As reported last week, multiple data points in the COMEX are starting to flash yellow in the gold market. Cash settlements are at a recent high, open interest has spiked in March to way above normal, and roll costs are creeping up.
Are these tremors in the gold market?
The Treasury added almost $400 billion of debt in January, the third most since July 2020. As the month closed out, the national debt eclipsed $30 trillion.
The other two larger debt increases both came right after the debt ceiling was raised. Perhaps most important is the fact that almost $200B of the newly added debt was in short-term Bills (turquoise below).
January showed very strong growth with 467k new jobs reported by the BLS. This crushed expectations of 150k. Some analysts even projected a contraction given the reported loss by ADP on Wednesday.
However, the bigger story is the revisions of prior months. October to December saw upward revisions of nearly 900k jobs! The story is more complex though. The BLS has updated their models to “smooth” out the job numbers for seasonality. Most of these “new” gains were pulled from job reports last summer (more on this below).
With little fanfare, the national debt crossed the $30 trillion threshold this week. That is an unfathomable number. And as host Mike Maharrey explains in this week’s Friday Gold Wrap podcast, it’s worse than that. Most people aren’t concerned. Maharrey argues that they should be, likening the federal government’s borrow and spend policy to a monetary Jenga game.
The Federal is supposedly on the path to tighter monetary policy, although it is currently still pouring gas on the inflation fire. The central bank says it is tapering its asset purchases even now, and will eventually begin shrinking its balance sheet. It also plans to raise interest rates.
Peter Schiff has been saying the Fed can’t do what it claims it’s going to do. Economist André Marques agrees. He says the Fed is trapped. It doesn’t really have room to raise rates or taper.
The national debt quietly pushed past $30 trillion on Jan. 31. But that is only the tip of the debt iceberg. The American taxpayer is on the hook for a lot more than that. In his podcast, Peter Schiff said US government borrowing and spending has turned the dollar into monopoly money propped up by a massive Ponzi Scheme.
On January 31, the national debt quietly eclipsed $30 trillion.
The US government has run up debt at breakneck speed after raising the debt ceiling. The national debt broke through $29 trillion on Dec. 16. It took just 46 days for Uncle Sam to add another $1 trillion to his massive pile of debt. It took less than five years for the national debt to grow from $20 trillion to $30 trillion.
Global gold mine production increased in 2021 as economies opened up after the first wave of the coronavirus pandemic. But mine output did not recover to pre-pandemic levels, and overall gold supply fell for the second straight year.
According to data released by the World Gold Council, annual mine production increased 2% year on year, growing to 3,560.7 tons last year compared to 3,474.7 tons in 2020.
As reported last week, Comex January turned out to be extremely strong in both gold and silver for a minor month. Most of that strength materialized after First Position. February was looking modest in gold and weak in silver, but the gold market is now showing outlier trends.
This analysis focuses on gold and silver delivery volume on the Comex. See the article What is the Comex for more detail.
A bill filed in the Oklahoma Senate would establish a state bullion depository similar to the one operating in Texas. This would not only create a safe place to store precious metals; it also has the potential to facilitate the everyday use of gold and silver in financial transactions in Oklahoma and set the stage to undermine the Federal Reserve’s monopoly on money.
