Quiet prevails, could be punctured later in the week


Quiet prevails. The markets are running sideways – stocks, bonds, gold, silver, the dollar, commodities. Even the Argentine peso, at least for the moment, looks stable. Gold is trading at $1197; silver at $14.22. The quiet, however, could be punctured later in the week. The Labor Department releases its latest consumer price report on Thursday. In the meanwhile, a feel-good story comes from Australia this morning. Miners at work in the Beta Hunt nickel mine, owned by RNC Minerals of Canada, hit the mother lode last week – a single blast producing 9000 troy ounces of gold worth $10,000,000. One 200-pound rock contains “2400 ounces of high-grade gold,” according to reports. The mining company will auction off the find as collectors’ items. It, by the way, says the mine might be even richer as it goes deeper.

Stay tuned. We will update if things change.

Quote of the Day
“Because Chinese and American leaders have all sorts of carrots and sticks (e.g., economic, military, cyber, etc.) that they can use, they are now determining which ones to use, how far to push the testing, and how far the other will go in inflicting pain and enduring it. The escalations come in the form of tit-for-tats—i.e., a series of escalations that can become progressively larger and more painful, and that take different forms that can extend beyond trade (e.g., to include capital wars). It’s this series of escalations that the wise Chinese leader that I referred to conveyed can easily get beyond anyone’s control.” [Emphasis added]

Chart of the Day

Chart note: With the US dollar the centerpiece of interest the past several weeks, we thought it appropriate to post the long-term overlay chart of the gold price and the major-currency version of the US Dollar index. As you can see, the dollar has been in a secular, long-term decline against other major currencies since the early 1970s when the U.S. abandoned gold-backing for the currency and the world switched to free-floating gold and currency prices. Despite all the talk of a strong dollar and how Treasury secretaries historically back the concept, the reality is the opposite – a weak dollar when measured against its major competitors. In the end, unencumbered ownership of physical gold coins and bullion, as this chart amply illustrates, has proven to be a very effective defense in the on-going process.

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