It appears quantitative easing has pretty much come to an end. At least for now.
Although the Fed was still expanding the balance sheet through mid-month, it only added a net $9B to the balance sheet during March. This was accomplished with moderate purchases of short- and long-term debt, while 5–10-year notes had a $20B runoff. MBS (light green) was surprisingly quiet with a net $2B runoff, but this disguises the typical volatility seen in MBS weekly purchases.
Based on COMEX data, gold is set to have another strong month in April, which is not surprising given the lead-up.
The big action in silver occurred early in the month, making March a pretty large outlier. First, it continues the recent trend of increasing deliveries. Second, deliveries were 8.7% of the max open interest for the month. This is the highest percentage since July 2020 when prices took off. There are still 24 open interest contracts remaining.
No doubt, money supply growth is decelerating but is still far from contractionary.
According to the seasonally adjusted data, M2 expanded by $83billion in February. January was revised down from $245 billion to $176 billion.
Data coming from the COMEX could indicate growing pressure for a breakout in gold and silver.
COMEX data has shown large deviations for several months. Most of this occurred before Russia invaded Ukraine and these deviations have grown larger since. The invasion seems to have accelerated trends that were already in place.
Gold is currently tucked between fragile support and weak resistance.
Both gold and silver have been on a wild ride for the past several weeks. The last technical analysis showed how gold had broken through the lengthy consolidation pattern between $1750-$1800, with the Ukraine crisis pushing the metal through $1900.
Banks are in the process of restocking gold at a pace not seen in years.
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/inventory data at the Comex to show the physical movement of metal into and out of Comex vaults.
Over the past couple of weeks, I have focused on the activity at the Comex for the upcoming delivery months. While the data still supports a very bullish near-term posture as shown below, aggressive longs should consider when and how margin rates could be used to rein in prices.
In January, the US Treasury realized its first surplus in 2.5 years.
The surplus was short-lived.
The Treasury went in the red by $216.6 billion in February.
Weeks before the Russian invasion of Ukraine, I highlighted Comex data points that could signal a big move ahead in gold. The invasion may have been the spark to light the fire, but the data showed the groundwork was being laid back in January.
Silver has now sent up its own flare that may be tied to the largest data adjustment ever seen at the CME for silver.
