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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, November 18, 2022, 7:52 am ET
With midterms nearly over (only six races remain open, Republicans have gained control of the House, Democrats the Senate), the December FOMC meeting and November CPI reading weeks away, and third quarter earnings results slowing to a trickle, there aren't many catalysts presently available for a wide swing in stocks or bonds.
For a rare moment, markets have achieved some degree of calm, a good time to assess positions and make plans for tax considerations and the coming year. Many funds have already closed their books for 2022, which should limit trading volumes over the final six weeks of the year. Market attention will soon turn to holiday retail activity, as Black Friday and the Christmas shopping season begins in a week.
Being that Thanksgiving is at the earliest possible date and Christmas falls on a Sunday, retailers will have a solid four weeks in which to woo customers to take up what appears to be a bloated inventory in consumer goods. Stores have been struggling with excess inventory as high gas and food prices have somewhat limited discretionary spending, but, as seasoned retailers know well, Americans are usually eager to open their wallets and max out credit cards when it comes to gift-giving and bargain hunting.
Despite the downward effects of sinking stocks, the lower segment of the retail crowd is unaffected by the downdraft. These are the people who will do the bulk of shopping and spending. The end result could be a retail bonanza. Unless there is some unusual event that turns consumers away from the stores and internet deals, this holiday season figures to be better than the last two, especially since there will be no widespread lockdowns or restrictions due to health concerns, and, with credit usage at all-time highs, the urge to spend what one does not have will be strong.
With that in mind, markets will be looking for an upswing from what's been a rather dull week. Options expire today, though word is that puts outnumber calls by a fairly large margin (CBOE Equity put/call ratio of 1.46), which should prompt some volatility.
As of Thursday's close, here's where the major indices stand for the week:
Dow: -201.54 (-0.60%)
Early indications are for a positive open, though not much can be read into that for the cash session, as recent trends have aptly shown. The direction of futures seems to have little bearing over the day's trading other than in the initial few minutes, and sometimes, not even to that degree.
Stocks remain in what has become a month-long upswing, and there's little to indicate any change in sentiment, though, from a technical standpoint, equities appear a bit overbought. Stocks have gained, on a weekly basis, three of the past four. A strong session to close out the week would put that figure at four out of five an .800 batting average for the bulls, though it's a questionable call as the averages are bumping up against considerable resistance at these levels, especially the Dow, which has gained more than 1500 points in the current rally.
With futures and European stocks on the rise, look for a positive open and the possibility of some follow through if bulls don't see red in weeks ahead.
At the Close, Thursday, November 17, 2022:
Thursday, November 17, 2022, 9:19 am ET
Timing is everything.
The patterns are obvious and unmistakable.
NASDAQ: 11,183.66, -29.36%, -4,649.14 YTD
Bitcoin: 16,572.00, -72.56%, -43,822.90 1Y
First, the NASDAQ, being heavily populated with big tech (GOOG, AMZN, APPL, MSFT, NFLX, META, etc.), recently had an all-time, one-day point gain (11/10/22, +760.97, +7.35%). Even with that, the index is still down nearly 30% year-to-date. Charts confirm that it is still nowhere near the most recent high (13128.05, August 15) and is unlikely to recover significantly barring staff reductions which are already underway at most big cap tech companies.
Meta Platforms and Amazon have already announced major layoffs and restructuring. Meta announced on November 9, that it was laying off 11,000 employees, or 13% of its worldwide staff. Shares of META have fallen precipitously over the course of the year, down 66.55% year-to-date.
Company shares had fallen to a closing low of 88.91 on November 3rd, but received a reprieve on its layoff announcement and the enormous tide of November 10 that lifted all boats. Trending around 115, the stock reached a high of 117.08 on the 15th (Tuesday), but shed nearly four points on the 16th (Wednesday), closing the cash session at 113.23, and is indicated lower going into Thursday.
META, and its chief, Mark Zuckerberg, have made a number of unforgivable blunders over the past few years, beginning with inconsistent and biased censorship on their platform, including the banning of a sitting president, Donald J. Trump, and culminating in their fanciful foray into virtual reality, which has cost not only in terms of cash flow and facility expenditure, but also in human resource, devoting hundreds of thousands of man-hours to a technology that is not even close to adoption by more than two percent of the population.
The trend for Meta Platforms is for further layoffs after the holidays and through 2023, which should boost the share price at various junctures, but essentially remaining in a long-term decline. Wall Street would prefer a handful of lean and mean employees to thousands, head count being a major, albeit necessary, impediment to profits and wealth creation. Sadly, Meta Platforms cannot reduce headcount quickly enough or by large enough numbers to halt its path toward Chapter 11. The company will continue to bleed cash and human resource for the foreseeable future.
On Monday, November 14, Amazon made public its intent to lay off 10,000 employees, and some staff have already been furloughed. For Amazon in particular, mass layoffs right at the start of the holiday season are troubling and cause for concern among investors and employees of the internet retail giant.
Closing Wednesday, November 16, at 97.12 per share, Amazon stock is down a solid 43% on the year and reached a closing low of 86.14 on November 9. A return to, and below, that level is a good probability for AMZN in coming weeks. It gets worse. From its peak on July 9, 2021 of 185.97, the share price has been essentially cut in half.
While their fourth quarter has been traditionally strong and this year will likely show the effect of some of the job cuts, those results won't be available until mid-January. Meanwhile, having missed EPS estimates in the first and second quarter of 2022, and beating a low number by returning 0.28 for the third quarter, the trailing twelve month P/E of the company stands at a startling 87.50, a number usually reserved for IPOs, startups, and fledgling firms returning 25% or greater growth.
Amazon, a mature 25-year-old company, is a stagnant, aging behemoth, which has benefitted from first-mover status and monopolistic practices gone unchecked by US regulators. The glory days of dictating demands to the market have ceased to be; a new regimen of competition and regulation from all sides and of varying degrees on national or global levels. Long term, Amazon will prove to have outlived its usefulness, burdened with high headcount and overhead, legacy systems, and less-than-optimal business conditions. Even their vaunted AWS cloud service will be under assault.
Bottom line, both META and AMZN could soon be $50 stocks. Neither offers any dividend and their business plans going forward are neither visionary nor risk-averse. The technology cycle that pushed them to extraordinary heights is regressing and they're struggling to keep up. Any widespread economic downturn could sned share prices into the teens.
Secondly, bitcoin, the legendary 13-year-old granddaddy of cryptocurrencies, has failed to deliver on its significant promises. Privacy is all but dead, adoption peaked somewhere between December, 2020 and July, 2021, its user base is eroding by the minute and the entire crypto space is under siege, the latest trip-wire sprung by Sam Bankman Fried's FTX exchange implosion, emanating ripples of FUD through cyber-land.
Falling far short of reliability as a stand-alone currency, bitcoin may survive in places like El Salvador and Nigeria, which have the greatest levels of adoption, but globally, crypto is a massive bust. The price levels of bitcoin over the past 12 months tell the troubling truth: its going to triple digits and eventually to zero as there's nothing backing it other than its unique blockchain technology.
As far as mining is concerned, there's undeniably less and less interest in mining "coins" that continue to erode in value. Miners are less interested in acquiring the latest, fastest servers at high prices with little guarantee of profitable return, if any. As mining ceases to be profitable, the price of bitcoin will logically suffer.
Looking at the past year, different levels have been met and breached. It is more than a year out from the peak of $64,400.00 on November 12 of last year, with a rundown to $40,000 from January, 2022 to May, then another dump to the $30,000 level, for a month, from early May to early June, followed by another drawdown to $20,000, which maintained from mid-June to just last week, before tumbling to $16,000, the new "floor" complete with trap door.
There's no telling when bitcoin will dump to $12,000, then below $10,000, but whenever it breaches $10,000 to the downside, the aftermath will be nothing but pain for anyone hodling, holding, or otherwise caught up in the failed belief system that somehow, cryptocurrencies will replace fiat dollars.
At the root of all cryptos, blockchain is nothing more than a glorified ledger system with safeguards and verifiable protocols. It has its usefulness as well as vast limitations. Bitcoin and the thousands of copycat cryptos have proven to be volatile, hackable, undisciplined and eventually useless. The entire space will be reduced to rubble within two to three years, investors having lost billions, if not trillions in the process.
With those obvious examples in mind, equity markets are due to open in less than a half hour. Futures are skidding to fresh lows. European stocks are charting from upper left to lower right, and Friday is a huge day for options expiration.
Initial claims for state unemployment benefits dropped 4,000 to a seasonally adjusted 222,000 for the week ended Nov. 12, the Labor Department said on Thursday, but that's already old news. St. Louis Fed President James Bullard presented charts showing, in a graphic presented for discussion at an economic event in Louisville, that using even "dovish" assumptions, a basic monetary policy rule would require rates to rise to at least around 5%, while stricter assumptions would recommend rates above 7%.
Setting the tone deeper, housing starts dropped 4.2% and permits fell 2.4% in October, pushing the total number of building permits to its lowest since August, 2020.
Look out below.
At the Close, Wednesday, November 16, 2022:
Wednesday, November 16, 2022, 8:58 am ET
Leading off Wednesday's market-moving events was third quarter earnings from Target (TGT), exposed with an adjusted EPS of $1.54, short of analyst estimates for $2.17.
Suffering from bloated inventory, and, according to Chairman and CEO Brian Cornell, a change in consumer habits, caused the company to miss earnings estimates by a country mile. For pundits, this was missing the "target" by a mile. Shares of Target were down 15% in brisk pre-market trading. Shares of the retailer are already off 22% for the year.
"In the latter weeks of the quarter, sales and profit trends softened meaningfully, with guests' shopping behavior increasingly impacted by inflation, rising interest rates and economic uncertainty."
With Target suffering from its own problems - including an estimated $400 million loss so far this year due to organized shoplifting - two other major retailers reported prior to the opening bell.
TJX Companies (TJX), operators of 1,284 T.J. Maxx, 1,148 Marshalls, 850 HomeGoods, 59 Sierra, and 39 Homesense stores, as well as tjmaxx.com, marshalls.com, and sierra.com, plus stores in Canada, Europe, and Australia, reported mixed results for their fiscal third quarter 2023 ended October 29, with net sales of $12.2 billion, a decrease of 3% versus the third quarter of fiscal 2022, net income of $1.1 billion and adjusted diluted earnings per share of $0.86.
While EPS beat estimates of $0.80, some doubt remained on the top line, with net sales lower from the comparable quarter a year ago. The stock is up marginally pre-market.
Lowe's (LOW) earned $3.27 per share in the three months to Oct. 28, easily topping expectations for a profit of $3.10 per share. Lowe's main competitor in the home improvement space, Home Depot (HD), reported a strong quarter on Tuesday. Investors responded to the results by boosting the share price by less than two percent prior to the opening bell.
The capper to the morning news was October retail sales report from the Census Bureau in its Monthly Retail Trade Survey, which showed consumer spending accelerating over the month from a flat reading in September, up 1.3 percent from the prior month, and 8.3 percent above October 2021. The figures are not adjusted for inflation, meaning sales are not increasing by any significant amount, remaining relatively flat in real terms.
Widely expected to improve over September's reading, the 1.3% move was interpreted as a sign of inflation not moderating, producing a negative for stocks, as the main components of the gain were in food, gasoline, and auto sales. Futures fell sharply on the announcement, the major indices dropping to session lows.
Gold advanced on Tuesday by $7.60 per ounce, ending in New York at $1779.20, while silver slipped lower, losing 46 cents on the day, from $21.98 to $21.52 per ounce. Bumping up against resistance at $22, silver is close to its highest level in six months as it has gained more than 30 cents this morning.
In the slow-motion train wreck that is the crypto space, bitcoin is sliding early Wednesday morning, falling away from $17,000, dipping down to a range around $16,550. Continued fallout from the FTX default should keep a lid on cryptos over the next few weeks, at least. More companies, tokens, and coins are expected to be obliterated as collateral in the space is questionable at best, most of it vaporware.
Wednesday is shaping up to be a rally-buster.
At the Close, Tuesday, November 15, 2022:
Tuesday, November 15, 2022, 9:07 am ET
In case you thought the huge selloff into the close Monday was a sign that the top was in for the current bear market rally, think again. A couple of big earnings hits by mega-retailers and a positive PPI report was all Wall Street needed to keep the rally going into the opening bell.
Walmart (WMT) posted adjusted earnings of $1.50 a share on revenue that rose 8.7% to $152.8 billion. Analysts were expecting the company to post adjusted earnings of $1.32 a share on $147.7 billion in revenue, according to FactSet. US same store sales advanced by 8.2%.
The world's largest retailer also reported a $20 billion stock repurchase program, raised fourth quarter guidance, and set out a framework for its $3.1 billion portion of the nationwide opioid settlement. The company has the money, making billions while assisting in the deaths of hundreds of thousands of Americans from 1999 through 2019 on sales of prescription drugs.
Since profits come before people, the stock is trading six to eight percent higher in pre-market trading.
The $3.1 billion settlement was not included in third quarter earnings. It will be paid out to localities, states and tribal entities once details of lawsuits are sorted out and agreed upon.
Also reporting Tuesday morning, Home Depot (HD) said earnings for the three months ending in October, the company's fiscal second quarter, came in at $4.25 per share, up 25.6% from the same period last year and firmly ahead of consensus forecast of $4.13 per share. Group revenues rose 5.6% to $38.87 billion, just ahead of analysts' estimates of a $37.95 billion tally.
Same store sales were up 4.3% from last year, also beating estimates.
Despite the upbeat tone of the report, Home Depot stock is trending lower prior to the opening bell, down less than two percent.
Adding another dose of fuel to the rally fire, October's Producer Price Index (PPI) measured a positive 0.2 percent with the rate of annual increase pegged at 8.0 percent.
The most recent report came after September PPI was revised down to 0.2% and August to unchanged.
Futures were higher before and after the earnings and PPI reports. S&P futures pointed to an open for the index over 4,040, while Dow futures were up more than 400 points and NASDAQ futures were more than 350 points higher. European stocks were modestly higher, sporting gains of less than 1/2 percent. Bitcoin continued to rally in the aftermath of the FTX breakdown, closing in on 17,000. Bear in mind that bitcoin fell from 21,301 on November 5th to 15,757 on November 9th.
Gold and silver were flat-lining while WTI crude continued its downward trajectory, dipping below $85 per barrel even as the dollar index falls, registering 105.45 after cresting at 112.93 on November 3rd.
In the background, unseen by 99% of the US population, interest on government debt reached a record of $736 billion in the third quarter of 2022, seasonally adjusted on an annualized basis.
For comparison purposes, interest on the debt was $421 billion in the 3rd quarter of 2012 and a mere $300 billion in the same quarter of 2002. With interest rates increasing, it won't be long before the bankrupt federal government pays out over a trillion dollars in interest annually, possibly as early as next year.
Debt levels for governments, corporations and individuals continue to increase around the world, continuing to fuel inflation and the greatest debt bubble ever seen.
But, keep buying those stocks, cretins.
One more thing: keep an eye on 4030 on the S&P. It's the 61.8% retrace of the August 16 - September 30 decline.
At the Close, Monday, November 14, 2022:
Sunday, November 13, 2022, 12:00 pm ET
As far as the federal government is concerned, not much will change as the results from the 2022 midterm elections continue to be tabulated. Thanks to the new (since 2020) third-world style of elections, Democrats will retain their hold on the House and Senate unless there's a radical turn of events in some of the California House races where Democrats lead in most.
Other than the wildly-hyped but eventually inconsequential elections, the big news came out of the Bureau of Labor Statistics (BLS), when they recorded October inflation officially rising 0.4% for the month and 7.7% on a yearly basis.
Maybe "7" is Wall Street's lucky number, as traders saw fit to dive heavily into stocks on the release of the CPI figure Thursday, boosting the NASDAQ to a record one-day point gain and setting up a huge weekly win for equities. Treasuries also were bid, sending the 10-year yield to its lowest level in just over a month.
For the Dow Industrials, the weekly gain was the fifth in the last six, while NASDAQ, S&P, and the NYSE Composite all shot higher for the third time in the past four weeks. NASDAQ gains were outsized, up 8.10% on the week, though even with such a winning hand, the tech-heavy index is still down 28.48% for the year.
While seeing inflation "easing" to a mere 7.7% annually may have been music to the ears of beaten-down investors, inducing a "buy the dip" moment Thursday, should such a rate maintain over time, prices would essentially double over the next nine years, something that might not be so readily apparent at the macro level, but would certianly put the kibosh on consumer spending, notionally.
Bearing in mind that the rate of inflation is just another way of calculating the decline in purchasing power of the currency, it's not hard to see stocks performing better in such an environment. After all, equity prices have fallen most of the year, decidedly NOT keeping pace with inflation.
This decline in the general rate of inflation isn't likely to change the calculus of the Fed's rate-raising mechanism. In fact, it shows that their prolonged attack on inflation is working as intended, leaving a 50 basis point hike in December (12-13) and two 25 basis point raises at the January 31 - February 1 and March 21-22 meetings in 2023. Those seem to be locked in, as the Fed has expressed a concern over slowing the rate increases too soon, the hope being that economy isn't sent headlong into a deep recession. However, should a recession occur, citizens can rest assured that the Biden administration will insist that there isn't one.
Third quarter earnings reports are due this week from retailers, including Home Depot (HD), Lowe's (LOW), Walmart (WMT), Target (TGT), and Macy's (M).
Short-dated bills hardly budged over the week, though anything longer than six months were bid, with the one-year note hammered back by 17 basis points, while one-month bills were only slightly lower, at 3.71, and the two-month yield held steady at four percent.
Yields fell dramatically on Thursday and stayed down Friday as bond markets were closed for Veterans Day. The largest drop was on the three-year note, which slipped 41 basis points over the course of the week, from 4.58% to 4.17%. The 10-year dipped 35 basis points, to 3.82%, the lowest levels since October 6, though it seems unlikley to remain under four percent over the long haul as tere's still more work to be done on inflation. However, with financial repression writ large and control over the economy now a prime consideration of the Fed, higher interest on the 10-year might not be so readily attained. These knockdowns may be just the beginning of rate normalization, with the understanding that the worst may be over.
WTI crude oil fell again, to $88.86 per barrel from $92.60 a week ago. Despite announced production cuts by OPEC+ commencing on November 1st, there's been little to suggest that supply has been crimped at all in the US.
In the US, the national average for a gallon of regular 87 octane gas was essentially unmoved from last week, holding steady at $3.78. California ($5.38) remains the only state averaging over $5.00/gallon. The cheapest gas can be found in Texas, at $3.06. The Southeastern states continue to trend well under $4.00 per gallon. Every state east of Idaho, Utah, and Arizona is under $4.00/gallon, except Illinois ($4.16), Pennsylvania ($4.08), Indiana ($4.05) and Michigan ($4.03), though even those (other than PA) are lower this week.
Slammed by the sudden collapse of Sam Bankman Fried's FTX and the exchange's token, FTT, all crypto suffered a very disturbing decline this week, with Bitcoin checking in at a disappointing $16,553.00, down from $21,236.50 last Sunday morning.
With the FTX exchange filing bankruptcy Friday, on Saturday, the exchange was either hacked or raided, with somewhere in the range of $477-$650 million missing. Bankman Fried and his cohorts are supposedly holed up in the Bahamas. This story still has legs as there are many unanswered questions amid rumors surrounding celebrities sports stars, Joe Biden, and other politicians.
There are suggestions that FTX was employed as a conduit for funds destined for Ukraine. There's ample evidence that Bankman Fried was the #2 donor - behind George Soros - to Democrat campaigns.
Bitcoin crated as low as $15,668, and has recovered somewhat, though all of crypto-land is under extreme pressure and heightened scrutiny.
Gold/Silver Ratio: 81.39
Gold price 10/14: $1,650.20
Silver price 10/14: $18.20
Gold gained nearly $100 during the week and silver advanced by nearly a dollar. The usual sources are touting yet another "breakout," though the more likely scenario would be for a pullback in the coming days. In any case, both of the precious metals remain quite undervalued.
Here are the most recent prices for common one ounce gold and silver items sold on eBay (numismatics excluded, free shipping included):
Gold received the customary ramp in relation to COMEX price swings higher, while silver was more subdued, likely owing to premiums being reduced on smaller denominations (10 oz or less).
The Single Ounce Silver Market Price Benchmark (SOSMPB) fell for the second straight week, to $36.72, a loss of 64 cents from the November 6 price of $37.36.
A record day on the NASDAQ and a crypto crash somewhat overshadowed the midterms in the US. While Joe Brandon takes a victory lap, the American public seems content to play along with the charades in politics and markets for now.
Democrats appear on the verge of holding the majority in the House, now that the Senate has gone their way with the Nevada vote swinging to the Democrat in late tabulations.
Heading toward a week after the actual voting, there are still 19 House races undecided, the current tally: Democrats, 204, Republicans, 212. Republicans trail in most of the races still pending. 218 seats are needed for a majority.
With the embarrassing manner in which elections are now conducted in what was formerly the word's greatest representative Republic, the future is a moving target.
At the Close, Friday, November 11, 2022:
For the Week:
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