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Weekly Survey of Gold and Silver Prices
Money Daily has been providing business and financial market news, views, and coverage on a nearly continuous basis since 2006. Complete archives are available at moneydaily.blogspot.com.
Money Daily has been providing business and financial market news, views, and coverage on a nearly continuous basis since 2006. Complete archives are available at moneydaily.blogspot.com.
Friday, September 1, 2023, 9:00 am ET
Through Thursday, marking the last day of August, stocks are higher for the week. The Dow is up 375 points, the NASDAQ ahead by 444 points (3.27%) and the S&P is up 101. Stocks have spent the last week making up for losses incurred during the earlier part of the month.
The Dow has fared the worst. Since peaking on July 31, it is down over 900 points. Over the same span, the NASDAQ ended August down 312 points, while the S&P dropped 81 points. Overall, the month of August was dissatisfying to the longs in the market. With September the worst month for stocks since 1945, the average decline on the S&P has been -0.73%, the lowest performance of any calendar month.
Perhaps most concerning is the Dow Transportation Average losing 5.81% since its peak on July 28. As the saying goes, "move it or lose it," implying that transportation costs and viability are affecting domestic and international trade, which has been on the wane due to sanctions imposed by Western nations, political tensions and the failure of China to recover fully from lockdowns and restrictions from COVID-related policies.
Declining output from China's manufacturing sector can largely be attributed to falling demand in Europe and the United States. Without exports, China cannot keep factories at full capacity, as its domestic economy is not well advanced and consumers are suffering from a severe downturn in the housing market, where much of China's wealth is invested. A continuation of the housing crisis which began over a year-and-a-half ago with the collapse of property developer Evergrande threatens to upend the country's brief affair with prosperity achieved through the first two decades of the 21st century.
Since early 2020, China's economy may have suffered more than any other nation because of its reliance on exports and the well-being of their trading partners, primarily, Europe and the United States. As Western nations have focused on policies designed to limit the commerce of others, their own domestic economies have not done well. Rising interest rates are making conditions even tighter although the recession that's been forecast since the latter part of 2022 has failed to materialize, at least according to dodgy data that always seems to be revised lower months out.
The BRICS summit last week may have put an exclamation point on the current state of affairs as six more countries are due to become full members of the trade and security bloc soon to become BRICS+. The addition of Iran, Saudi Arabia and the UAE tightens their grip on global energy production, killing off the petrodollar while establishing new control by parties that may no longer be characterized as "friends" of the United States and Western partners.
While Wall Street plays the denial game, pressing the "all good" narrative of which it is so fond, hopes are high that the labor market cracks and companies accelerate cost-cutting measures in the labor market. Their logic that a reeling economy will keep the Fed from raising interest rates even further is based on the slipshod notion that the Fed will be forced to turn its attention away from fighting inflation to keeping the lights on in America. What they fail to consider is that demand falls during recessions, leading to lower prices and squeezed profit margins.
Besides, the Fed consistently is behind the curve, so theres no guarantee that they'll open the money spigots at the most opportune time, if at all, should the economy slow down.
More insight on the relative strength or weakness in terms of employment comes in the form of the August non-farm payroll reports, released at 8:30 am ET. So-called experts were expecting the August jobs number to come in at 175,000. The number came in exactly equal to July's figure of 187,000, at least before July (and June) were revised lower. The unemployment rate rose sharply, from 3.5% to 3.8%.
The change in total non-farm payroll employment for June was revised down by 80,000, from +185,000 to +105,000, and the change for July was revised down by 30,000, from +187,000 to +157,000. With these revisions, employment in June and July combined is 110,000 lower than previously reported. Seems to be a trend the past few weeks: everything is being revised lower than initially reported. Surely, August's numbers will be revised lower and July's taken down another 10-20,000 or so next month.
Job creation has been lower in 2023 than in prior years, back to 2020.
With the August number coming in higher than expectations but revisions and the official unemployment rate casting a long shadow over the labor market, there's something for everybody in this report. The White House can trot Brandon out to the press and proclaim again how well "Bidenomics" is working, while the sharks at trading desks will see an opportunity to once more suggest that the Fed must stop raising rates, now that employment is heading in the wrong direction.
Equity futures were likely focused on the unemployment rate and lower revisions. In keeping with the recent "bad news is good news" for stocks mantra, futures leapt higher on the release of the August data. Gold and silver were bid higher, with the dollar suffering losses against the yen, euro, and pound.
Happy days are here again!
At the Close, Thursday, August 31, 2023:
Thursday, August 31, 2023, 9:19 am ET
After Tuesday's JOLTS-inspired rally, Wall Street insiders, who routinely trade on some of the most perverted logic money can buy, were gifted with a pair of negative data dumps to keep the rally going for a fourth straight session. ADP discovered only 177,000 new jobs were created in the month of July, while the Commerce Department managed to lower it's second estimate of second quarter GDP from the initial estimate of 2.4% annualized growth, to a shrinking 2.1%.
Since the GDP numbers are not indexed to inflation, it's more likely than not that the economy was actually shrinking since official CPI was hovering around four percent over the period from April 1 through June 30. Had the announcement been in that regard, stocks might have leapt even higher, because nothing makes a stock picker and client juicer more raging than an economic collapse.
The current faddish behavior of stock "investing" is taking the "soft landing" narrative and themselves all too seriously. In the belief that if the economy hits the skids or is convincingly heading that way, the FOMC of the Federal Reserve will stop raising interest rates and eventually return to lowering them, goosing the economy with more easy money, as was the case through most of this century.
This kind of "pivot wishing" has been in effect since about the beginning of October last year, but really gained traction at the start of 2023. Since that time, the most-favored stocks on the NASDAQ, lovingly dubbed "the Magnificent Seven (Microsoft, Amazon, Apple, Alphabet (Google), Tesla, Nvidia, Meta Platforms) have been tearing it up, dragging the entire index along with it. The NASDAQ is up 35% this year, outpacing rival indices by country miles. The Dow has gained a mere five percent; the S&P is up 18 percent.
Thursday morning, the Labor Department released the latest unemployment figures, showing the number of Americans filing for initial jobless benefits dropping to 228,000, down from from 232,000 last week, close to six-month lows.
That qualified as good news, which may or may not be good news for the stock market and is most likely to be interpreted as bad news (not good). OK, this is getting confusing.
But, wait, there was more bad news released Thursday morning prior to the opening bell. as one of the Fed's favorite flavors of inflation indicators rose 4.2% on an annual basis in July, topping June's +4.1%. The Core Personal Consumption Expenditure (PCE) Deflator is watched closely by Fed officials as they fight tirelessly in a life-and-death struggle to rid the world of the scourge of inflation (that's sarcasm, folks) while salvaging the last two percent of purchasing power remaining in the soon-to-be-extinct US dollar.
Headline PCE jumped up to plus 3.3% year-over-year, constituting the he largest bump in that series since June of last year. Ugh! More bad news.
The problem with this particular brand of bad news is that it's from the wrong package. This is within the inflation bad news wrapper, which is actually bad news for stock junkies, since any uptick in inflation or inflation expectations means the Fed will have more of an inclination to lean into interest rates a little harder.
Because the Fed has been so hell-bent on fighting inflation, this bad news is actually not good, in other words, bad. This is where it gets tricky for equity participants. How much and of what varieties of bad news will constitute a breaking point, at which bad news is no longer good news, but just remains stinky, contemptible bad news?
Slowing arms shipments to Ukraine? Crashing of the commercial real estate market? Another round of COVID, complete with mandates (as opposed to woman-dates... soooo sexist;) and lockdowns? Nuclear war?
At some point bad news is just bad, but that's a story for another day, another planet perhaps. For today, stock futures are feasting on whatever news the algorithms are feeding them, with Dow futures leading the way, up more than 100 points a half hour before the opening bell. S&P futures are up about eight points, and NASDAQ futures are pretty much flat, though they are improved from levels preceding the two data releases this morning.
So, word, it's all good. Or, bad. Depends on where you're sitting.
At the Close, Wednesday, August 30, 2023:
Wednesday, August 30, 2023, 9:15 am ET
Bad news is good news now that stocks have exceeded the event horizon. Tuesday's JOLTS report showed an unexpected drop in job openings to below nine million for the first time since March 2021.
That was all Wall Street needed to send stocks screaming higher on the basis of a slowing economy (fewer jobs) prompting the Federal Reserve to slow the pace of rate increases and possibly cease altogether. The next FOMC meeting is just three weeks away, on September 19-20, followed by two more, October 31-November 1, and December 12-13, for the year.
Yield on the two-year note dropped to 4.87% after topping out at 5.03% to close out last week. The 10-year note yield slid to 4.12%. A week ago it stood at 4.34%, a multi-year high. Yield on the 30-year bond fell to 4.23% after hitting 4.45% last week, also a multi-year high.
Market expectations for a Fed rate hike in September fell off the table on the JOLTS news. There's now a minimal (10-20%) chance that the Fed will raise rates at its next meeting. November and December meetings will likely be guided by data that comes in between meetings, with the focus on the labor market, CPI, PPI, and productivity. What the market wants is a "soft landing" from what's believed to be a strong, growing economy. Given price increases over the past few years, it's difficult, if not impossible, to discern real growth as opposed to inflationary pressure on everything from labor to goods to services.
The market's wishful thinking will be magically granted by media blowhards, who will also suggest that the Christmas season will be one of the best ever, despite people looking for jobs that ceased to exist.
This is just one more iteration of the age of delusion, where black is white, up is down, Ukraine is winning, and bad news is good news, even though good news is still good news.
Prior to the open Wednesday morning, ADP added fuel to the fire, announcing the creation of 177,000 new private sector jobs in July, well below expectations of 195,000.
Right on cue, moments later, the Commerce Department revised the increase in gross domestic product (GDP) in the second quarter down to 2.1 percent from the previously reported 2.4 percent.
With this latest dose of bad news, stock futures are pointing to a positive open. Stocks have rallied three straight sessions, erasing a portion of the losses taken earlier in the month. All the majors are lower for the month of August and remain lower than the peaks reached in January of last year, but they appear to want to make up for lost time.
Perhaps a weakened economy might just be the thing that sends stocks to fresh all-time highs. After all, Brandon himself told us his economic plan was working, and it seems that for once he was right, but for the wrong reasons. People are being put out of work, the economy is stalling, all economic data from the government is basic trash on a third-world national level, so yeah, the plan to wreck the US economy is going swimmingly.
At the Close, Tuesday, August 29, 2023:
Tuesday, August 29, 2023, 9:14 am ET
Headed into the three-day Labor Day weekend, stocks appear to be lacking a catalyst in either direction, though there will be plenty offered via data releases as the week progresses, including payrolls, second estimate of GDP, JOLTS, consumer confidence, US employment growth, core PCE deflator, and August wages.
Monday's trading was probably annoying to bullish bettors. Highs of the day were reached within the first 15 minutes after the open. the remainder of the session more or less bumped around, looking for someplace to hide, until a late surge got the majors back near where they started.
As August has been one of the worst months in some time, there's been more than ample hand-wringing and nervousness about what comes next in terms of a potential government shutdown as the politicians put on a staged show over spending in September. The congressional loafers have been out on recess for most of the month, so they'll need to make noises when they get back to the capitol. It's all farcical nonsense over debts that will never be repaid.
In the meantime, the global shift is well underway. The United States, especially in Democrat-run big cities, has become a slum, a ghetto for the disenfranchised working poor, illegal immigrants, the welfare sub-class, and the over-regulated, over-taxed, stressed out businesses that remain in those cesspools of empty office buildings, closed storefronts, streets lined with tarps, tents and homeless people.
It's all quite depressing, even as professor Brandon the Imposter lectures the population on the virtues of "Bidenomics" and how it is making America great again, stealing a line from the opponent he clearly intends to imprison or murder.
Stock prices remain priced to near perfection, ensconced within an economy comprised largely by government spending, graft, bribery, and shiftless behind-door deals. The consumer economy, birthed by the Nixonian era of fiat currency, is about dead. One look at the enormous numbers of storage facilities spread across the country as far as the eye can see, packed to the rafters with worthless Chinese-made junk and assorted marred furnishings, broken appliances and mementos of the former glorious era tells the story of a debt-ridden country that traded its national treasure for trinkets, toys, and trash, which all of it eventually will become.
A reckoning is overdue, but everybody still wants to continue playing along with the government crooks and Wall Street snake-oil salesmen. It will all go well... until it doesn't.
A completely unhinged, lengthly, exasperating correction awaits, though it probably won't come until after Labor Day. After all, everybody needs a break from not working, pretending, and whistling past the grave of a dying economy.
Thanks for playing.
At the Close, Monday, August 28, 2023:
Sunday, August 27, 2023, 11:50 am ET
With the BRICS Summit and the Fed's Jackson Hole Symposium now in the rear view mirror, the upcoming week may offer a glimpse of what's ahead for markets, as impacts from the addition of six new countries to the official BRICS roster and a semi-hawkish speech delivered by Chairman Jerome Powell will be weighed by market participants.
At first blush, the BRICS event appeared to be something of a dud, the highly-ballyhooed rumors of a gold-backed trading currency never materialized into anything concrete. However, at the mention of a cluster of Mideast countries - Ethiopia, Egypt, Saudi Arabia, Iran, and the United Arab Emirates (UAE) - plus Argentina formally joining BRICS on January 1, 2024, heads were turned. Strategic moves by BRICS to secure important resources, political capital, and transportation routes in the Mideast and plant another very large seed for growth in South America resonated loudly in Western capitals. With a subtle touch, BRICS, led by Russia and China, hammered another nail into the coffin of dollar hegemony, the petrodollar suddenly, officially, dead.
Powell's speech had much less impact, though one wouldn't guess that from mainstream financial media reports. His blabbering over 25 basis point increases to the federal funds target rate and two percent inflation were presented to the public as an announcement of great import, while the BRICS were largely ignored and marginalized. National security advisor, Jake Sullivan, said the BRICS were largely "aspirational." Being not quite as smart as maybe Hunter Biden, taken at his word, Sullivan's latest foot-in-mouth moment qualifies him as the ultimate jester in the White House coup cadre. The world anxiously awaits the response from Supreme Under-warlord, John Murphy.
As unsympathetic as the anti-BRICS rhetoric has become, Powell's continuous loop of "higher for longer" messaging has become trite, boring, and the general policy ineffective if not outright damaging. Inflation hasn't been tamped down by the Fed's tightening; rather, the pace of price hikes has been slowed by major consumer-oriented companies easing up on their price gouging (see Coca-Cola (KO), Yum Brands (YUM) and PepsiCo (PEP) for prime examples).
The Fed acts as though 21% interest on credit cards and 7.50% on a 30-year fixed rate mortgage aren't contributing to the inflationary/affordability squeeze, in reality, a loss of purchasing power. While the dollar buys less, the Fed exacerbates the condition by making currency more expensive. They've hoodwinked entire generations with this Keynesian hokey-pokey. Their control of money supply, interest rates, and especially the treasury market is soon to be extinguished, but not before an intense conflagration exposes the foreign-held central bank(s) as counterfeiters and frauds of the highest magnitude.
This is what the BRICS are in the process of presenting to their version of a new world order, based on cooperation, honesty, integrity, and respect, qualities sorely lacking in the governments and central banking officials of the US, UK and European Union. As a unified crowd, the soon to be BRICS+ have taken the Chinese and Indian philosophy of playing the long game to new levels of expertise. Rather than challenge the West with shiny objects of real money, they are gradually unifying the rest of the world as an iconoclastic megalith, standing in opposition to the tyrannical, divisive "rules based order" that's been imposed upon the lesser nations of the world for so long. It's a subtle, slow, highly effective strategy that will eventually erode confidence in fiat currencies and replace them with true money and fair trade.
The worlds of politics, commerce and finance were shaken to its heels and ties this week, not by any blustery statements by the Chairman of the Federal Reserve, but by world leaders and their envoys quietly and profoundly expanding their reach at the BRICS Summit.
That is the truth. The danger to Western fiat-based economies is now plain to see.
While anxiously awaiting a communique from the BRICS summit and Jerome Powell's Jackson Hole speech, traders' attention was turned to something completely different on Tuesday, when ratings agency, S&P Global issued downgrades and warnings on a wide array of banks, focusing on regionals with commercial real estate loan exposure and upside-down spreads on reserves, mostly treasuries and other credit instruments.
Associated Banc-Corp (ASB), Valley National Bancorp (VLY), UMB Financial Corp (UMBF), Comerica Bank (CMA), and KeyCorp (KEY) were downgraded, the effects immediate on the stock exchanges, though net severe, with shars of the downgraded firms lower by 3-5% generally.
Though not mentioned by S&P, shares of major banks, such as Bank of America, JP Morgan Chase, Goldman Sachs, Wells Fargo, Morgan Stanley, and Citigroup also fell in sympathy. Losses were not serious. The entire banking sector has been under pressure from at least March.
Weighing more heavily on their individual issues, Nordstrom's (JWN), Kohl's (KSS), Macy's (M), Dollar Tree (DLTR), Gap (GPS) and Dick's Sporting Goods (DKS) cited weaker results in their second quarter reports due to what some described as "inventory shrinkage," otherwise known as shoplifting and looting by organized mobs in flash attacks. For the week, Macy's was down 20%; Nordstrom's dropped nearly 20%; Kohl's, -16%; Dollar Tree was off 13%; and Dick's did a deep dive into the shallow end of the pool, shedding 25%. Gap, already beaten down, fell another two percent, currently trading around $10/share.
It wasn't just theft beguiling retail. In conference calls, there was also extensive mention of consumers being tapped out and the fear of lowered expectations as the student loan moratorium expires on August 31. Retail is a sector most unloved, with some companies teetering on bankruptcy.
For the most part, the week was volatile, with bounces to the upside and down happening through ach session, ending with a split decision, as the Dow finished down for the week, while the others posted positive weekly closes, especialy NASDAQ, which ended up 2.26%.
Though he covered no new ground, the market gave Fed Chair Powell a pass on his Jackson Hole address by putting on healthy gains Friday. How durable these last-minute uprisings will be is questionable. There's one more week remaining in what has been a rather dismal August, and September is, according to Stock Trader's Almanac, the worst month of the year for investors.
Troubling is the fourth straight week of declines on the Dow Jones Transportation Index, which has fallen over 1,000 points since late July. If people and products aren't being moved, the economy can stagnate, leading to recession. There appears to be troubling times ahead.
Just when it appeared that yield curve spreads were headed for normalization, long-dated maturities ramped high while short-term rates remained flat, amplifying the inverted nature of the curve, with 2s10s at -78, down from -66, and full spectrum (1-month out to 30 years) gasping for air at -126, lower, from -115.Unraveling the mess that the Fed has fostered is going to be tricky, if there's even any opportunity to return to the "normal" nature of the curve, up-sloping, from shorter to longer rates.
With foreign investors dumping securities that used to be held as Tier 1 reserves, the de-dollarization effect on treasuries will be net negative, especially in the most-favored flavor of long-dated, 5s, 7, 10s, and 30s. If the US government continues to flounder and shlep its way through global affairs with threats and sanctions as far as the eye can see, expect more countries to dump dollars, sending rates to the moon. Congress, the executive branch and the Fed created this mess. The American people will be forced to pay the price of their folly.
WTI crude oil closed out the week at $80.05, down a bit from last week's $81.40. The US national average for a gallon of unleaded regular gasoline is $3.79, down four cents from last week.
WTI traded as low as $78.77/bbl. this week, the lowest in a month, and the outlook is for the price to remain in a range around $75-82, but not higher. Supply/demand dynamics suggest that because of the recent price run-up, everybody is pumping, despite indications to the contrary from OPEC+. America is pumping at the fastest rate since the Trump years, and may soon surpass the record level of 13 million barrels per day (November 2019), hitting 12.770 million in March.
According to gasbuddy.com, Mississippi remains the cheapest place to buy gas, dropping two cents from last week, to $3.27, though that's a far cry from just a few weeks ago, when it was the only state with gas under $3.00. followed by Louisiana ($3.36) and South Carolina ($3.36). Alabama ($3.40), dropped three cents. Texas fell from $3.43 to $3.38, and Tennessee got relief, faling from $3.47 last week to $3.39. Prices came down in Florida, from $3.79 to $3.67.
California continued higher, with gas now averaging $5.27 a gallon, followed by Washington ($5.06). Oregon ($4.71), Nevada ($4.45), Utah ($4.19), Idaho ($4.09), Arizona ($4.30) were all higher over the course of the week. Illinois ($4.07) and Colorado ($3.86) both dropped, reducing the number of states at $4.00 or above by one, to a mere eight.
In the Northeast/Midwest region, beyond Illinois, the highest gas prices are in Pennsylvania ($3.87), New York ($3.86), and Michigan ($3.75). The lowest prices in the region can be found in Ohio ($3.47) and Kentucky ($3.52).
This week: $26,051.50
Talk about stability. Bitcoin seems to have found a sweet spot.
Silver:Gold Ratio: 78.87; last week: 82.80
Per COMEX continuous contracts:
Gold price 07/28: $1,958.80
Silver price 07/28: $24.48
Thanks to front month futures rolling over, gold and silver prices rebounded this week in a big way, a move long overdue. The suppression cartel continues to ply their trade, though following the BRICS failure to launch a gold-backed currency - a favorite rumor the past three months - they may ease up just a little even though the Exchange Stabilization Fund (ESF) still has trillions of Federal Reserve Notes with which to conduct the business of fiat counterfeiting, naked shorting, spoofing, and other assorted crimes.
For those who don't believe there's criminality afoot, this week, two former JP Morgan gold traders, Gregg Smith and Michael Nowak, were handed down separate prison sentences - 23 months, and nine months, respectively - for spoofing trades in precious metals. They were convicted of the crimes a few months back. In 2020, JPMorgan paid $1 billion in fines for this and other frauds. The sentences were reduced to less than half of what prosecutors advised. While there's still a little justice being meted out, it's more hand slapping than anything else.
Here are the most recent prices for common one ounce gold and silver items sold on eBay (numismatics excluded, free shipping included):
In a little more than a month, the US government's fiscal year 2023 will come to an end. Prior to that, however, will be a lot of wrangling and noise from congress and the White House over spending and deficits, prompting rumors of a government shutdown. In the end, not much will change. Like the debt ceiling fiasco in May and June, the legislators will simply punt the fiscal ball downfield, hoping for disruptions and distortions to emanate from the 2024 elections, thus hiding their profligate spending habits.
Some people are noticing the enormous blot on the balance sheet that is interest on the debt, the federal jackpot now standing at $32.7 billion. Interest payments will soon exceed $1 trillion annually, and become the largest single line item in whatever suffices as a budget for the federal government.
As sad as the truth may be, the American people never voted for this kind of racketeering, money laundering, fiscal irresponsibility and prolific overspending. Politicians in congress and many presidents - Democrat and Republican alike - could not keep their hands out of other people's pockets. It's as simple as that.
Keep this in mind any time you pay any kind of tax on anything. In an honest system, there'd be no need for probably 90% of what government taxes, borrows, and spends.
At the Close, Friday, August 25, 2023:
For the Week:
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