The January Trade Deficit saw a slight increase compared to December, coming in at -$68.3B vs -$67.2B in the prior month. After peaking at -$106B in March of last year, the Trade Deficit has returned to a more stable range between -$60B and -$80B.
Looking at last month’s US Treasury activity, it’s clear that interest expenses are exploding upwards at an unsustainable pace. Annualized interest on the debt increased by $25 billion in a single month.
The seasonally adjusted money supply in January increased by $31 billion. This was the first increase in the money supply in five months.
This month, the conclusion is going at the top because it can be hard to read through and interpret all the data.
In a nutshell, the data is sending mixed signals. Delivery volume is slowly drifting lower, but some of the underlying data is starting to show large deviations from the mean. In particular, silver saw a lot of contracts wait until the last minute to roll, similar to what we saw with gold last month.
Why?
Gold deliveries in February came in quite low for a major month, totaling only 15,055. This is the lowest month going back to February 2020 (pre-Covid). The chart below shows the big spike in deliveries seen after Covid started. While the current month is still above any pre-Covid month, it is small when compared to some of the major delivery months seen recently.
The Federal Reserve came close but still fell short of its $95 billion per month balance sheet reduction target through the last full week in February. This means the Fed has fallen short in 8 of the last 9 months.
And with rising interest rates coupled with even this modest balance sheet reduction, the Fed is also bleeding money.
The data over the last several months has been spot on in predicting the moves in gold and silver. November showed the market was in neutral, but then the December analysis correctly identified an impending move upward, and the January review concluded that gold may need a breather before moving higher.
So, what about this month?
Gold inventory in COMEX vaults declined by nearly 5% in a single month.
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.
With the CPI losing the relief from cooling energy prices, this month showed a solid uptick in prices, coming in at 0.54% (~6.6% annualized).
The Federal Government ran a deficit of -$39B in January. While that may not seem like much, it looks worse when compared to the average January.
