The October Consumer Price Index data came out this week. They expected it to come in hot. But not this hot. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey digs into the CPI numbers, along with another inflation index that looks even worse, and he wonders out loud how anybody can still buy into this “transitory” inflation narrative.
The October CPI data came in even hotter than expected, and we saw widespread price increases across multiple categories.
The following provides an in-depth analysis of the most recent CPI data.
Gold demand remained strong in October according to the latest data released by the World Gold Council.
Both gold withdrawals from the Shanghai Gold Exchange (SGE) in October and gold imports in September were up year-on-year, and Chinese ETF gold holdings set a new record. These all signal that the Chinese gold market continues to recover after it was hit hard by the coronavirus pandemic.
After all the drama, Congress finally did what everyone knew it would do. It raised the debt ceiling by $480 billion in October. The Treasury wasted no time and quickly added $480 billion to the national debt in the second half of the month.
With this new debt tagged on, if the Fed has to raise rates to 6% to fight inflation, it would increase interest costs by $250 billion within 6 months and nearly $1 trillion within a few years. This is why the Fed must tell everyone that inflation is transitory.
Despite the Fed announcing it will begin tapering QE and a better than expected jobs report, gold rallied on Friday. In his podcast, Peter Schiff said this is sign sellers are exhausted.
October jobs came in at 531k, finally beating expectations with strength shown across the board. Furthermore, August and September were both revised upwards by over 100k. ‘
Perhaps even more surprising is the early reaction in the gold/silver market. More on this below.
The September trade deficit smashed the record set just last June.
September 2021 charted a total trade deficit of -$80.9 billion. That was up a massive 11.2% over the August trade deficit of -$72.8 billion and crushed the previous June record of -$73.2 billion by over 10.5%.
The Federal Reserve wrapped up its FOMC meeting on Wednesday and finally announced the much-anticipated QE taper. The Fed will cut its bond-buying program by about $15 billion a month. But so what? In this episode of the Friday Gold Wrap, host Mike Maharrey digs into the Fed announcement and raises some very important questions.
Gold has been rangebound of late, bouncing between $1,750 and $1,800 an ounce for several months. Given the inflationary environment, one would expect gold to be soaring. So, what’s going on with the yellow metal? And when will the price of gold go up? Peter Schiff tackled this question during a recent Q&A session on YouTube.
Hedge funds closed shorts and went long in both gold and silver in October.
Please note: the COTs report was published 10/29/2021 for the period ending 10/26/2021. “Managed Money” and “Hedge Funds” are used interchangeably.
The Commitment of Traders analysis last month highlighted the potential over-extension of the shorts leading to a rebound. This proved to be the case in a big way. Unfortunately, the momentum lost steam and the $1810s for gold presented too much resistance.
