The Chinese gold market continues to show signs of recovery after it was hit hard by the coronavirus pandemic.
Chinese gold demand rebounded sharply in the first half of 2021 after plummeting in 2020, and imports remained strong in July, above 2019 levels, according to the latest data from the World Gold Council.
China ranks as the world’s largest gold consumer.
Gold and silver have both significantly drained from the Comex inventory since August 1.
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 to show the physical movement of metal into and out of Comex vaults.
CPI data came in slightly cooler than expected for August, giving new energy to the “transitory” inflation narrative. But can we really trust these numbers? In this episode, Friday Gold Wrap host Mike Maharrey takes a deep dive into the CPI and considers this question. He also touches on the big gold sell-off Thursday sparked by surprisingly good retail sales numbers.
A couple of years ago, CNBC commentator Jim Leventhal made a pretty astounding comment. When asked about gold, Leventhal said he had no interest in it because gold has no uses as a metal.
Of course, this is nonsense. Gold has a wide range of uses in sectors ranging from jewelry to high-tech electronics. And gold is becoming increasingly important in the healthcare industry.
The latest seasonally adjusted month-over-month inflation rate was 0.3% (vs. .4% expected), with a non-seasonally adjusted annual rate of 5.3% (vs 5.4% expected). The reason for the fall from July’s .47% pace was spread across multiple categories, specifically Commodities, Food, Shelter, and Transportation.
While the CPI drop-off since the June peak appears to prove the Fed narrative of “transitory” inflation, a deep dive into the numbers shows why the Eccles building should keep the champagne on ice for the moment. Much of the recent pullback can be explained by the economy shutting down again in response to Delta. (more on this below).
The Federal Budget Deficit for August 2021 was $171B which was down from the $302B in July. The chart below shows the Federal Budget for the previous 18 months.
A lot of investors are disappointed in gold. After all, many buy gold because of inflation. Even with rapidly rising prices, the yellow metal hasn’t delivered as you might expect.
During his virtual speech for the Money Show, Peter Schiff explains exactly what is going on. He said in the end, gold will be vindicated because inflation will win in a knockout.
When I walk the beach, I look for sharks’ teeth. Over the years, I’ve developed a pretty good eye for them. In fact, I’ve filled an entire lamp with sharks’ teeth.
Not too long ago, I was walking the beach with my son and there were no sharks’ teeth to be found. Frustrated, I told Brendan that I was going to change my strategy. Instead of looking for sharks’ teeth, I’m going to look for gold coins.
The government is always promising to fix things. It has policies to fix the economy, fix foreign countries, and even fix the pandemic. But as Friday Gold Wrap podcast host Mike Maharrey explains in this episode, instead of fixing things, the government wrecks pretty much everything it touches.
The Treasury bumped up against the debt ceiling at the end of July. Since then, it has been using “extraordinary measures” to allow the Government to keep hemorrhaging cash without having to increase the debt ceiling.
The chart below shows the month-over-month change in debt for August equal to $0. Despite zero net change, there are two important facts to highlight.
- The Treasury continued converting short term debt to long term
- Nonmarketable debt holdings shrunk by $257B
