The price analysis of gold and silver last month discussed the technical damage done and highlighted how support had become resistance. It concluded, “When everything is so lopsidedly bearish, it can signify capitulation. That said, beware of trying to catch a falling knife. Because of the technical drivers in gold and silver, moves tend to extend beyond what seems possible as momentum carries the move forward… The paper market is driving prices and the spec traders don’t see a Fed pivot anywhere, which suggests more time before a turnaround.”
The short-term picture is still rather mixed despite the incredible physical demand on the Comex. The data below helps provide some context.
Inflation is raging. The economy is teetering on the brink. Government spending is out of control. All of this has a root cause. Our money is broken. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about what broke our money and the only way to fix it. He also reveals the illusion of rising wages and breaks down Whoopi Goldberg’s inflation blame game.
Let’s say you were a country or a group of very wealthy individuals and Covid hits. You see governments around the world print money like crazy. It makes you think there might be some inflation to deal with and you want to protect yourself. Gold and silver are the logical choices. So, if you decide to accumulate a whole bunch of precious metals, how would you do it?
Physical metal has continued to drain from COMEX vaults. This is particularly true for silver, which now has 17.4 paper ounces for every registered ounce.
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.
Although gold has been one of the best-performing assets in 2022, it has faced significant headwinds due to rising interest rates and a strong dollar. Members of a panel discussion during the London Bullion Market Association’s (LBMA) annual precious metals conference agreed that gold and silver prices may still face headwinds in the near term as investors continue to anticipate an aggressive Federal Reserve fight against inflation. But they were bullish on the long-term potential of the precious metals market.
The September Consumer Price Index (CPI) data came out on Thursday. Once again, it was “hotter than expected,” despite the Federal Reserve hiking rates by over 3% since March. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey breaks down the CPI data in the context of the Fed’s inflation fight and concludes “this is what losing looks like.”
The latest seasonally adjusted inflation rate for September came in at 0.38%, dropping to 8.25% YoY. Median expectations had been for 0.3% MoM and 8.1% YoY so the hot number hammered markets on the open, especially precious metals.
The markets climbed their way back as of publishing, indicating the investors may be starting to understand the Fed’s predicament even though the probability of a 75bps hike in November is now a near certainty at 99%.
In a series of tweets, Rich Dad Poor Dad author Robert Kiyosaki said now is a great time to buy silver.
Kiyosaki predicted that the dollar will ultimately crash when the Fed pivots and surrenders to inflation.
According to the BLS, the economy added 263,000 jobs in September, which was slightly below the Dow Jones estimate of 275,000. More significantly, the trends reveal a slowing labor market.
Education and Health led the way with strong hiring along with Leisure and Hospitality.
Over the last 18 months, the Treasury has aggressively converted short-term debt to longer-term debt. This can be seen in the chart below with the turquoise bars being negative.
