The mainstream seems to have conceded that the economy is heading toward a recession. But most people aren’t too worried. They seem to think the downturn will turn out short and shallow. In his podcast, Peter explains why the recession will more likely be long and deep. Since people don’t understand the nature of the boom, they can’t understand the nature of the bust.
According to the BLS, the economy added 372k jobs in June. This exceeded the 250k market expectations and seems to indicate the labor market is more resilient than the rest of the economy which the Atlanta Fed currently forecasts as being already in recession. While resiliency is a positive sign for the economy, a strong job market will make it harder for the Fed to bring down inflation.
And there are some signs of weakness when you dig into the data – particularly the revisions.
The Federal Reserve is putting on quite the tough guy act. Everybody is convinced the central bank is going to keep up the inflation fight even if the economy gets shaky. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about the Fed’s hawkish messaging and wonders out loud if the central bankers are writing checks they can’t cash.
The May trade deficit came in at -$86B. This was another MoM decline but the monthly deficit is still significantly larger than it was at any point before 2022 as shown below. One of the biggest concerns is the Services Surplus contracting by 8.1%.
The silver-gold ratio hit a two-year high this week, indicating that silver is significantly undervalued compared to gold.
Demand for silver for brazing and soldering applications is expected to expand by 23% by 2030.
This is one of several silver-related stories in the latest edition of Silver News published by the Silver Institute.
The technical analysis last weekend highlighted that gold looks to be in a bottoming structure. Despite the sell-off this week, $1800 held, which could be another indication that gold is in the process of bottoming, with some final weak hands getting pushed out of the market.
Please note: the COTs report was published 7/3/2022 for the period ending 6/28/2022. “Managed Money” and “Hedge Funds” are used interchangeably.
Both silver and gold had their weakest COMEX delivery months in several years.
Gold started July delivery with 937 contracts outstanding. This is the lowest level since November of last year and the second-lowest since the start of Covid (see figure 2).
The first month of Federal Reserve balance sheet reduction turned out to be a big dud. As it turns out, the balance sheet shrank by less than $1 billion in June during the first month of quantitative tightening.
As part of its vaunted inflation fight, the Fed announced in May that Quantitative Tightening (QT) was set to begin last month. From Reuters:
Federal Reserve Chairman Jerome Powell continues to insist that the economy is strong enough to withstand tighter monetary policy to fight inflation. But the economy seems to be saying otherwise. So, how will this play out? In this week’s Friday Gold Wrap podcast, host Mike Maharrey gazes into his crystal ball and speculates about what might happen over the next several months. He also tells the tale of two central bankers and discusses the current gold market.
