15 April 2011

Gold Daily and Silver Weekly Charts - Something Wicked This Way Comes

Today was a very early April options expiration for US equities, and we saw quite a few antics in the stocks. Of special interest to many were the games being played with the mining stocks.

There is intraday commentary on gold and silver and the closing of the retail gold window at the Belarus central bank here.

April is supposed to be one of the better months for stocks, but so far it has been correcting fairly steadily from the early April highs.

Gold and silver are starting to get a second wind in this breakout, and the increasing inflationary environment in the global fiat currencies, particularly the dollar, are driving them higher.

This is the latest on US inflation from John Williams at Shadowstats. John tracks the underlying inflationary trends better than anyone else that I know.
"The pace of consumer inflation is accelerating rapidly, with annual CPI-U at 2.7% and CPI-W at 3.0%, while the annualized quarterly, seasonally-adjusted inflation rates have hit 5.2% for the CPI-U and 6.0% for the CPI-W.

These higher inflation numbers are tied directly to the Federal Reserve's successful and ongoing efforts to debase the U.S. dollar, which in turn have boosted dollar-denominated commodity prices such as oil. The inflation pace here normally would be of concern to the Fed, except the U.S. central bank officially ignores inflation tied to food and energy prices, even though, again, those debilitating price increases for consumers are a direct result of Fed policy.

Of particular discomfort to consumers, this inflation has not resulted from booming economic activity and wages, but rather from Fed monetary policy in the context of stagnant/declining broad economic activity.

Inflation has gained the upper hand in retail sales, with sales gains now more than accounted for by rising prices. A pending benchmark revision (April 29th) should show a much weaker recent history for retail sales activity, as the just-published benchmark revision to industrial production did for that series...

Inflation Above 3% Tends to Rattle Consumers. Where consumers look at inflation in terms of out-of-pocket expenses, the threshold of pain has been crossed, with popularly used consumer price indices at or within one month of topping 3% annual inflation. Further, for those who do not get paid in seasonally-adjusted dollars, the 0.5% adjusted CPI-U monthly gain felt more like the 1.0% unadjusted gain."