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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 30, 2022, 8:52 am ET
The way stocks swing and gyrate up and down these days, it won't take much for the major US indices to turn in a positive result on the final day of the quarter, along with a weekly gain, in which case it would be only the second in the past six weeks.
Unlike the first and second quarters, which were unabashedly negative, the third quarter has been one of racing up and down the scale. After a devastating decline the second week of June, stocks gained on a consistent basis for the next eight weeks, from mid-June until mid-August. Anticipating Fed Chair Jerome Powell's speech at Jackson Hole, stocks began to decline, then fell off a cliff on the 26th, when Powell promised "some pain" associated with the inflation fight, confirming the Fed's seriousness in the inflation fight and rising path of interest rates.
It's been pretty much straight into the abyss since then, with the major indices making fresh 2022 lows Tuesday and Thursday, with a sharp, reflex rally in between, on Wednesday.
As of Thursday's close, the Dow stood 364 points (-1.23%) for the week, the NASDAQ losing 130 points (-1.20%), and the S&P off by 52 (-1.43%). The past 6 1/2 weeks have been a downhill joyride for the shorts and excess agony for those holding stocks for the long haul.
While the bulls hope for some end of quarter respite, there's plenty of optimism on the bear side of the trade. Economic data continues to indicate an uneven economy, the housing market is taking a hit in terms of slowing sales and lower prices due to higher mortgage rates. A 30-year fixed-rate mortgage is currently averaging 6.70%, more than double the rate at the start of the year. With the Fed poised for another 50 or 75 basis point hike in November, the cost of owning a home may become even more of a burden.
To the Fed's chagrin, employment has not wavered. Job seekers have their choices in most markets as employers continue to struggle to find qualified candidates for open positions. Despite the recessionary environment, there are still companies on the road to recovery from two years of the pandemic, which sent thousands of workers to early retirement or early graves, opening up positions in just about every field, specifically in professional services, health care, and skilled trades, though even low-level jobs in food service and hospitality are offering better pay and increased benefits in order to attract employees.
The major meat grinder continues to be inflation, which seems not likely to abate soon. While fuel prices have fallen for months, they are on the rise again, as consumers are reporting massive price increases at the pump just this week. Food remains elevated, but other big-=ticket items, such as automobiles, are now under pressure from interest rates, as financing costs are beginning to keep would-be buyers on the fence until prices relax. Rising new car inventories are also being reported by dealers, adding to price pressure on the downside.
Atlanta Fed's GDPNow just hit the lowest prediction for third quarter GDP at 0.3%, just as second quarter GDP was confirmed to be -0.6% after first reading of -0.9%. Even if the third quarter comes in flat, it would take a fourth quarter gain of two percent to just get GDP to even for the year, despite the government's claim that there is no recession.
Looking ahead an hour to the opening bell on Wall Street, futures have been bounced around all morning, the Dow swinging from the red overnight to 250 points higher, but recently close to unchanged.
Investors will weigh the relative contributions to the data from today's reading on one of the Fed's favored indicators, the Personal Consumption Expenditures (PCE) price index, which was released by the Bureau of Economic Analysis at 8:30 am ET, showing the PCE Price index up 0.3% in August after a drop of 0.1% in July. More importantly, core PCE (which excludes food and energy) was elevated, up 0.6%, following a flat reading from July, indicating that inflation is spreading out further into mainstream consumer goods and services.
Predictably, the PCE reading sent stock futures negative, as investors see untamed inflation continuing to spread throughout all segments of the economy, a signal that the Fed won't ease up on interest rates any time soon.
Later, at 10:00 am ET, results of the University of Michigan's latest consumer sentiment survey will be released. With the general consumer mood somewhat sour, any signs of hope will be market positive.
As the quarter comes to a close, it's instructive to note price levels for the months of July, August and September, despite a serious rally right in the middle of it all. Here's where the major averages began and now sit with just one more session for the quarter ahead:
Index/Date 6/30/22 9/29/22
Stocks are lower, albeit not as severely as the first and second quarters, where most of the losses began piling up. With just three months left in 2023, there are plenty of market moving metrics and events on the horizon, not the least of which are mid-term elections for the House and Senate, a pair of FOMC meetings (November 1-2, December 13-14), and three sets of monthly non-farm payroll data, the first of which kicks out Friday of next week (10/7).
The second week of October through the second week of November will be rife with earnings reports. Of course, holiday retail sales will be another important data drop that could have influence over the direction of individual stocks and possibly the entire market.
Thursday, September 29, 2022, 9:18 am ET
Apparently, the Bank of England is still relevant to the rest of the world (now known as ROW).
On Wednesday, with their debt market on the verge of complete capitulation, the BOE decided that its best path forward would be to back away from planned interest rate hikes and spending down of its balance sheet in order to accommodate industry and consumer-crushing inflation. Thus, England's central bank bought all the gilts (British equivalent to US treasuries) it could, ending the threat of pension funds going belly up over margin calls to their leveraged credit bets.
Their sudden reversal has been hailed as "saving the world." In less polite circles, it's being described as plunging further into third world status. The British pound, savaged by the US dollar unipolar reserve currency recently, fell to a level unacceptable to global investors, 1.0418, nearing parity to the dollar on Monday and, after briefly recovering, was sliding once again, down below 1.06 when the bank intervened.
The result was a quick return to a level above 1.08 and a huge rally in equity markets, based on a theory that the US and EU would soon get the memo and follow suit. Noting that the British currency was trading above 1.35 to the dollar just a year ago, the sudden easing by the BOE served to relieve some of the tension over an ongoing global debt implosion, but only for a limited time frame while at the expense of the bank's credibility.
That the global monetary system is all quite complex and interconnected comes as no surprise to anyone with eyes and ears open. Over the past few years, disruptions to the global monetary order have been more the norm than the exception. Equity markets have been wracked with losses all year long as interest rates have been on a long climb to extremely restrictive levels that will likely keep inflation from getting completely out of hand, but will constrain economic activity into further contraction.
Just moments ago, the third and final estimate of second quarter US GDP was reported at -0.6%, the same level as the second estimate, but lower than the initial reading of -0.9%. On the heels of first quarter GDP registering a -1.4% contraction, US GDP is on track to register its first full year of negative GDP since 2020 (-3.40%) and the first non-pandemic-related shrinkage since 2009 (-2.60%).
In other words, US GDP will have to grow by a combined total of two percent over the third and fourth quarters, a prospect that is looking rather doubtful. Atlanta Fed's GDPnow prediction tool has third quarter GDP pegged at +0.3%, a number that is less than encouraging for the bullish case.
On that news, and the latest reading of initial jobless claims coming in at a six-month low of 193,000, US stock futures plummeted, with Dow futures off more than 320 points, S&P futures down more than 50, and NASDAQ futures falling more than 180, with US equity markets set to open in less than half an hour, setting up a gap down drop after Wednesday's monstrous dead-cat, England-saved-the-world bounce.
Coming directly after US stock indices fell to fresh 2022 lows, Wednesday's rally was about as predictable as an ordinary sunrise and is likely to be about as enduring as puppy love. References to furry, lovable pets aside, the global economy is riding a wave of destruction that will not end abruptly on a central bank hockey stick save. The global decline will end when investors fully capitulate, after most have lost more than half of their money and pensioners face a future that looks as grim as images of the Great Depression.
With inflation still running hot and recession an undeniable reality, these two forces together should serve to decimate any semblance of stability in markets and economies of the West. As Russia plows ahead with its eventual annexation of most - if not all - of Ukraine, NATO allies will be busy sitting on their hands, watching their weapons inventory be systematically deployed and destroyed by the vagabonds (Russians) from the East.
While the threat of nuclear war keeps reappearing in the mainstream media, it is likely to remain just that - a threat - something the world has known and become accustomed to since the end of World War II.
If somehow Europe, the US and the UK Commonwealth nations avoid a full-blown, long-lasting depression, the recession will at least be one of the longer and most asset-crushing of the past 50 years as wealth moves from the uni-polar West to a bi-polar monetary regime wherein Russia, China and the rest of the world emerge as equals or betters.
This is only just the beginning.
At the Close, Wednesday, September 28, 2009:
Wednesday, September 28, 2022, 9:15 am ET
It's difficult to assess the severity of blowing up Nordstream 1 and 2, which were the focus of a terrorist action, damaging a part of the pipelines deep beneath the Baltic Sea, effectively shutting down the flow of gas between Russia and Germany indefinitely.
Owned by Gazprom, which paid half the cost of building Nord Stream 2, with the remainder of the $11 billion pipeline project financed by British oil and gas major Shell, Austria's OMV, France's Engie, and Germany's Uniper and Wintershall DEA.
Predictably, Western media has left open the question of who was behind the Tuesday attack, except to blame Russia itself for the explosion that sent gas spewing to the surface in the Baltic.
The Kremlin on Wednesday called insinuations that it would sabotage the pipeline "predictably stupid and absurd."
"It's pretty predictable and predictably stupid to express such versions," Kremlin spokesperson Dmitry Peskov told reporters.
There are obvious reasons for various actors to do something that is as close as an act of war as possible, but it's likely the true culprits will never be officially revealed. Yet, the damage has been done and it is certain to escalate tensions worldwide and especially in Ukraine and Europe. The action effectively shuts down energy flows to Germany, and thus, the German economy. Germany stock market, DAX, was down close to 100 points on Tuesday and is trending lower Wednesday, down as much as 250 points intraday, six percent over the past five days and 25% year-to-date.
If anything, Germany has become the biggest casualty of the sanctions against Russia. The country will be struggling to find sources for energy, any of which will come at a very high price, crippling industry and sending the citizens scrambling for fuel to heat homes and power their vehicles as winter approaches.
With the third quarter coming to a close on Friday, it's not just Germany suffering. Most developed nations, and particularly, those in the NATO alliance, have seen their economies under attack from inflation and recession, simultaneously. The Nordstream sabotage just makes matters that much worse.
Meanwhile, referendums have been held in four Ukrainian provinces, which, according show overwhelming support for those provinces becoming a part of Russia. According to election officials, 93% of the ballots cast in the Zaporizhzhia region supported annexation, as did 87% in the Kherson region, 98% in the Luhansk region and 99% in Donetsk. Russia could consider legislation on annexation of the four provinces - which make up nearly 20% of Ukraine - as early as October 4, the outcome a near-certainty to expand Russia's borders as it continues to plow through Ukraine's military defenses.
Ramifications of the situation in Europe and Ukraine cannot be avoided. The US and its allies are playing a very high-stakes game of chicken on Russia's border, and it increasingly appears that they are on the losing side. As with everything else touched by the illegitimate Brandon administration, the effort in Ukraine and the sanctions against Russia have been an abject failure, costing billions of US dollars and countless innocent lives. Russia cannot be blamed for defending its borders. NATO goaded them into the initial invasion by refusing to adhere to the Minsk agreements and militarizing Ukraine following the coup of 2014, engineered by the US and its allies.
Upping the ante by blowing up Russian infrastructure in international waters is yet another strategy that will likely result in further alienating European allies toward possible defection from the official posture of NATO and the European Union. Politics aside, the more the US and its proxies and allies advance military aid to Ukraine, the worse the situation becomes for all involved.
Russia is likely to begin an offensive within weeks which will further advance their positions before the onset of winter, isolating the capitol of Kiev while most of Europe freezes from lack of energy supply. This cannot end well and is paramount in the financial picture rapidly evolving.
Just how much more the citizens of Europe and the US will take is likely already understood. The failure of the people to organize and rise up against their oppressive, ill-minded governments has been evident since the election fiasco of 2020 and continues apace. Unless full-scale uprisings occur, the fate of Europe, the US, and UK Commonwealth countries will be sealed under the boot-stamp of tyranny.
Investments are likely to suffer greatly under such conditions.
As US trading approaches this Wednesday morning, futures have improved overnight from deep in the red to wildly positive. Global markets are an utter travesty and an affront to the intelligence of investors, just like US elections and what used to be known as "news" on the mainstream media.
Everything that's happened since November 2020 is disgusting and utterly repulsive. Having lost any backbone whatsoever, Europeans and citizens of the US, Canada, Australia, and England, can blame their politicians and their own cowardly countrymen for what has already occurred and what will befall them in the future.
At the Close, Tuesday, September 27, 2022:
Tuesday, September 27, 2022, 7:33 am ET
While there's certainly reason for equity investors to be concerned, their attention may be focused on the wrong valuations. Stocks have been beaten down badly throughout 2022, with the Dow reaching the tectbook bear market metric of -20% year-to-date on Monday, but the real carnage was in FX and fixed income markets, which were blowing out around the globe.
Assessing just the more prominent damage, the British pound hit an all-time low of 1.0350 against the US dollar on Monday, based mainly on fears that the recently-elected government's economic plan for tax cuts amid a cost-of-living (inflation) crisis may fuel even more inflation while stripping the government of necessary revenues.
As if that wasn't enough, the Bank of Japan's recent intervention of buying dollars has done little to stem the slide in the yen's value. The USD/JPY pair traded above 140 on September 1st and has remained above that level - a 24-year high - ever since. Japan's emergency intervention brought the number down to a level around 142 on September 21, but the trade has continued to creep closer to 145 over the past week.
The Bank of Japan insists on keeping their benchmark 10-year rate at 0.25%, despite the global trend to raise rates and inflation - a phenomenon foreign to Japan since the 1990s - beginning to emerge in their sheltered, largely import-based economy. The official inflation rate of 2.8% would be the envy of most other countries at this juncture, but, Japan is seeing the fastest rate of increase since 2014.
Fixed income markets, especially in sovereigns, everything from German Bunds to British Gilts to US Treasuries were blowing out on Monday, extending recent high yields. The treasury market saw unprecedented increases in yields across the curve, led by the 3-year note, rising from 4.21% on Friday to 4.37% Monday. Yields have been rising at an alarming rate sicne the start of the year. For instance, the yield on a six-month bill approached 4.00% on Monday, closing out at 3.95%. At the start of 2022, the yield was 0.22% (that's not a misprint).
With treasuries guaranteeing nearly risk-free yields around four percent and the dollar continuing to strengthen against other currencies, spiking as high as 114.51, the case for owning stocks is further weakened. The asset class that was considered TINA (There Is No Alternative) since the end of the Great Financial Crisis of 2007-09 is now being shed by investors of all breeds. Hedge funds, pension managers, institutional brokerages, and individual investors are all running full tilt away from stocks toward what are now perceived as safer plays during turbulent times.
Such an environment only serves to fuel even more pessimism in stocks. The falls from all-time highs in January have created a vicious feedback loop that is unlikely to end anytime soon. The safe haven US dollar and high bond yields will pull more and more money out of stocks through the end of the year and into 2023.
Monday's trading in the US was hardly encouraging. On the heels of one of the worst weeks yet this year, the main indices failed to bounce, instead sending all the averages to closes well below the -20% level for the year, the dull performance against a stark background of inflation, recession, and a looming government shutdown should congress fail to reach agreement on a short-term funding measure by the end of the fiscal year, Friday, September 30.
Congressional chaos would serve as a cherry atop what is already a melting sundae of monetary and fiscal incompetence.
Sloganeering of "Let's go, Brandon" may give way to "Thanks, Chump Congress." Mitch McConnell, Chuck Schumer, Nancy Pelosi, and even Brandon himself will likely spend the rest of the week pointing fingers at each other as yet another funding fiasco evolves and Hurricane Ian hurtles toward Florida's Gulf coast.
What a time to be alive. People over 40 suddenly are flashing back to formerly forgotten fond memories of the Clinton years.
At the Close, Monday, September 26, 2022:
Sunday, September 25, 2022, 11:55 am ET
"If you want a picture of the future, imagine a boot stamping on a human face -- forever."
Looking past the market disaster of the past two weeks, final week of September marks the end of fiscal 2022 for the federal government, expected to close the books with a deficit of more than a trillion dollars, though not before staging the usual drama of a potential government shutdown.
The main issue revolves around the deal offered to West Virginia Senator Joe Manchin (D) by Senate leader Chuck Schumer (D-NY) that got Manchin to support the "Inflation Reduction Act of 2022" which passed by the narrowest of margins in August, 51-50, as VP-in-absentia, Kamala Harris, cast the deciding vote.
Manchin was promised a pipeline through his state and neighboring Virginia, but Republicans are aligned against the Democrat stop-gap funding plan that includes money for the project and are set to filibuster, forcing compromise by Democrats or shutting down non-essential government functions beginning at midnight Friday, September 30. The proposed bill would fund government operations through December 16, assuring more drama, just before the holidays, from the worthless windbags in congress, whose sole aims in life are continuing re-election and trying to maintain he appearance of relevance by pushing themselves through the media's watchful eyes and ears.
If a shutdown is on the agenda next week, it would come as welcome to most of the nation's people. For a multitude of good reasons, no institution is more loathed than the Washington, DC political establishment.
This was the second consecutive week of steep losses in the major averages, the total decline since September 12 between eight and 10 percent overall.
Over the week just past, the NYSE Composite led the indices with a loss of 776.92 points, or -5.33%. The Dow was the least damaged, losing exactly four percent, though it plunged to a 22 month low, the last time the 30 industrials finished at a lower level was November 20, 2020 (29,263.48). The NYSE Composite Index (13,796.99) also fell to its lowest level of the year and the worst in nearly two years. A closing price of 13,761.32 was made November 13, 2020.
The S&P ended the week at the third-worst level of the year, just a percent ahead of the year-to-date closing low of 3,666.77 of June 16. Likewise, the NASDAQ managed to remain above its closing low of the year of 10,646.10 (June 16), though just barely.
Looking ahead, the next major data points are likely to be partially obscured by the possibility of a government shutdown at the end of the week (Sept. 30) and third quarter earnings reports, which will begin to hit the wires the second week of October. Led by the banking sector, analysts have downgraded expectations, so that year-over-year declines will only be mentioned in passing.
Among the major banking firms, Goldman Sachs (GS) leads off on Thursday, October 13; Citigroup (C), JP Morgan Chase (JPM) and Morgan Stanley will report on Friday, October 14. Bank of America (BAC) reports on Monday, October 17, along with terminal customer abuser Wells-Fargo (WFC). That the banking giants reports are split up over a weekend is no accident. The separation is designed to spread the panic and glee over several days instead of focusing on earnings that have been lowered to levels over which the banks can triumph, even as Bank of America, JP Morgan, and Wells Fargo all fell short of anticipated EPS in the second quarter.
Whatever the case for the banks and other major corporates, the period between now and the midterm elections are likely to be trying and confounding. While there is no FOMC meeting in October, the next is prior to the November 8 poll-going, on November 1-2. September CPI and PPI figures are released on the 12th and 13th of October, though this period, PPI is the earlier release, CPI the latter. Prior to that will be September non-farm payrolls, on Friday, October 7.
While anything is possible, including a bounce-back rally, the future does not look very bright for equity investors. Year-to-date, the Dow is down 19.12%; NASDAQ, -31.36%; S&P, -23.00%; and the NYSE Composite, -19.91. A short-term rally may calm some nerves, but the trend is well-entrenched and stock look to close oout the year of 2022 as one of the worst ever.
Inverted to nearly record levels, 2s-10s are -51 basis points, 2s-30s are even worse, at 59 basis points. If this isn't a clear signal of recession - despite the government's insistence that GDP contraction in the first and second quarters of 2022 is not actually a recession - then nothing is. Clearly, bond markets are stressed to the extreme, with scrambling to secure the highest return the newest game in town before the markets become completely illiquid.
The middle of the curve surged this week, with one-year note yield up 19 basis points, two-year and three-year notes up 35 and 40 basis points, respectively, reflecting the 75 basis point hike announced by the FOMC on Wednesday, September 21.
Yields are now getting to the point at which they may actually stem inflation by causing recession and stopping any economic growth in its path. With the Fed set to hike another 50-75 basis points at the November meeting and signaling further hikes into 2023, this appears to be the beginning of the more serious part of the Fed's fight on inflation, certain to incur costs to economies everywhere.
Other central banks, from Sweden to Indonesia and everywhere in between, are also raising interest rates after decades of lowering them, often into negative territory. Low rates spurred plenty of credit demand. Now it is being vaporized in a rapidly escalating global rate raising regime. Something is bound to break very soon.
WTI crude oil's current contract closed out the week at $79.43/barrel, a sharp drop from last week's $85.40 and the first time WTI crude has been selling for less than $80/barrel since January. While $80 oil doesn't exactly light up smiles on the faces of oil company executives, it is another clear signal that demand is waning, people are changing driving habits and the world as a whole has gone into a mode of austerity when it comes to energy usage.
Lower oil prices have been reflected in gas at the pump, the price of which has been in decline since June. According to gasbuddy.com, the national average for a gallon of unleaded regular was actually up a few cents, at $3.66 a gallon, though that appears to be a temporary blip, as price deceleration will continue into the winter as refineries switched from summer to the cheaper winter blends on the 15th of September. The change in fuel blends typically results in prices at the pump dropping anywhere from 10 to 30 cents per gallon, depending on location, which will come as a relief for the nation's drivers. Even with a recession looming, there is a hint of good news.
With no useful real-world purposes, bitcoin and the thousands of alt-coins it spawned, will likely end up in the bottomless pit from which all investment scams originate. Spending more of its time below the Maginot line of $19,000 than above it, Bitcoin priced Sunday morning at $18,946.50, a number sure to be compelling to hodlers contemplating that they have possibly erred in their judgement.
Sooner or later, bitcoin is going to collapse, as real money liquidity dries up and fiat currencies evaporate. Cryptos, built atop and alongside fiats, have no future in a liquidity squeeze. Consider that most of the world's currencies are depreciating against the US dollar and it's a rather small step of logic to see that bitcoin - as a competing currency, if nothing else - will follow the trend.
The time may have come to short bitcoin and crypto in general. It's simply a bad fit when people are going to be forced to return to basics.
Interestingly, gold and silver have actually stood up pretty well against the appreciating US dollar, which portends well for the future of precious metals as respected currency. Premiums remain well above COMEX and LBMA prices for smaller purchases, though 10-ounce and above silver and anything substantial in gold - 100 or more ounces - is seeing some price pressure. The continued central bank effort to suppress prices will continue, though not without drawbacks. Like bonds, pushing too hard may backfire in the longer run.
There's speculation and then there's asset protection. Gold and silver provide the latter, and they are both undeservingly inexpensive. Nothing wrong with buying gold around $1750 an ounce or silver under $24. In the end you have ounces of value rather than worthless paper.
Gold/Silver Ratio: 87.66
Gold price 08/26: $1,750.80
Silver price 08/26: $18.78
Below 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) made a small gain through the week, to $35.18, adding 12 cents from the September 23 price of $35.06.
This is the second leg of what may turn out to be the deepest, longest bear market in history, rivaling the Great Depression of 1929-1939. In terms of lost decades, the 2020s looks to become the latest, kicked off by the pandemic, exacerbated by corruption at the highest levels of finance and government, and finalized by coordinated central bank policies that finish off what little value remains in globalized fiat currencies.
A new standard may emerge, but it will only be another elitist design on impoverishing the lower classes, as money - or currency - has always been the primary tool to suppress the masses.
In the meantime, preparedness for a possible currency crisis is paramount and should have been planned for long ago. Gold, silver, guns, ammo, seeds, and fuel should be topping all lists.
At the Close, Friday, September 23, 2022:
For the Week:
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