Gold trending higher, a presidential tweet disrupts idyllic market morning


Gold is trending higher this morning after hitting an overnight low of $1335.  It is now trading at $1348 (+$2) and level with Friday’s close.  Silver is up slightly at $16.47 (+9¢).  At the moment, tensions in Syria have wound down and the trade war with China has returned to the back burner.  All is right with the world. Stocks are up. Oil is down.  The bond market is trading quietly.

Spoiling this otherwise idyllic scene, we see that the dollar is plummeting.  Might it be an early, first response to the latest presidential tweet?  “Russia and China,” he warns, “are playing the Currency Devaluation game as the U.S. keeps raising interest rates. Not acceptable!”  Devaluation, as the trade war manual reads, begets devaluation. Resurrecting an old concern the president reminds the markets that the strong dollar policy may have become a thing of the past.

Chart of the Day

Chart note: MZM (Money Zero Maturity) is the preferred money supply measure with contemporary economists “because it better represents money readily available within the economy for spending and consumption,” according to Investopedia. We hear much about the impending return of inflation these days, but this chart shows no signs of it in monetary growth, the precursor to price inflation. In fact, it shows the complete opposite and trending down not up. The scenario depicted might not be so troubling were it not for the fact that the Federal Reserve created trillions of dollars through its quantitative easing program that somehow, as this chart clearly shows, never made it to the general economy.  An article in the Wall Street Journal this morning by Nick Timiraos emphasizes that deflation is not a problem.  We would agree with that finding.  As for disinflation, its close cousin, well. . . .that’s another story.
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