reserve in charge of determining what interest rates are going to be.

The more they manipulate interest rates; the worse things are going to be. So, the more they try to keep interest rates really, really low in order to try to stimulate the economy, the longer we’re going thinking we have more bricks than we do. Or, believing that people are willing to save up for the future when they’re not actually willing to do that, and the further we get in more and more of these investments that aren’t going to pay off.

So, the sooner we can hit that point where we’ve realized the error we have made, the smaller the error actually is. I think that’s the way it is with most things in life. The earlier we catch ourselves making a mistake, the better off we are because we can fix it before things have gotten too bad.

Mike Gleason: Very well put. Talk about this idea of inflation targeting that the Federal Reserve seems to be holding so dear. This magic number of two percent inflation that they so desperately want to achieve. Talk about the flaws in that practice and then maybe also discuss some of the dangers of inflation in general, which is really just a hidden tax on the citizens at the end of the day, isn’t it?

Dr. Lucas Engelhardt: Oh yeah. So, inflation targeting, the idea is, and this is actually something, it’s kind of an interesting idea. The first place I know that implemented this was New Zealand a few years ago, where they were having this problem where they had very high rates of price inflation. So, they decided what they were going to decrease inflation to some more reasonable level. Something like three percent. I don’t remember the exact number they were going.

They found that they actually managed to pull it off. Prices fell, they didn’t have a horrible recession as would often be the case if you tried to pull this off some other way, because people seemed to believe them. So, after this example from New Zealand, it seems to have caught on as this great idea that everybody needs to do.

What’s then the problem with this, it seemed to work at least that time. Well, to me the fundamental problem is how do we measure the thing? So, we know that here that the most common measure that we would use in the U.S. is the Consumer Price Index. We have this basket of goods, right, things we think normal people would buy, and we look at how the cost of this basket changes over time.

Now, there are a number of errors that can show up in this index, which really anybody who takes the first semester of macroeconomics gets taught the weaknesses. It doesn’t matter who’s teaching it, you learn the weaknesses of this particular index. Things like it totally ignores relative price changes.

So, if say both apples and oranges are in this consumer basket, and apples go up in price, but oranges drop, that is not taken into account when we’re calculating the cost of the basket in the future… despite the fact that I would guess that basically most normal people if apples are getting more expensive and oranges are getting cheaper, are going to change what they buy. So, we get things like that. Or people will change where they shop based on what prices are doing. So, if prices are going up a lot in specialty stores they start shopping more at big box stores, or vice versa.

So, we can see all of these little changes at the micro level that people will actually make in their lives, we just don’t catch. So, the CPI is the most common way we would measure this, but it’s not the only one. There are other measures of inflation out there, and all of them have various weaknesses attached to them.

Then, the question is if we know that all of our measures are going to be mis-stating the thing that we’re actually trying to shoot for in some way or another, and it’s not always predictable which direction or how much, then what’s really the point in having a target for this thing? We won’t actually ever know if we’ve hit it. So, that to me is a rather significant problem.

Another issue is, it feels like an abusive language to me. Because, if you read the act that… I’m trying to remember the name of the most recent one that influences the Federal Reserve’s targets, I forget exactly what it was called. But, they’re supposed to aim for price stability, and bizarrely this means prices increase on the average two percent per year.

I don’t know about you, but if my height increased by two percent two year, I would not consider it to be stable. I’d say that I was actually growing. Similarly I’d say with prices if they’re going up two percent per year, that’s not stability that’s actually an increase in prices.

Mike Gleason: Right, the opposite of stability.

Dr. Lucas Engelhardt: Right, exactly. Okay, maybe they’re not flying all over the place unpredictably, but it’s still not stable. But, in any case, what does this do even if it is predictable? Well, this does change people’s behavior. If for example we have prices are increasing overtime, that changes the way we decide to hold money versus invest in riskier financial assets, for example.

Where we know that if we’re under a much more stable currency, we know that over the long run the gold standard was very stable. If you look at prices when you try to compile what these price indices might look like in 1650 and you compare that to 1900, the basket of goods basically costs the same amount. Over the course of a 250 year period we saw very little change in terms of an overall trend. What that means then is that holding money itself is not necessarily a terrible investment in that type of society.

That makes it very easy for people who are relatively low income, actually. You don’t have to know a lot about stocks, you don’t have to know a lot about how financial markets work. You just hold onto your gold coins until you want to use them and that’s going to work pretty well for most people. But then, when you have a system like ours where every single year, if the Fed accomplishes its goal, all the money you have has just lost two percent of its value. You don’t want to do that.

You have to start searching out other things that are actually going to pay you something. And we know that with interest rates being what they are right now, just sticking the money into a savings account, being a relatively safe, easy thing to do, well that’s not going to help at all. I know my savings account I believe pays .01%, which they may as well just round that down to zero. So, you have to start searching out things that are riskier, at which point knowledge about financial markets becomes much more important.

It turns out, I would suggest inflation, and I’m not the only one suggesting this, inflation does play a big role in driving things like inequality. It makes it much more difficult relatively for those with lower incomes than for those with higher incomes. Precisely because it’s taken away all of these relatively easy, relatively stable sorts of investments that were available under more stable currency.

Mike Gleason: Yeah, it certainly does create a bigger divide. The wage earner seems to be the one that is most harmed by this inflationary policy, for sure. Now, the Austrians talk a lot about the gold standard, you referenced that in your previous answer. It’s a good way to keep politicians in check, keeping government debt in check. So, in a perfect world, how would a gold standard be reintroduced at this point, Lucas, and what problems do you believe it would correct, or would some other type of monetary reform be better to solve our issues for instance?

Dr. Lucas Engelhardt: Yeah, that’s kind of a tricky question of, “Okay, if we have this system we like how do we possibly get there?” Well, there are a couple different plans that some of the big name Austrian economists have come up with to try to move us back towards say a gold based currency. Ludwig Von Mises, his plan was, the first step is we stop issuing additional paper dollars. Then, whenever the price of gold stabilizes, we just declare that that is going to be the parity between dollars and gold, and then we have a conversion agency that will guarantee conversion in either direction from these.

So, say that the price of gold stabilizes at, I don’t know, $2,500 an ounce. In that case, you can go to this conversion agency, if you have $2,500 they guarantee providing you with an ounce of gold. If you provide them with an ounce of gold, they guarantee providing you with $2,500. So, in that way, the paper currency we’re all using now would become as good as gold again, because it would in fact be backed by gold.

He also suggests eliminating any larger bills, which at the time he was writing this was several decades ago, he considered a large bill to be five dollars and up… which tells you something about what prices have done over the past few decades if that’s a large bill.

He said we need to eliminate all these large bills and instead use gold coins. Get people used to the idea that gold is in fact money, and so we have this psychological connection with the metal itself.

So, I did some math just to find out, say if we had a dime that was made of gold how much that would be worth. Turns out, it would be about $120 roughly, right, would be a gold dime. Which, makes sense looking at gold prices. One ounce of gold is around $1,200, a dime is about a 10th of an ounce of gold.

Mike Gleason: Yeah, we often talk about that in the 10th ounce of gold products that we sell…. very close in size to a dime.

Dr. Lucas..

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The Energy Report

Source: Streetwise Reports   02/21/2019

The key reasons to consider investing in this company, which is producing oil and gas in central Alberta, are presented in a Haywood research report.

In a Feb. 11 research note, analyst Christopher Jones reported that Haywood initiated coverage on Altura Energy Inc. (ATU:TSX.V) with a Buy rating and a CA$0.70 per share price target. This implies a projected return of 63%, as the stock’s current share price is CA$0.46.

“Altura is a company that warrants closer attention,” Jones noted. “We recommend accumulating shares at current levels.”

Jones listed and described the investment drivers behind this company, which has “largely flown under the radar” since 2015 and is currently trading below its peers. The list includes Altura’s:

1. Performing people. Altura’s management and board members are “top tier” and “not your typical junior C suite,” Jones described. David Burghardt, the president and CEO, ran Vermillion France for two years. Founding board members include Darren Gee, president and CEO of Peyto Exploration; Brian Lavergne, president and CEO of Storm Resources; and John McAleer, managing director of Palisade Capital. “A strong C suite is an intangible that could have a high impact on share price performance over time as this unique team gains traction with the market,” the analyst wrote.

2. Growth potential. The company’s growth is forecast at 70% debt-adjusted per share and “ranks strongly relative to peers,” Jones commented. Altura reached production of 2,000 barrels of oil equivalent per day in 2018, and with 160 tier 1 future drilling locations, it has “above average growth visibility over the long term.”

3. Focus on returns. Management intends “to position the company for multiple years of profitable production and reserve growth” by employing new technology to exploit pools with significant original oil in place and a low recovery profile, Jones relayed. The team aims to grow organically and through acquisition to maximize shareholder returns.

4. Positioning for rising prices. Altura generates “cash flow netbacks that rival that of light oil producers” by effecting cost efficiencies, Jones indicated. At year-end, they were $29 per barrel of oil equivalent. With these strong netbacks, supported by low operating expenses and above average leverage, the company is “well positioned to capitalize on improving oil prices by directing incremental cash flow to further growth opportunities,” he added.

5. Multiple expansion potential. Altura looks attractive based on a handful of key metrics. As such, said Jones, “we expect the market to award the stock with a higher multiple as the company earns an audience with further operational execution.”

Catalysts to watch for, noted Jones, are Altura’s reserve update expected this month, in which Haywood expects to see “material reserve additions and net asset value growth.”

Jones concluded, “Altura provides investors with a rare blend of management quality, a solid growth asset, above average operational and financial metrics, and access to capital.

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Disclosure:
1) Doresa Banning compiled this article for Streetwise Reports LLC and provides services to Streetwise reports as an independent contractor. She or members of her household own securities of the following companies mentioned in the article: None. She or members of her household are paid by the following companies mentioned in this article: None.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Comments and opinions expressed are those of the specific experts and not of Streetwise Reports or its officers. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article until three business days after the publication of the interview or article. The foregoing prohibition does not apply to articles that in substance only restate previously published company releases.

Disclosures from Haywood Securities, Altura Energy Inc., February 11, 2019

Analyst Certification: I, Christopher Jones, hereby certify that the views expressed in this report (which includes the rating assigned to the issuer’s shares as well as the analytical substance and tone of the report) accurately reflect my/our personal views about the subject securities and the issuer. No part of my/our compensation was, is, or will be directly or indirectly related to the specific recommendations.

Important Disclosures

Other material conflict of interest of the research analyst of which the research analyst or Haywood Securities Inc. knows or has reason to know at the time of publication or at the time of public appearance: n/a. Research policy available here.

( Companies Mentioned: ATU:TSX.V,
)

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By CentralBankNews.info
     Sri Lanka’s central bank left its key interest rates unchanged but lowered its Statutory Reserve Ratio (SRR) on all commercial banks’ rupee deposits by another 100 basis points to 5.0 percent to tackle a large and persistent deficit of liquidity in domestic money markets.
     In November last year the Central Bank of Sri Lanka (CBS) cut SRR by 150 basis points to 6.0 percent to free up around 90 billion rupees in liquidity but also raised its two policy rates to maintain a neutral policy stance.
     Despite this injection of liquidity, CBS said the domestic money market continues to be tight, partly because the government is relying more on domestic sources of financing while credit to both public and private sectors expanded more than expected last year amid borrowers’ response to policies aimed at limiting imports of motor vehicles and other non-essential goods to narrow the trade deficit.
      Short-term money market rates have therefore remained in the upper bound of the policy rate corridor despite what CBS described as “appropriate” open market operations and other market interest rates have also remained at elevated levels.
      The new reserve ratio will take effect on March 1 and the decision to retain the central bank’s Standing Deposit Facility Rate (SDFR) at 8.0 percent and the Standing Lending Facility Rate (SLFR) at 9.0 percent was taken to stabilize inflation at mid-single digit levels and enable the economy to reach its potential.
      Sri Lanka’s inflation rate rose to 3.7 percent in January from 2.8 percent in December but CBS expects inflation to remain in its desired range of 4.0-6.0 percent in 2019 and beyond.
      Sri Lanka’s economy has slowed in recent quarters and growth is projected to remain subdued in the fourth quarter of 2018 and this year before slowly reaching its potential in the medium term amid a low inflation environment, a competitive exchange rate and policies that support investment.
      In the third quarter gross domestic product grew 2.9 percent, down from 3.6 percent in the second quarter.
      Hit by a political crises, delayed discussions with the International Monetary Fund (IMF) on a 6th loan tranche and ratings downgrades by all three main ratings agencies, Sri Lanka’s rupee fell sharply in the second half of last year before recovering in January, supported by net inflows to the government securities market and a slowdown in imports.
      Today the rupee was trading at 179.5 to the U.S. dollar, up 1.9 percent this year but down 14.5 percent since the start of 2018.
      By end-January, gross official reserves had fallen to US$6.2 billion, enough for 3.4 months of imports, from $7.9 billion at the end of October 2018 and $7.0 billion end-November.

     The Central Bank of Sri Lanka issued its first monetary policy review of 2019:

“The Monetary Board of the Central Bank, at its meeting held on 21 February 2019, decided to reduce the Statutory Reserve Ratio (SRR) applicable on all rupee deposit liabilities of commercial banks by 1.00 percentage point to 5.00 per cent with effect from 01 March 2019. The Board also decided to keep the policy interest rates of the Central Bank unchanged at their current levels, and accordingly, the Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank will remain at 8.00 per cent and 9.00 per cent, respectively. The Board arrived at this decision following a careful analysis of current and expected developments in the domestic economy and the financial market as well as in the global economy, with the broad aim of stabilising inflation at mid single digit levels in the medium term to enable the economy to reach its potential.

Economic growth remains below potential

Available leading indicators and current projections suggest that Sri Lanka’s real economic growth will continue to remain subdued during the fourth quarter of 2018 as well, and economic growth in 2019 is also expected to be modest. The economy is expected to gradually reach its potential in the medium term benefitting from the low inflation environment, competitive exchange rate and appropriate policies to support investment.

Despite an uptick in inflation in January 2019, inflation outlook remains favourable in the medium term

Headline inflation and core inflation as measured by the year-on-year change in both Colombo Consumer Price Index (CCPI, 2013=100) and National Consumer Price Index (NCPI, 2013=100) increased in January 2019 mainly due to the increase in non-food inflation driven by higher expenditure on certain items such as house rentals and education. Recent upward adjustments to fuel prices as well as possible increases in administratively determined prices of certain commodities could exert some transitory price pressures in the coming months. However, domestic supply side developments are expected to be favourable in the period ahead. Projections indicate that inflation is likely to remain in the desired 4-6 per cent range in 2019 and beyond.

External sector has witnessed some improvements so far in 2019 amidst challenging global economic conditions

Amidst a modest growth in exports, a slowdown in import expenditure was observed, particularly during the latter part of 2018, resulting from policy measures adopted by the government and the Central Bank to curtail motor vehicle and non-essential goods imports. These developments contained the trade deficit significantly in November and December 2018. The noticeable growth of earnings from tourism continued to support the current account of the balance of payments (BOP),although workers’ remittances recorded a marginal decline in 2018. In the financial account, foreign investments to the government securities market recorded a net inflow thus far during 2019. The Sri Lankan rupee strengthened somewhat underpinned by net inflows to the government securities market and the slowdown in imports along with changing global financial conditions. Meanwhile, Sri Lanka met the scheduled repayment of the maturing International Sovereign Bond of US dollars 1 billion in January 2019. By end January 2019, gross official reserves stood at US dollars 6.2 billion, which was sufficient to finance 3.4 months of imports.

Persistently tight liquidity conditions in the domestic money market

Deficit liquidity conditions in the domestic money market continued to persist at high levels, despite the liquidity injection through the reduction in SRR by 1.50 percentage points to 6.00 per cent in mid-November 2018. In the tight liquidity environment, the Central Bank continued to conduct open market operations appropriately, while allowing the short-term money market rates to remain around the upper bound of the policy rate corridor. Other market interest rates also remained at elevated levels both in nominal and real terms.

Expansion in credit to both public and private sectors was more than expected in 2018 irrespective of tight market liquidity conditions and high interest rates. This was partly attributable tothe private sector borrowers’ short term responses to policies adopted to limit imports and related expectations. The government also relied more on domestic sources of financing, while the weak financial performance of state-owned business enterprises also contributed to credit growth. However, driven by the contraction in net foreign assets of the banking sector, the year-on-year growth of broad money (M2b) decelerated by end 2018 as envisaged.

The monetary policy decision is expected to reduce the liquidity deficit in the domestic money market

Given the current and expected conditions in the domestic economy and financial market, the Monetary Board observed that the continuation of the current neutral monetary policy stance is appropriate. However, the Board was of the view that some policy intervention by the Central Bank to address the large and persistent liquidity deficit in the domestic money market is warranted. Accordingly, the Monetary Board decided to reduce the Statutory Reserve Ratio (SRR) applicable on all rupee deposit liabilities of commercial banks by 1.00 percentage point to 5.00 per cent from the current level of 6.00 per cent with effect from the next reserve maintenance period commencing 01 March 2019. The Standing Deposit Facility Rate (SDFR) and the Standing Lending Facility Rate (SLFR) of the Central Bank will remain unchanged at their current levels.”

     www.CentralBankNews.info

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By The Gold Report

Source: James Kwantes for Streetwise Reports   02/19/2019

James Kwantes of Resource Opportunities profiles a gold explorer that recently released a resource update on its project in northern Quebec.

  • New resource shows 423,000 Au oz Indicated at 1.22 g/t Au and 303,000 Au oz Inferred (1.27 g/t) at Chevrier
  • Genesis Metals joins the Discovery Group; John Robins, Jim Paterson come on as strategic advisors

Chibougamau is Cree for “gathering place” and the First Nations hamlet in northern Quebec served as one long before French explorers and traders travelled the area in the 1600s.

Gold was discovered in 1903 and mining companies followed. Fast-forward 116 years and Chibougamau is now an important hub for the Quebec government’s Plan Nord, an economic development plan designed to open up the vast north of the province to new opportunities, particularly in mining. The initiative has elevated a jurisdiction that was already recognized as among the most mining-friendly in the world.

Genesis Metals Corp.’s (GIS:TSX.V; GGISF:OTC) Chevrier gold project is about 35 kilometers southwest of Chibougamau at the western end of the prolific Abitibi Greenstone Belt, a structure that has produced more than 180 million ounces of gold. Mining operations in the region include Stornoway Diamond Corp.’s Renard mine and the Monster Lake high-grade gold project, a JV between Toma Gold and IAMGOLD.

And Genesis continues to gather ounces at Chevrier, in the Abitibi’s Fancamp Deformation Corridor. An updated resource estimate published February 4 shows 423,000 ounces Indicated at 1.22 g/t gold and another 303,000 ounces Inferred at 1.27 g/t gold at the Main Zone and East Zone at Chevrier. Average grades have decreased because Genesis moved to a lower cut-off grade (0.3 g/t in-pit, 0.95 g/t u-g) for the resource update.

The resource update establishes Chevrier as a growing open-pittable deposit with higher-grade underground and discovery possibilities, says Genesis chairman and CEO Brian Groves.

“This resource is a significant milestone in the history of Chevrier. We have developed a robust model for gold mineralization in the Main Zone with multiple new targets elsewhere on the property,” Groves said. “With our recently strengthened technical team, we will now explore the potential for expansion of the mineralized envelopes as well as other targets on the 130-square-km property.”

Joining John Robins’ Discovery Group should help Genesis tap into talent and open doors. Robins and Discovery Group principal Jim Paterson have joined Genesis as strategic advisors. The group, founded by Robins in 2005, has an impressive record of creating shareholder value in a dismal market, including:

  • the $520-million sale of Kaminak to Goldcorp in 2016;
  • the 2018 sale of Northern Empire Resources to Coeur Mining for $117 million;
  • Great Bear Resources has been a junior mining standout, with a 1-year return of more than 600% on bonanza-grade gold discoveries at its Dixie project in Ontario’s Red Lake district.

Paterson has already been key to helping Sundar build out the Genesis team. Paterson tapped into his extensive network to attract three experienced operators for the Genesis technical team: geologists Rob Carpenter and Garrett Ainsworth and engineer/financier Andrew Ramcharan. The trio joined the advisory board in November. Each should help unlock further value at Chevrier, including potential new discoveries.


Kaminak co-founder Rob Carpenter, a strategic advisor to Genesis Metals, checks out Chevrier drill core.

Carpenter and Ainsworth are familiar names to Canadian mining investors. Carpenter was co-founder and the former CEO of Kaminak Gold and key to identifying the 5-million-ounce Coffee gold deposit purchased by Goldcorp. Among other ventures he is a director of White Gold, where he is helping legendary Yukon prospector Shawn Ryan explore the White Gold district between Coffee and the Klondike goldfields.

As for Ainsworth, the exploration geologist’s greatest accomplishments have been in the western Athabasca Basin. As VP Exploration for Alpha Minerals, Ainsworth discovered the Patterson Lake South uranium deposit now being advanced by Fission Uranium (which bought Alpha). Ainsworth then spent four years at NexGen Energy as VP Exploration and Development, a period that saw NexGen’s shares soar from 30 cents to above $4.00 as it expanded the ultra-high-grade Arrow uranium deposit in Saskatchewan.

Andrew Ramcharan, an engineer and graduate of the Colorado School of Mines, was Managing Director of Project Evaluation for debt and equity financings at Sprott Inc. He also worked with IAMGOLD on M&A. Stephen Williams, a metallurgical engineer who is Vice-President of Corporate Development and Investor Relations for Bluestone Resources, has also joined the Genesis board of directors. He previously worked for Canaccord Genuity as a director of the metals and mining investment banking team.

Quebec has earned a reputation as one of the world’s best mining jurisdictions. Now, the province’s Plan Nord has opened up Quebec’s vast north, providing linkages to already exceptional infrastructure in Chevrier’s immediate neighborhood (the Abitibi’s Fancamp Deformation Corridor). The Genesis gold project is near major highways and a rail line, and has a regional road running through it, as well as an airport nearby. The solid infrastructure in a safe jurisdiction tick off two of the main boxes for both investors and potential suitors.

Jeff Sundar, the president of Genesis, is younger than most mining execs. But he has been working in the sector long enough to see cycles come and go. Sundar has also experienced M&A success, in both 2010 and 2018. He was a director of Underworld Resources, which was acquired by Kinross for $138 million in July 2010 for its White Gold deposit in west-central Yukon (now owned by White Gold Corp). More recently, Northern Empire Resources—where Sundar was on the board—and its Sterling gold project was acquired by Coeur Mining for $117 million.

But the years between those takeovers were mostly punishing, for Genesis and the whole sector. Genesis completed a successful 10,000-meter drill program in 2017 that firmed up the resource at the Main Zone and identified new target areas. But the company received little recognition for it in the market, even though most intercepts were within 150 meters of surface. The final assays, announced Jan. 22, 2018, included some of the best mineralization yet:

  • 21.35 meters of 8.73 g/t gold including 3 meters of 37.97 g/t;
  • 22.6 meters of 3.59 g/t Au;
  • 19.4 meters of 4.26 g/t Au including 7.8 meters of 8.99 g/t.The program helped Genesis develop a new geological model that laid the foundation for the resource update. Company geologists followed up this past summer with a surface prospecting and mapping program that defined extensions to Main Zone mineralization and identified new target areas. The work was funded by Quebec investment funds that provide assistance to active junior exploration companies in the province.

    As for the price of gold, Sundar believes the timing could be right. Gold equities have seldom been cheaper relative to the price of gold, he pointed out.


    XAU (gold miners index) to gold ratio.

    “Generalist interest is returning to the space,” Sundar said. “People are starting to look at gold and gold equities again. With new team members providing a fresh look at our Chevrier deposit, including the potential for new discoveries, Genesis is well-positioned to capitalize.”

    Genesis shares sank as low as 6 cents during tax-loss selling season in December. The stock has since rebounded to the 10-cent level, giving Genesis a market capitalization of about $8.7 million.

    Genesis Metals (GIS-V)

    Price: 0.085

    Shares outstanding: 101.8 million (137.7 million fully diluted)

    Market cap: $8.65 million

    James Kwantes is the editor of Resource Opportunities, a subscriber supported junior mining investment publication. Kwantes has two decades of journalism experience and was the mining reporter at Vancouver Sun, the city’s paper of record.

    Disclaimer: James Kwantes owns Genesis shares and Genesis Metals is a Resource Opportunities sponsor company. Readers are advised that this article is solely for information purposes. Readers are encouraged to conduct their own research and due diligence, and/or obtain professional advice. The information is based on sources which the publisher believes to be reliable, but is not guaranteed to be accurate, and does not purport to be a complete statement or summary of the available data.

    Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

    Disclosure:
    1) James Kwantes’ disclosures are listed above.
    2) The following companies mentioned are billboard sponsors of Streetwise Reports: Great Bear Resources. Click here for important disclosures about sponsor fees. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security.
    3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
    4) The article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
    5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article.

    Photos and graphics provided by the author.

    ( Companies Mentioned: GIS:TSX.V; GGISF:OTC,
    )

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By IFCMarkets

Bank of Mexico may cut the rate

In this review, we will consider the chart of the euro against the Mexican peso. Is there a possibility for the EURMXN to rise?

Such a movement occurs when the euro strengthens and the Mexican peso weakens. The current account balance of Mexico has been negative for already 30 years. In the 4th quarter of 2018, the deficit was $5.08 billion. In the Eurozone, the current account balance is positive at nearly 20 billion euros per month. Such dynamics can contribute to the strengthening of the European currency against the Mexican peso. An additional negative factor for the peso may be the rate cut of the Bank of Mexico (8.25%) at its next meeting on March 28, 2019. Market participants estimate the likelihood of such an event at the level of 70%. In addition, the Mexican government is going to increase spending to provide financial assistance to the state oil company Pemex in the amount of $3.6 billion. Investors fear that this will not be enough amid its debt in the amount of $106 billion. In turn, the main risk for the euro is the launch of the new money emission for the TLTRO program. The ECB may report any details at its next meeting on March 7, 2019.

On the daily timeframe, EURMXN: D1 is correcting upwards within the wide neutral channel. A number of technical analysis indicators formed buy signals. The further price increase is possible in case of positive macroeconomic news in the EU and negative – in Mexico.

  • The Parabolic Indicator gives a bearish signal. It can be used as an additional resistance level, which should be overcome before opening a buy position.
  • The Bollinger bands have narrowed, which indicates low volatility. The lower Bollinger band is titled upward.
  • The RSI indicator is above 50. It has formed a positive divergence.
  • The MACD indicator gives a bullish signal.

The bullish momentum may develop in case EURMXN exceeds the upper Bollinger band, the Parabolic signal and its two last fractal highs at 22. This level may serve as an entry point. The initial stop loss may be placed below the two last fractal lows and the lower Bollinger band at 21.5. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level (21.5) without reaching the order (22), we recommend to close the position: the market sustains internal changes that were not taken into account.

Summary of technical analysis
Position Buy
Buy stop Above 22
Stop loss Below 21.5

Market Analysis provided by IFCMarkets

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Article by ForexTime

Global sentiment and risk appetite will be heavily influenced by the outcome of high-level trade talks between the United States and China that began in Washington yesterday.

While there is a growing sense of optimism over both sides securing a deal, a more realistic outcome will be for an agreement to extend the 1 March deadline. Such a development will open the doors to further negotiations down the road – ultimately removing some element of uncertainty over trade, while also reducing tensions. A return of risk appetite amid easing tensions will certainly be good news for global equities and emerging markets but will signal bad luck for King Dollar.

It has not been the best of trading weeks for the Dollar, especially after minutes from January’s FOMC meeting revealed that policymakers were unsure if rate hikes were needed this year. The Dollar is clearly facing multiple headwinds in the form of disappointing economic data and speculation over the Fed taking a long pause on rate hikes this year. While the economic and central bank divergence between the United States and everyone else seems to be supporting the Dollar, the question is – for how long? The Dollar may lose its throne, as fears over US growth slowing down sends investors to other safe-havens like the Japanese Yen and Swiss Franc.

In the United Kingdom, the Brexit saga has dragged on for too long and this fatigue is slowly being reflected in the Pound’s valuation. This was a week filled by Brexit noise, political drama in the UK and endless uncertainty. The pessimism over Theresa May securing any deal with the EU was re-confirmed this morning, after an EU official stated that “there will be no deal in the desert” at the summit in Egypt next week. I believe the Pound could still be offered a lifeline amid the chaos if the government extends Article 50 in an effort to prevent a no deal outcome. Taking a look at the technical picture, bears are seen to be re-entering the scene if a weekly close below the psychological 1.3000 level is achieved.

Taking a peek into the commodity markets, Gold is set to cap two consecutive weeks of gains after briefly reaching its highest level since April 2018 earlier this week. With US President Donald Trump set to meet China’s top trade negotiator, Vice Premier Liu He, later today, investors are left hanging on the edge of their seats just one week before the 1 March deadline. Any positive headlines of a trade deal being struck between the world’s two largest economies may put downward pressure on bullion prices. On the other hand, concerns about global growth momentum may offer support for Gold. Recently, weaker-than-expected economic data out of the US is starting to pose questions about the resilience of the world’s largest economy, especially when set against the slowdown evident in the EU and China.

In regards to the technical perspective, the precious metal seems to be in the process of creating a new higher low. The bullish trend on the daily charts remains valid above the $1303 support level.

Disclaimer: The content in this article comprises personal opinions and should not be construed as containing personal and/or other investment advice and/or an offer of and/or solicitation for any transactions in financial instruments and/or a guarantee and/or prediction of future performance. ForexTime (FXTM), its affiliates, agents, directors, officers or employees do not guarantee the accuracy, validity, timeliness or completeness, of any information or data made available and assume no liability as to any loss arising from any investment based on the same.

Article by ForexTime

ForexTime Ltd (FXTM) is an award winning international online forex broker regulated by CySEC 185/12 www.forextime.com

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By The Gold Report

Source: Maurice Jackson for Streetwise Reports   02/19/2019

John-Mark Staude, president and CEO of Riverside Resources, talks with Maurice Jackson of Proven and Probable about successes in 2018 and the outlook for 2019.

Maurice Jackson: Joining us for a conversation is Dr. John-Mark Staude, the president and CEO of Riverside Resources Inc. (RRI:TSX.V; RVSDF:OTCQB), where knowledge is golden. Dr. Staude, welcome to the show, sir.

John-Mark Staude: Thank you, Maurice.

Maurice Jackson: We brought you on today to highlight some of Riverside Resources successes of last year and the company’s outlook for 2019. But before we begin, for first time listeners who is Riverside Resources?

John-Mark Staude: Riverside is a prospect generator. We’ve been working for 12 years, finding projects and finding partners through the prospect generator business. We’ve been able to expose ourselves to great upside while limiting the downside risk.

Maurice Jackson: You referenced that you are a prospect generator. There’s a lot of ambiguity regarding prospect/project generators, therefore speculators often overlook them in their portfolio. What type of competitive advantages does a shareholder have with a project generator over traditional exploration companies?

John-Mark Staude: I think the first thing is you’ve got a tight share structure, key that other people are spending the money. The second is you get a lot of shots, multiple different projects going simultaneously. Third is you don’t have the management teams that have to continually go back and refinance, so they can be focused on discovery for the shareholders. Those three things make prospect generators one of the better ways to invest in mineral exploration.

Maurice Jackson: Let’s revisit 2018 and share some of the successes of Riverside Resources that will serve as catalysts for 2019.

John-Mark Staude: I think the first thing was that we were able to leverage off of our previous work on copper, so that in 2019 we’ll be able to generate new big strategic alliances. I think the second thing was we signed a letter of intent with Sinaloa Resources, and now in 2019 we’ll have the definitive agreement and the go forward drill program. I think a third thing was the work that we did on Cecilia. High-grade gold mineralization, very good geology. Now in 2019 we can see drilling. So we have lots of catalysts in 2019. We’re really excited about this coming year.

Maurice Jackson: Speaking of 2019, let’s discuss the outlook for this year. What is new and what does Riverside Resources have planned this year?

John-Mark Staude: I believe one of the key things is a new strategic alliance. Getting a strategic partner will be awesome, and I think we have that in our sights. I think the second thing will be drilling. We have now got a definitive agreement progressing with Sinaloa Resources, and we’ll have additional new assets added into the portfolio. We’ll also diversify beyond Mexico. We’ve done well in Mexico, but we’ve also been successful previously in porphyry coppers in Canada and large gold systems in Arizona, and I think in 2019 we’ll again see us diversify beyond Mexico to capture great new opportunities.

Maurice Jackson: I want to expand further on the value preposition of Riverside Resources here. Germane to this discussion are the prices of gold, silver and copper. Twofold question. What are some of the catalysts you see that will change these prices, and what type of impact can we expect that this will have on Riverside Resources?

John-Mark Staude: One of the catalysts we see now is some of the uncertainty around trade and some of the uncertainty particularly in the gold price and with this gold price we actually see that has been rising up; that for us is excellent. We have gold assets in the ground, and gold potential to grow. So I think the gold will be a really key way to do this.

Maurice Jackson: Let’s be a little bit more specific for current and prospective shareholders. What type of competitive advantages does Riverside Resources have in the natural resource space included in this discussion with the prices moving?

John-Mark Staude: One of the competitive advantages we have is knowledge. We have knowledge, we have been able to find gold. We’ve been able to find copper. We’ve been successful. We’ve worked in this region and made discoveries that have then been built into mines. That’s a competitive advantage. The second is we’re all running. We’re in the position, we didn’t have to stop during the downturn times. We’ve been able to continually keep the same strong technical people. I know, Maurice, you’ve actually been out to site, other people come out to site. We can really demonstrate out on site the great development and ease to do the work. I think our turnkey ability has been shown by strategic alliances we’ve done in the past, and many projects we’ve been able to turn over. So in 2019, that creates great chance for catalyst rising gold prices, with potentially rising copper prices, with copper demand from electric cars, other copper usage. Riverside’s in an awesomely great position.

Maurice Jackson: Speaking of site visits, yes, I was there in April 2018 at the Cecilia, and I noticed there a lot of the intangibles that don’t show up on the balance sheet. Could you share some of those with us?

John-Mark Staude: I think one of the ones is relationships. When you come out to the site you can see how well we get along with the local people. I think the second is ease of access, you can see that we have the gate keys, we have the ease to get to the projects, paved roads into the area’s infrastructure. It’s so easy to look at a map, but in reality when you go out and see that you can drive on paved roads, when you have power lines, when you have water, when you have all of that stuff. I think the other intangible is our team. When you can see that we have the people in the back of our company that do the work for many other supporting groups, can really do a good work. Riverside has a sought-after team. I think those are in some of the intangibles that really make Riverside unique.

Maurice Jackson: Speaking of your team, a lot of them are seasoned in their tenure. Talk to us about how many years they’ve been with Riverside.

John-Mark Staude: Riverside’s been going 12 years and some of them been going with us ever since the beginning. Many of them have worked with me before Riverside. I used to work at Teck Resources, prior to that at BHP, and even prior to that back in the 1990s at Magma Copper, and some of these individuals that work with me today worked with me back then. We’ve been friends up to 30 years, and we’ve been able to be involved and we therefore we know we have trust, we know what we can count on, and we know we have the skills that deliver excellent projects, and the excellence to trust in what we’re doing.

Maurice Jackson: Speaking of Mexico, there’s a new president. What type of impact do you foresee the new administration having on Riverside Resources?

John-Mark Staude: It’s interesting, we were a bit concerned initially, back when the elections happened, hearing about socialist different movements and things, but really interesting, since December 1st when he’s been elected, it’s actually been pro capitalism, pro-development. There continue to be noises going back and forth about different issues, and they’ll have to get settled out. But we’re actually quite positive about the new president AMLO, and we’re also quite president about his words and efforts that he says towards helping develop favorability towards investments. So, we actually see that this new administration will be able to be a good push for the mining industry. We’re pretty pleased with what’s happening now.

Maurice Jackson: Switching gears slightly, to make the Riverside Resources project portfolio come to fruition, joint venture partners have to be willing to commit to projects. What is their current level of commitment that Riverside Resources is seeing right now?

John-Mark Staude: Right now, the first thing is the really big strategic alliance we have coming. Second is a drill program and funding with Sinaloa Resources. We’ll come up with the news release coming out quickly here as we finalize the definitive agreement, which we’ve not yet finalized, but we’ll get that done, and that’ll actually be a major program. We’ll also find that we have work on the copper, gold and silver assets, and we’re working on spinning out our transaction for one of our other properties. So, we actually see quite a few number of flows of capital coming in, and quite a few catalysts in 2019 due to the partner spending.

Maurice Jackson: You touched on it briefly, how does amalgamation fit into this narrative, and how realistic is the proposition of amalgamation?

John-Mark Staude: So at this point what we’re talking about is actually taking one of our assets into another company. We’ve been working on it now. Two aspects, one is the capital and the other is the other party, the ability and interest to be able to carry it forward. We’re working on that now, and I think it’s fairly realistic to do. It’s not something that we’ve put all of our eggs into, but it would be a great step for Riverside to give our shareholders another set of shares, another strategic way of increasing shareholder value. I think we have the right team on the other side. This will be a really exciting transaction going forward.

Maurice Jackson: John-Mark, what do you see as the biggest challenge for Riverside Resources, and how would you mitigate that situation?

John-Mark Staude: One of the big challenges is getting more partners in Mexico, and the way we’re mitigating it is by doing work again outside of Mexico, and by doing that we have our skills and we have Freeman Smith, our Vice President, Exploration, lives in Vancouver, knows the Canadian portfolios and Canadian assets, and we live in Vancouver, Canada, so it really fits for us to be able to diversify. That diversification really helps our shareholders as well. It helps us being in Mexico, and leveraging off of our knowledge in other places as well, using our skills. We’re in a great position for 2019.

Maurice Jackson: Let’s touch on the capital structure here briefly. John-Mark, Riverside has a proven record of being a good steward of capital. Remind us how many shares outstanding there are, enterprise value, and where does the company stand financially?

John-Mark Staude: Riverside has almost 45 million shares out, after going for 12 years. That’s remarkable. Financially, we have $1.5 million cash, and the market is actually very low right now. So myself, I’m buying more shares. We’re at a low in the market conditions right now, and I think there’s great upside right now. Our enterprise value is only $5 million. Our market cap is $7 million. We’re in a good situation to have a good leverage to the upside now.

Maurice Jackson: Last question. What did I forget to ask?

John-Mark Staude: Well, you always ask great questions. I think one of the other things is what do we actually see in the next news release? I think the next news release for us will be the signing of a deal. Signing of deals is great. Those are the momentum steps that we like. Also, the addition of a new asset. We’re excited by that. So I think we have two new things coming on, short term, that will really make a difference for Riverside.

Maurice Jackson: Dr. Staude, for someone listening that wants to get more information on Riverside Resources, please share the contact details.

John-Mark Staude: We’re at www.rivres.com, or give us a call at (778) 327-6671.

Maurice Jackson: As a reminder, Riverside Resources trades on the TSX, symbol RRI, and on the OTCQB, symbol RVSDF. As reminder, Riverside Resources is a sponsor of Proven and Probable, and we are proud shareholders of Riverside Resources for the virtues conveyed in today’s message. And last but not least, please visit our website, provenandprobable.com, where we deliver mining insights and bullion sales. You may reach us at contact@provenandprobable.com.

Dr. John-Mark Staude of Riverside Resources, thank you for joining us today on Proven and Probable.

Maurice Jackson is the founder of Proven and Probable, a site that aims to enrich its subscribers through education in precious metals and junior mining companies that will enrich the world.

Sign up for our FREE newsletter at: www.streetwisereports.com/get-news

Disclosure:
1) Maurice Jackson: I, or members of my immediate household or family, own shares of the following companies mentioned in this article: Riverside Resources. I personally am, or members of my immediate household or family are, paid by the following companies mentioned in this article: None. My company has a financial relationship with the following companies mentioned in this article: Riverside Resources is a sponsor of Proven and Probable. Proven and Probable disclosures are listed below.
2) The following companies mentioned in this article are billboard sponsors of Streetwise Reports: None. Click here for important disclosures about sponsor fees.
3) Statements and opinions expressed are the opinions of the author and not of Streetwise Reports or its officers. The author is wholly responsible for the validity of the statements. The author was not paid by Streetwise Reports for this article. Streetwise Reports was not paid by the author to publish or syndicate this article. The information provided above is for informational purposes only and is not a recommendation to buy or sell any security. Streetwise Reports requires contributing authors to disclose any shareholdings in, or economic relationships with, companies that they write about. Streetwise Reports relies upon the authors to accurately provide this information and Streetwise Reports has no means of verifying its accuracy.
4) This article does not constitute investment advice. Each reader is encouraged to consult with his or her individual financial professional and any action a reader takes as a result of information presented here is his or her own responsibility. By opening this page, each reader accepts and agrees to Streetwise Reports’ terms of use and full legal disclaimer. This article is not a solicitation for investment. Streetwise Reports does not render general or specific investment advice and the information on Streetwise Reports should not be considered a recommendation to buy or sell any security. Streetwise Reports does not endorse or recommend the business, products, services or securities of any company mentioned on Streetwise Reports.
5) From time to time, Streetwise Reports LLC and its directors, officers, employees or members of their families, as well as persons interviewed for articles and interviews on the site, may have a long or short position in securities mentioned. Directors, officers, employees or members of their immediate families are prohibited from making purchases and/or sales of those securities in the open market or otherwise from the time of the interview or the decision to write an article, until one week after the publication of the interview or article. As of the date of this article, officers and/or employees of Streetwise Reports LLC (including members of their household) own securities of Riverside Resources, a company mentioned in this article.

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The Information presented in Proven and Probable is provided for educational and informational purposes only, without any express or implied warranty of any kind, including warranties of accuracy, completeness, or fitness for any particular purpose. The Information contained in or provided from or through this forum is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice. The Information on this forum and provided from or through this forum is general in nature and is not specific to you the User or anyone else. You should not make any decision, financial, investments, trading or otherwise, based on any of the information presented on this forum without undertaking independent due diligence and consultation with a professional broker or competent financial advisor. You understand that you are using any and all Information available on or through this forum at your own risk.

( Companies Mentioned: RRI:TSX.V; RVSDF:OTCQB,
)

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Analytics by JustForex

The EUR/USD currency pair
Technical indicators of the currency pair:
  • Prev Open: 1.13362
  • Open: 1.13330
  • % chg. over the last day: +0.02
  • Day’s range: 1.13301 – 1.13492
  • 52 wk range: 1.1214 – 1.2557

USD index (#DX) keeps recovering. The investors are waiting for additional drivers. Yesterday the US published ambigous economic reports. At the same time, the American currency was supported by the growth of the 10-year government bonds yield to the weekly maximum. The negotations between the Washington and Beijing remain in the spotlight. Keep an eye on this issue and open positions from the key levels of 1.13250-1.13500.

The Economic News Feed for 22.02.2019:

  • – IFO Business Index (GER) – 11:00 (GMT+2:00);
  • – Consumer Price Index (EU) – 12:00 (GMT+2:00);
  • – Federal Reserve Monetary Policy Report (US) – 18:00 (GMT+2:00);

Indincators do not provide precise data, the price has crossed 50 MA.

The MACD histogram is close to 0.

The Stochastic Oscillator is near the overbought zone, the %K line is above the %D line, which gives a weak signal to buy EUR/USD.

Trading recommendations
  • Support levels: 1.13250, 1.13000, 1.12800
  • Resistance levels: 1.13500, 1.13700, 1.14000

If the price fixes above 1.13500, expect the quotes to grow toward 1.13700-1.14000.

Alternatively, the quotes can fall toward 1.13000-1.12800.

The GBP/USD currency pair
Technical indicators of the currency pair:
  • Prev Open: 1.30503
  • Open: 1.30251
  • % chg. over the last day: -0.08
  • Day’s range: 1.30244 – 1.30513
  • 52 wk range: 1.2438 – 1.4378

GBP/USD keeps being traded in a flat. There is no single defined trend. The ambiguousness around Brexit remains, which puts addtional pressure on the GBP. Keep an eye on the relevant data on this subject. The local support and resistance levels are 1.30250 and 1.30750. You should open positions from these levels.

The Economic News Feed for 22.02.2019 is calm.

The indicators do not provide precise signals, the price has crossed 50 MA.

The MACD histogram is close to 0.

The Stochastic Oscillator is in the neutral zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations
  • Support levels: 1.30250, 1.29800, 1.29400
  • Resistance levels: 1.30750, 1.31150, 1.31500

If the price fixes above 1.30750, expect the quotes to grow toward 1.31150-1.31400.

Alternatively, the quotes can correct toward 1.29800-1.28600.

The USD/CAD currency pair
Technical indicators of the currency pair:
  • Prev Open: 1.31752
  • Open: 1.32252
  • % chg. over the last day: +0.38
  • Day’s range: 1.32160 – 1.32419
  • 52 wk range: 1.2248 – 1.3664

Yesterday USD/CAD quotes retreated from the local minimums. The CAD is consolidating around 1.32100-1.32400 with an ambiguous technical picture. The investors are waiting for the retail sales report from Canada. Keep an eye on the oil quotes dynamics. You should open positions from the key levels.

The Economic News Feed for 22.02.2019:

  • – Retail Sales Report (CAD) – 15:30 (GMT+2:00);

The indicators do not provide precise signals, the price fixed between 50 MA and 200 MA.

The MACD histogram is in the positive zone but below the signal line, which gives a weak signal to buy USD/CAD.

The Stochastic Oscillator is in the neutral zone, the %K line is below the %D line, which points to a bearish mood.

Trading recommendations
  • Support levels: 1.2248 – 1.3664
  • Resistance levels: 1.32400, 1.32600, 1.32800

If the price fixes below 1.32100, look for the market entry points to open short positions. The movement will tend toward 1.31800-1.31600.

Alternatively, the quotes can grow toward 1.32600-1.32800.

The USD/JPY currency pair
Technical indicators of the currency pair:
  • Prev Open: 110.828
  • Open: 110.689
  • % chg. over the last day: -0.14
  • Day’s range: 110.620 – 110.808
  • 52 wk range: 104.56 – 114.56

The safe haven currency keeps trading in a long flat. The technical picture is ambiguous. The USD/JPY quotes are testing the local support and resistance levels at 110.650 and 110.900. Keep an eye on the US Treasury bonds yield. The financial market participants are waiting for news on the US/China trading negotiations.

In January, Japanese national basis index of consumer prices confirmed the forecasts and reached 0.8%.

The indicators do not provide precise data, the price has crossed 50 MA and 200 MA.

The MACD histogram is close to 0.

The Stochastic Oscillator is in the neutral zone, the %K line is crossing the %D line. There are no signals at the moment.

Trading recommendations
  • Support levels: 110.650, 110.450, 110.250
  • Resistance levels: 110.900, 111.100, 111.500

If the price fixes below the support level of 110.650, expect the quotes to rise toward 110.400-110.200.

Alternatively, the quotes can grow toward 111.100-111.400.

Analytics by JustForex

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by JustForex

The US dollar is moving without a clear dynamic against the basket of major currencies. Yesterday, the dollar index (#DX) closed the trading session with a slight increase (+0.18%). The United States has published ambiguous statistics. Core durable goods orders rose by 0.1% in December instead of 0.2%. Philadelphia Fed manufacturing index declined significantly in February and counted to -4.1, while investors expected growth to 15.6. Existing home sales counted to 4.94M in January and were worse than market expectations at the level of 5.01M. At the same time, the American currency was supported by the growth in the US government bonds yield to a weekly maximum.

The ECB monetary policy meeting account did not have a significant impact on the euro. Regulator considers the possibility of launching the next round of targeted longer-term refinancing operations (TLTRO) for Eurozone banks. This means a likely increase in stimulation in the Eurozone. The regulator wants to sum whether the slowdown in economic growth in the Eurozone is enough to require the launch of a new round of TLTRO.

The British pound is being traded near monthly highs against the US dollar. Yesterday, European Commission President, Jean-Claude Juncker, said that he was not optimistic about the negotiations with the UK about avoiding the “tough” Brexit. It also became known that the country would not have time before March 29, the date of Brexit, to conclude new agreements on the conditions of cooperation with many countries outside the EU, which would significantly complicate Britain’s trade relations with partners.

The “black gold” prices became stable. At the moment, futures for the WTI crude oil are testing the mark of $57.10 per barrel. At 20:00 (GMT+2:00), a report on the US Baker Hughes total rig count will be published.

Market Indicators

Yesterday, the bearish sentiment was observed in the US stock market: #SPY (-0.36%), #DIA (-0.37%), #QQQ (-0.37%).

The 10-year US government bonds yield has been growing. Currently, the indicator is at the level of 2.68-2.69%.

The news feed on 22.02.2019:

– German IFO business climate index at 11:00 (GMT+2:00);
– Consumer price index in the Eurozone at 12:00 (GMT+2:00);
– Statistics on retail sales in Canada at 15:30 (GMT+2:00);
– Fed monetary policy report at 18:00 (GMT+2:00).

We also recommend paying attention to the speech by the ECB President.

by JustForex

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