The Treasury bumped up against the debt ceiling at the end of July. Since then, it has been using “extraordinary measures” to allow the Government to keep hemorrhaging cash without having to increase the debt ceiling.
The chart below shows the month-over-month change in debt for August equal to $0. Despite zero net change, there are two important facts to highlight.
- The Treasury continued converting short term debt to long term
- Nonmarketable debt holdings shrunk by $257B
- Managed Money (e.g. Hedge Funds)
- Producers (e.g. gold mining companies)
- Swaps (e.g. banks)
The Labor Department released its August jobs report on Friday. To say the numbers were disappointing would be an understatement.
According to the report, there was an increase of only 235k jobs, well below the estimated 720k. That’s a miss of nearly 500k jobs.
The month-on-month trade deficit fell in July but remains far larger than it was a year ago. And the Trailing Twelve Month figure hit a new record.
The Fed balance sheet stands at $8.33 trillion, up $111 billion from the prior month-end.
The chart below shows how the Fed Balance sheet has grown by instrument over the last 18 months. The major surge from COVID can be clearly seen as $2.5T was added within 2 months. The monthly changes since then reflect QE on autopilot.
M2 Money Supply is measured by the Federal Reserve to calculate the amount of money in the financial system. Historically, the term inflation was defined as an expansion of the money supply that generally led to higher prices. Therefore increases in M2 is the measure of inflation. This analysis reviews the changes in money supply as a potential indication of future price increases.
The price of gold and silver can be driven by many variables both technical and fundamental. Fundamental drivers include Fed meetings/speeches, its balance sheet, inflation data, jobs numbers, market risk appetite, etc.
This analysis examines some of the more technical factors driving prices (e.g. Comex OI, Miners price action, technical price action). The CFCT Cots report can show investor positioning but is covered in another analysis.
This analysis focuses on gold and silver within the Comex/CME futures exchange. See the article What is the Comex? for more detail. The charts and tables below specifically analyze the physical stock data at the Comex. This is different than the delivery countdown that looks to see how many contracts will stand for delivery each month. Instead, it shows the physical movement of metal into and out of Comex vaults.