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.
This analysis focuses on gold and silver physical delivery on the Comex set for September 21, 2021. See the article What is the Comex for more detail.
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.
The US government ran yet another massive budget deficit in July. The shortfall was particularly larger on a month-on-month basis with tax season ending and the flow of money into the Treasury slowing. The following analysis puts digs deeper into the numbers and puts them into some historical context.
For the first time this year, CPI data came in within expectations. Many in the mainstream took this as a sign “transitory” inflation might be cooling. But many prices continue to increase.
The BLS Consumer Price Index (CPI) has become one of the most anticipated data points each month. The CPI has become a controversial measure over the years. Many correctly point out that it is continuously refined to lower the inflation readings using mechanisms like Owners Equivalent Rent and goods substitution. This makes sense from a strategic standpoint as inflation expectations have shown that they can cause inflation to increase. Thus understating inflation can rein in expectations.
The BLS provides an employment picture of the US on the first Friday of every month. It estimates how many jobs were added or subtracted by sector. While some of the assumptions may be controversial (e.g. the birth/death model) and job numbers are prone to revisions, it remains the most widely anticipated statistic each month by the financial markets. Considering its popularity, the job numbers are heavily analyzed by many sources. This article uses visuals and historical data to provide greater insight and perspective.
“Just because something is inevitable, does not make it imminent, but eventually the future arrives”
The US Government is on an unsustainable debt trajectory. Even though the Federal Reserve has acknowledged this fact, most mainstream pundits consider it a distant problem or even not an issue at all. They argue that debt fears have raged since the debt crossed $1T decades ago and no negative consequences have materialized.
The US Trade Balance shows the deficit and surplus of US trade for Imports and Exports. A deficit occurs when imports are greater than exports. When the Trade Balance is in deficit (which it has been for decades), it accounts for one of the two components of the Twin Deficits. The Fiscal Deficit accounts for the other component and was reviewed in a previous article.
The CFTC Commitment of Traders (COTs) report is released once a week and shows a breakdown of open interest by trader category. As discussed in the gold/silver pricing analysis, Open Interest can be a major factor in the metal price. The CFTC breaks down open interest by:
