Gold And Silver: Silver Outperforming Gold Over Past Month

Its Gold and Silver time!

Silver, the beautiful metal so beloved in the Southwest US and in Mexico, is starting to gain against its more expensive cousin gold over the past month.

Short positions on silver (and gold) are near their lowest levels in years.

And the price ration of gold to silver is declining.

It appears that silver is playing “catch-up” behind gold. Thanks to Jesse!

To paraphrase Jackie DeShannon, “Put A Little Silver in Your Portfolio.”

Atlanta Fed GDPNow Q2 Forecast Plunges To -42.8%

US Governors: “It’s our party and we’ll snub who we want to.”

The shutdown continues as Q2 GDP “growth” is now forecast to be … -42.8%.

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This comes on the heels of the St Louis Fed’s forecast of -48.07 for Q2.

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The shutdowns are strange since COVID-019 is 7th on the list in terms of US deaths.

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The Los Angeles County medical superintendant.

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Fears Mount About Inflation Returning With a Vengeance (But No Signs Of Inflation Yet)

Given the reaction of The Federal Reserve to the Covid-19 virus, it is understandable for investors to freak-out about possible Weimar Republic / Venezuela-like hyperinflation.

(Bloomberg) — Even a calamity of disease, death and economic destruction afflicting the world all at once isn’t enough to suppress the notion in some quarters that inflation could return with a vengeance.

The coronavirus crisis has killed hundreds of thousands, incapacitated millions and affected the livelihoods of billions — prompting policy makers to fear a deflation spiral reminiscent of the Great Depression. But economists including former Bank of England official Charles Goodhart, and investors such as BNP Paribas Asset Management, are asking if a different phenomenon lurks in the wreckage of global growth.

Muted Price Growth

IMF predictions for inflation rate at end of 2021

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Yes, inflation rates are muted in the short-run, but the surge in government spending and The Fed balance sheet is scaring some people about “inevitable” hyperinflation.

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And the surge in M2 Money Supply YoY is leading some to panic.

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But like the Titanic that sank after striking an iceberg in calm seas, there are calm seas on the inflation front. The EUR Inflation Swap Forward 5Y5Y is less than 1%.

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The USD Inflation Swap Forward 5Y5Y rate is 1.7944%.

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But USD Swaption volatility remains calm after a jolt upwards in March.

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And the US Treasury Inflation Indexed curve is negative beyond 3 years.

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So, the data is showing calm inflation seas, not gut-wrenching Venezuelan-like inflation.

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At Least Greenland And Kazakhstan Are Raising Interest Rates! (Most Central Banks Lowering Rates)

Even more central banks joined the global rate-cutting trend, with Guinea and Georgia on Wednesday lowering their benchmarks for the first time this year after South Sudan did so on Tuesday.

More than a dozen institutions including the Federal Reserve, European Central Bank and Bank of Japan have scheduled monetary policy meetings this week.

But not Greenland and Kazakhstan.

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Of the major Central Banks, India is really going wild to the downside along with Australia, Sweden and (no surprise) Japan.

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Today, as expected, The Fed last rates unchanged.

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Here is Greenland’s version of San Francisco! 

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Commercial & Industrial Lending Growth BOOMS As Companies Seek Funds To Survive The Lockdown (Back To Just Before The Great Recession)

As the US economy slows thanks to the Novel Coronavirus, we are seeing business loans growing at a tremendous rate as they seek to live another day.

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The growth rate of C&I lending (aka, business loans) is the highest since … just before Q4 2007 and The Great Recession.

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Hopefully, this situation is temporary. Otherwise, …

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Gold Contango? Gold Futures Price SOARS Above Spot Price

The COVID-19 virus sweeping the globe is having dramatic impact on asset and commodity prices. Particularly gold.

Contango, also sometimes called forwardation, is a situation where the futures price (or forward price) of a commodity is higher than the spot price of the contract today. Such is the case for gold futures where the futures price for gold exceeds the spot price.

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This will not be the Last Contango for Gold.

And good luck finding physical gold in the form of gold bars. Gold coins, on the other hand, are available.

RIP, Honor Blackman.

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Liquidity Trap! 3M Treasury Yield At -0.025%

A liquidity trap is a situation in which, “after the rate of interest has fallen to a certain level, liquidity preference may become virtually absolute in the sense that almost everyone prefers holding cash rather than holding a debt which yields so low a rate of interest.”

Well, Buckaroos, we are in a liquidity trap with the 3 month Treasury yield at -0.025%.

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A closer look at the T-bill market today.

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So here we sit in a classic liquidity trap!

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Fed Chair Jerome Powell in a liquidity trap!

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Mega thanks to Jesse at Jesse’s Cafe Americain for the jail jpg.

Frankly, I like The Byrds version of Buckaroobetter with the great Clarence White on the Fender Telecaster B-Bender guitar.

Sea of Red! Brent Crude Down 12.38% As Dow Closes Down 13% (Or 3,000 Points) Hedging Anyone??

We are in a Sea of Red.

Brent Crude is down 12.38% today while agriculture prices are down too.

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US, Europe and Asia are in red territory. With the Dow down 3,000 points or nearly 13%.

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It seems like a good time to hedge the stock market.

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A scene at your local grocery store.

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Virus Volatility! VIX, Gold, Oil, Europe, Emerging Markets (No Where To Run, No Where To Hide)

Volatility is spiking in virtually all asset classes.

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Even gold the most in over three decades.

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Wow. No where to run, no where to hide … from volatility. At least in terms of risky assets. Cash and Treasuries are the places to hide.

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