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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 8, 2023, 7:44 am ET
August wasn't very good for equity investors. So far, September isn't looking any better.
With the week shortened by the Monday's Labor Day holiday, investors haven't discovered any new reasons to buy and stocks have sustained losses over the past three days.
Through Thursday's closing bell, the Dow Industrials have shed roughly one percent, down 336.98 points. NASDAQ is down 282.98 (two percent), with the S&P off by 64.63 (-1.43%). The NYSE Composite has shed 227.60 (-1.41%) and Dow Transports are showing the way lower, down 536.47 (-3.39%), looking squarely at its fifth down week in the last six.
All of the indices are trading below their 50-day moving averages but above the 200-day, signaling pressure developing over the entire complex of US corporates.
Taking a longer view, even though nobody wants to mention it, the NASDAQ remains in correction territory, down 14.38 percent off its November 15, 2021 all-time high of 16057.44. Bear in mind the NASDAQ has gained over 30% in 2023. The losses sustained in the first none months of 2022 were substantial. Few tech cheerleaders care to recall that the NASDAQ traded down as low as 10,315 less than a year ago. This sobering assessment of the tech sector asks whether the rally from the fourth quarter of 2022 to the present was built on sound reasoning or has been more the result of bottom-fishing and momentum trading.
The other major indices are down lesser percentages from January 2022 highs. The S&P is only 7.20% lower than its January 3rd, 2022 high of 4,796.56, with the Dow down 6.25% from its January 4, 2022 closing high of 36,799.65.
Considering all the stresses confronting the US economy, none less so than the approaching battle in congress over funding for the 2024 fiscal year which begins October 1, there should be a large sign at the corner of Wall Street and Broad that reads: "Proceed with Caution."
At the Close, Thursday, September 7, 2023:
Thursday, September 7, 2023, 9:30 am ET
It could have been worse.
Wednesday's stock sell-off, that is.
Starting with the Dow, right around 1:00 pm ET, the day's low was struck.
It was right about the same time the US Senate confirmed the first of three
Continuing along the lines of diversity hires, the Senate will vote Thursday to confirm World Bank economist Adriana Kugler, a Latino, to the board of governors seat vacated by Lael Brainard.
The Dow managed to erase more than a third of its 330 point loss, the other indices following similar paths just after Jefferson's confirmation. Coincidence? Maybe. However, Jefferson is very dovish concerning monetary policy, which would fall right into line with the most fervent wishes of the Wall Street elite, who would like nothing more than to see the Fed reverse course on its inflation-fighting rate hikes.
No matter the case, the major indices made fresh lows intraday and then recovered to better, more soothing levels.
With that in mind, Thursday morning saw futures slide, with the NASDAQ leading the way, down more than 200 points with the opening bell minutes away.
Asian stocks were lower across the board overnight. Europe is mixed. Gold is higher ($1947.30), while silver continues to stumble, down as low as $23.17 just days after topping $25/ounce.
Brace for impact.
At the Close, Wednesday, September 6, 2023:
Wednesday, September 6, 2023, 9:45 am ET
Markets were not keen on the first trading day following the Labor Day weekend.
Other than the NASDAQ, stocks slipped lower at the open and remained in the red for much of the day. NASDAQ resisted the urge to fall until very late in the session, finally succumbing to the selling urges proffered.
One of the primary reasons for slumping stocks was worry over the price of oil, which continued to rise after Russia and Saudi Arabia announced they would continue their voluntary production cuts through the remainder of 2023. Also on the minds of investors, speculators, and gamblers in equities is the distinct possibility of a government shutdown over government funding for the coming fiscal year 2024, which begins October 1.
Under current market conditions, traders cannot have it both ways. While on the one hand are wishes for a weakening economy and labor market, the other hand looks for signs that the economy is doing well and inflation is under control. This schizophrenic market behavior is fraught with risk. In particular, tech stocks continue to be wildly overvalued, prices pushed higher by relentless options trading, speculation, and the lack of any other sector taking the lead.
There is currently a great divide between realities and perceptions concerning any and all government statistical measures and geo-political situations. From Ukraine to Africa's separatist movements from Europe, to BRICS alignments, actions on the ground seldom match up with distorted, pro-Western media distortions. Most passive investors, those with inelastic retirement plans, 401k plans, or other defined-contribution investments, are at the mercy of market forces. To wit, institutional investors have been playing the distribution game for months, as shown clearly in daily charts that swing wildly in both directions, allowing for quiet selling of large positions.
Any talk of headwinds in the economy are discarded as heresy by the titans of commerce.
Jan Hatzius, Goldman Sachs' chief economist, wrote in a research note released Tuesday that he and his colleagues are "substantially more optimistic than most other forecasters."
Hatzius cut his recession odds to a mere 15%, down from a 35% chance earlier this year. Meanwhile, continual revisions of all government data, including the latest downward revisions to June and July non-fam payrolls, have produced a nagging sense that the global and US economies are teetering on a knife's edge, just the kind of sentiment that could trigger a cascading selloff in equities.
Fixed income isn't helping matters and are probably adding to the underlying foreboding. Yield on the 10-year note continues to bounce between recent highs and lows, though the trend of higher yields on long-dated maturities has now become entrenched. The 10-year is yielding 4.26% currently, after dipping below 4.10% briefly last week. The continued inverted curve is just one more problem issue that seems to be far from being resolved.
With trading underway on Wednesday, stocks are feeling some pain. As September progresses, expect to see more stock distribution as profit-takers shed shares to weaker hands hoping for some kind of market revival. There are growing indications that economies are shrinking rather than improving. Adherence to the blue sky narrative may bring ruin upon more than just a few market participants.
At the Close, Tuesday, September 5, 2023:
Sunday, September 3, 2023, 1:35 pm ET
According to a recent J.D. Power survey, 51% of U.S. credit card holders now carry revolving debt at an average interest rate of 14.8%.
The average amount of federal income tax paid in 2020 was over $16,000. Americans in the most common tax bracket ($50-75,000) paid an average income tax of $4,567 for the 2020 tax year.
Still, taxes paid on average are expected to be higher in 2022 and 2023, and the government still can't manage to operate without running a deficit of at least $1.5 trillion. To date, nobody has discovered a cure for stupidity.
The Dow Jones Transportation Average shadowed the Industrials this week, each notching nearly identical percentage gains of 1.41% and 1.43%, respectively. The transports ended a string of four consecutive weekly losses, the Industrials rebounding from losses in three of the prior four.
Overriding everything else the past week were revisions to just about every government metric, but particularly acute was the change in non-farm payrolls. With the August report on Friday showing 187,000 net new jobs created, the revisions from June and July were startling, with June taken down 80,000, from +185,000 to +105,000, and July was revised down by 30,000, from +187,000 to +157,000. No doubt the August figure, which was conjured up just one day after the month ended (yeah, we're accurate, just trust us), will be revised lower, later, when supposedly nobody is looking.
Unfortunately for the number-nudgers at the BLS, people are noticing, and those people happen to be in the financial media and working for the largest brokerages in the country and they're all screaming about those revisions and the 3.8% unemployment rate, which, while bad for the economy, are good for stocks, because a weakening labor market might induce the Fed to stop hiking interest rates and start spreading some easier money out to the kids on Wall Street.
This absurd logic may play well in the board rooms of Goldman Sachs or JP Morgan, but it's going to hit like a load of BRICS (pun intended) on main street America. Also, the whole narrative of a strong economy is gradually unraveling as revisions continue to worsen. It won't be long before the crackheads on CNBC are effusing over increased profits from companies who cut costs to the bone through layoffs and firings. Once Amazon is operated solely by robots and AI, the stock will soar and the company's market value will approach the size of the national debt.
People will be wandering aimlessly seeking food and shelter, but the Dow will hit 50,000. Just look up some street scenes of places like downtown San Francisco, Los Angeles, Detroit, or Philadelphia on youtube to get a feel for the dystopian future.
While it's not going to be that bad for everybody, it's becoming increasingly evident that the US and other Western fiat-based economies are headed for history's trash heap. Wish that was a joke, but it's not.
Maybe the government can issue more stimulus checks in 2024. Sure, that will just fix everything.
Before that, however, it's September and Labor Day, and after that the historically worst month of the year, which may just be a doozy, given the brewing stalemate over the 2024 non-binding-budget by the slackers and imposters in Washington DC. Not that it must, but, the show goes on.
Yields in long-dated maturities moderated for a second straight week, with the 10-year note down to 4.18% and the 30-year down just one basis point, to $4.29. Yields were lower virtually across the board, with the short end actually outperforming, with 1-month and 3-month bills falling five and eight basis points, respectively.
How this all stacks up in a macro sense is still bizarro-world stuff. Treasuries, which have become nothing other than monetized debt as the US government deficits spiral out of control, are becoming less and less valuable as securities. The world is turning away from dollars, the vast amount of foreign reserves held in treasuries had been growing but is now shrinking, the movement begun at the same time the United states froze and seized more than $400 billion in Russian assets.
Since that event, other countries have taken note and begun to reduce reliance on US$ for trade. The BRICS Summit this past August 22-24 further cemented the relationships between the growing number of trading partners in the bloc by adding six more full members.
The inverted curve remains in play, though a little closer to normalization, with 2s-10s at -69, improving from -78 last week, and full spectrum (1-month out to 30 years) also better, at -122, up from -126. Still, it remains a mystery how the Federal Reserve will reconcile this condition without fully crashing stocks and crushing the economy. The days of easy money are in the past, but there may be a return to the policy in 2024, especially as the election approaches. However, it's not so easily accomplished. Should the Fed take its foot off the brake (raising interest rates), it would simultaneously step on the accelerator (inflation). The balancing act between salvaging the economy or the currency has become almost a daily routine in pretzel logic.
Invariably, rates are higher and are likely to remain there for a longer period than most people expect. The Fed doesn't just turn on a dime at the slightest change in wind direction. They are slow and usually six to eight months behind the ball, except in dire conditions like 9/11 or the plandemic, so another false flag triggering event may also be in the cards.
WTI crude oil ended the week at $86.05, up nearly eight percent from last week's closing price of $80.05. The US national average for a gallon of unleaded regular gasoline is $3.79, unchanged from the prior week though it's likely to rise if crude prices don't slow their rise and moderate back toward affordability.
The sudden gains for oil are being attributed to large supply drawdowns the past two weeks in US supply and to continuing production cuts by Saudi Arabia, Russia, and other countries in OPEC+. The US Energy Information Agency (EIA) is predicting higher oil prices for the remainder of 2023, so the price movement of recent weeks may be extended through the cooling autumn months and into winter.
How that affects the general economy, of which 70% is consumer-based and reliant heavily on gas consumption, will be negative. Higher costs for energy are main contributors to price inflation in everything else. Raising interest rates isn't going to cut the price of gas at the pump. The Fed's target of two percent inflation is never going to be achieved until energy policy (and lots of other policies) aren't corrected.
According to gasbuddy.com, Mississippi remains the cheapest place to buy gas, remaining level at $3.27. Following are Louisiana ($3.32), Arkansas ($3.37), and Texas, which dropped two cents to $3.36. Alabama and Tennessee were both at $3.40. Prices continue to drop in Florida, from $3.67 last week, to $3.64.
California remained the nation's leader, with gas now averaging $5.30 a gallon, followed by Washington ($5.08). Oregon ($4.74), Nevada ($4.48), Utah ($4.28), Idaho ($4.14), Arizona ($4.32) were all higher over the course of the week. Illinois ($4.03) kept the number of states at $4.00 or above at eight.
In the Northeast/Midwest region, beyond Illinois, the highest gas prices are in Pennsylvania ($3.85), New York ($3.86), and Michigan ($3.66), the latter moderating by nine cents. The lowest prices in the region can be found in Kentucky ($3.49) and Virginia ($3.58).
This week: $25,884.80
Bitcoin fell three percent on Friday afternoon in New York after the Securities and Exchange Commission (SEC) said it would not consider applications for exchange-traded funds based on spot bitcoin prices until mid-October. The decline effectively erased a weekly gain propelled by a court win for ETF hopeful Grayscale, which is trying to convert a bitcoin trust to the exchange-traded format.
Bitcoin hit close to $28,000 mid-week, only to see those gains pummeled.
BlackRock, VanEck and Fidelity have filed paperwork with the SEC to establish a spot-price bitcoin ETF, but the SEC has continually balked at allowing one. There are ETFs based on bitcoin futures. The logic of the SEC is that futures trading offers some degree of flexibility and safeguards, while a spot price ETF would be too risky for the general public.
For a change, those government goons are probably right.
Gold:Silver Ratio: 80.09; last week: 78.87
Per COMEX continuous contracts:
Gold price 08/04: $1,940.30
Silver price 08/04: $23.73
Here are the most recent prices for common one ounce gold and silver items sold on eBay (numismatics excluded, free shipping included):
The Single Ounce Silver Market Price Benchmark (SOSMPB) dropped by 2.46 over the course of the week, to $36.66, from the August 27 price of $39.12 per troy ounce. With the rise in the spot price, premiums are being brought back to earth, or at least into a low orbit.
An evolving realization that the fiat US$ has disposed of most of its purchasing power - currently about two percent of its original 1913 value - will keep silver (and gold) prices at elevated levels. It is only through ongoing suppression tactics executed by bullion banks that gold and silver are not pricing at much higher levels.
Simple logic would dictate that precious metals would roughly follow inflation, otherwise known as loss of purchasing power. Central banks, sovereign wealth funds, and precious metals ETFs want to hoard the world's gold supply, leaving silver a poor second choice as demonstrated by the extreme levels of the gold:silver ratio that have persisted since 1980, when it breached 40 to the upside. Since 1985, the ratio has rarely fallen below 50. Since August 2013, the ratio has never dipped below 60.
These are extreme levels, partially explaining why central banks hoard gold, but not silver, which, mostly through central bank efforts, has been demonetized over the years, the most egregious assaults on silver's status as money coming in the 1873, with the Coinage Act (known as the "Crime of '73") and further in 1964, when silver coins were pulled from circulation and the United States ceased minting coins containing silver.
Of course, silver has never actually lost its relevance as a store of value and medium of exchange. Along with gold, it meets the standard tests of what money should be:
... except possibly the last. While there are many people who will accept gold and/or silver as payment for goods or services, the practice is not widely accepted. Nobody can walk into a grocery story, load up with meats, produce and other staples, and pay with a gold or silver bar or coin. It's simply not accepted practice, though, 60 years ago, it was te standard, as coins of 90% silver content were still in circulation. Prior to 1933, gold coins were also legal tender almost everywhere in the world.
Now that nearly 100 years have passed since gold and silver were regarded as money and used in circulation, what's happened? The US dollar, the standard by which everything else is measured, has lost 98% of its value since its inception in 1913 under the auspices of the Federal Reserve System, a central bank operating as a part of a high-level global counterfeiting cabal which exchanges nearly worthless paper debt notes for things of value.
When the supply gets too low to support the last round of counterfeiting, threatening to push the economy into recession, the central banks - primarily in the US, China, Europe, the UK, and Japan - just print up more, devaluing existing notes even further. This is why the US government carries a growing debt load of $32.8 trillion, which will never be repaid. Europe's debt load is of similar size on a per capita basis (see chart below)
Debt per capita approaches or exceeds $100,000 per person in most developed nations. Japan, the UK, and European debt loads are approaching incomprehensible levels. At he end of all fiat monetary eras, governments break down, their treasuries looted by politicians and major business interests and chaos reigns until a new order is established. While the case has been made for CBDC (Central Bank Digital Coin), only gold and silver can serve the interests of the common man and woman in meeting their daily needs.
This is why the BRICS pose an existential threat to the purveyors of fiat currency. The eventually of some kind of asset-backed currency is nearly a mathematical certainty. The developed nations have overplayed their hands. Their debt loads are out of control. Interest payments, along with the interest rates, are climbing to astronomical, completely unsustainable levels. Change will come. It is only a matter of time and how much blood and treasure will be squandered before gold and silver regain their status as money and the only forms of money.
Many so-called economists (Keynesians, on the main) submit that there isn't enough gold and silver to recapitalize the world in gold and/or silver. Rubbish. The only matter is valuation. When dollars, euros, yen, pounds, yuan, rubles, and the rest of the world's fiat currencies are priced in grams or ounces of gold and silver, when the gold-silver ratio is rebalanced to historical levels (12-20), only then will the world be able to thrive and experience prosperity. Until then, the world is little more than a tax and debt plantation.
Finally, here's Tennessse Ernie Ford singing, "Sixteen Tons"
The song was a smash, soaring to #1 on November 26, 1955 on the Billboard Top 100 and staying on top for seven weeks. It's message is possibly even more poignant today than it was then.
Happy Labor Day.
At the Close, Friday, September 1, 2023:
For the Week:
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