On Wednesday night, I got to watch a bunch of guys skate around an ice rink with a silver cup hoisted over their heads. My beloved Tampa Bay Lightning won their second straight Stanley Cup championship with a 1-0 win over the Montreal Canadians.
If it seems like we just did this – well – we did.
This week, the IMF undercut the Fed’s “transitory” inflation narrative, warning about the possibility of sustained inflation in the US. But the real question remains unanswered – what will the Fed do about it? In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about the options on the table. None of them seem particularly good. That raises another question: how long can the politicians and central bankers keep this thing going?
Gold-backed ETFs globally added 40.7 tons of gold in the second quarter of 2021, reversing a trend of significant outflows in Q1.
In 2020, gold-backed ETFs recorded record net inflows of gold. Funds added nearly 231 more tons in 2020 than they did during the previous record year (2009/646 tons). But with declines in the price of gold and investors pivoting to riskier investments as economies improve, gold flowed out of ETFs in the first quarter. That trend reversed in May.
Even with the CPI rising more than expected every month this year, Federal Reserve Chairman Jerome Powell continues to insist that inflation is “transitory.” But not everybody is buying Powell’s narrative. In a blog post published July 7, International Monetary Fund (IMF) Managing Director Kristalina Georgieva warned of a “sustained” inflation rise in the United States.
But even if she’s right, will the Fed do anything about it?
This analysis focuses on gold and silver within the Comex/CME futures exchange See the article What is the Comex? for more detail. It provides historical context and defines many of the terms used below.
While it is exciting to track the countdown to First Notice to determine how many contracts will stand for delivery in a given month, the real movement of metal occurs in the stock report which shows metal entering and leaving the Comex system as well as ownership of physical metal. The charts and tables below analyze this data to track the change in trend that occurred with the Covid pandemic in early 2020 as noted in What is the Comex?.
Treasury Secretary Janet Yellen has conceded that we may well get more inflation than originally expected with all of this government stimulus. But she said if we do end up with higher inflation and higher interest rates, it’s a good thing. It will be good for society, and it will be good for the Federal Reserve.
Peter Schiff talked about it in this clip from a recent podcast.
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, it accounts for one of the two components of the twin deficits. The fiscal deficit accounts for the other component and will be reviewed in a later article.
TTM = Trailing Twelve Months
Central banks globally added another net 56.7 tons of gold to their reserves in May as more banks dip into the gold market, according to the latest data compiled by the World Gold Council.
Gold-buying by central banks slowed last year from the record pace we saw in 2018 and 2019. That trend has continued into 2021, but buying is ahead of last year’s pace as many countries continue to load up on the yellow metal.
Despite the addition of a better than expected 850,000 jobs in June, the unemployment rate ticked up to 5.9%, The anticipation was that it would drop to 5.6%. The media spun this as a fantastic jobs report, focusing on the headline number of jobs “created.” Peter Schiff talked about it in his podcast and said it was a weaker report than the headlines would suggest. And the really bad news is unemployment and prices are rising together.