The US continues to run massive trade deficits. Despite the lack of interest in the mainstream, trade deficits matter. And as Peter Schiff said last fall, we can’t just ignore these trade deficits forever.
February did not set a new monthly trade deficit record, but it was very close, and it was worse than projected.
There is a correlation between Managed Money activity and the price of gold. Managed Money net longs str down from their March peak. This indicates there is money on the sideline that could rush into the market if gold breaks through current resistance
Please note: the COTs report was published 4/1/2022 for the period ending 3/28/2022. “Managed Money” and “Hedge Funds” are used interchangeably.
According to the BLS, the economy added 431k jobs in March. February was revised up to 750k from an original 678k. The unemployment rate fell to 3.6%.
It would appear this was another strong jobs report. But when you did into the data, it’s not that clear-cut.
It appears quantitative easing has pretty much come to an end. At least for now.
Although the Fed was still expanding the balance sheet through mid-month, it only added a net $9B to the balance sheet during March. This was accomplished with moderate purchases of short- and long-term debt, while 5–10-year notes had a $20B runoff. MBS (light green) was surprisingly quiet with a net $2B runoff, but this disguises the typical volatility seen in MBS weekly purchases.
When you change the definition of words, it can create confusion. This is exactly why politicians have worked so hard to change the definition of inflation. As a result, a lot of people are very confused. In this Friday Gold Wrap podcast, host Mike Maharrey explains how the meaning of inflation has changed and why it matters. He also talks about signals flashing from the bond and real estate markets.
Based on COMEX data, gold is set to have another strong month in April, which is not surprising given the lead-up.
The big action in silver occurred early in the month, making March a pretty large outlier. First, it continues the recent trend of increasing deliveries. Second, deliveries were 8.7% of the max open interest for the month. This is the highest percentage since July 2020 when prices took off. There are still 24 open interest contracts remaining.
The Fed threw a pretty weak first punch at inflation with a quarter-point interest rate hike last week. But Fed Chair Jerome Powell followed up with some tough talk this week. The question is what will he do when the economy punches him in the face? In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about Powell’s attempt to bully inflation and if it might backfire.
No doubt, money supply growth is decelerating but is still far from contractionary.
According to the seasonally adjusted data, M2 expanded by $83billion in February. January was revised down from $245 billion to $176 billion.
Data coming from the COMEX could indicate growing pressure for a breakout in gold and silver.
COMEX data has shown large deviations for several months. Most of this occurred before Russia invaded Ukraine and these deviations have grown larger since. The invasion seems to have accelerated trends that were already in place.
