If the week just past seemed rather dull to you, it's not myopia or boredom. Everything just appears to be in a state of suspended animation.
The biggest event of the prior seven days was no doubt the massive takedown on gold and silver futures. While such raids are completely expected events, this most recent one was rather harsh. On Tuesday, spot gold crashed from $2,027.34 to $1,911.89, a decline of 5.7%, but, it was outdone by silver, which was spanked a nasty 14.9%, from $29.13 to $24.79.
Both metals recovered from the massacre, gold ending the week at $1,945.12, silver at $26.45 per ounce. Silver is still sporting a year-to-date return of 48.14%, tops among tradable assets worldwide. Gold's up 28.20%. Despite the recent smackdown, both metals are beating the pants off equities and fixed income.
Ted Bulter supplies a reasoned commentary on the selloff, with some technical assumptions and his usual wealth of market wisdom.
Andrew Mcguire's comments on the plunge were featured in Friday's Money Daily and is an equally compelling account.
Crude oil continued to be stuck in it's own sludge. The current price of $42.01 is near the top of the recent range, which has been slight. Since July 1, WTI crude has traded between $39.82 and $42.67, falling below $40 per barrel (on a closing basis) only once during that span (July 30, $39.92).
Oil's stability has kept prices at the pump in equilibrium with most Americans' thinner wallets. According to AAA, the average cost of a gallon of unleaded gas is $2.18. The average is skewed upwards by California, which has the highest price in the contiguous 48 states, at $3.205. Driving is cheapest in the Southeast, with most states under $2.00. Mississippi has the lowest average in the country, at $1.823. Jones county, MS, has the lowest average price, checking in at $1.692.
The only other place any movement was seen was fixed income. Long-dated treasuries tacked on yield, sending prices plummeting. Yield on the 30-year bond rose from 1.23% last Friday (Aug. 7) to 1.45% on August 14. The 10-year tacked on 14 basis points, from 1.57% to 1.71% on Friday. Shorter-dated maturities might as well be yielding nothing. Anything 2 years of shorter yields less than 0.15% and are negative in real terms.
It's hard to determine whether rising bond prices or zero-bound yields are a bigger headache for the Fed. On the one hand, yields below 1.5% (the entire complex) aren't exactly enticing to buyers nor do they inspire confidence in the economy going forward. Rising yields threaten to cause flight from stocks, tighter conditions and higher borrowing costs, a trifecta of bad outcomes.
The Fed has itself in a naughty fix. Its attempt at controlling the curve may be akin to trying to thread a needle from 100 miles out. Pinpoint accuracy is required, but real world conditions prevent any attempt at being even close to the mark. The best the Fed can do is pretend they have control via occasional speech-giving by member presidents and the usual cry of "no change" at the usual FOMC meetings and press conferences.
So, that just about covers the waterfront. Besides the Dow's 1.81% and the composite's 1.07% gains on the week, stocks were literally frozen in place, a position amplified by Friday's performance, a complete flattening out across all the major indices.
Blah might be the prevailing sentiment as the slog through August continues and congress drags on its holiday without providing relief to the American public with any kind of stimulus bill, needed or not. The churlish and childish approach to governance displayed by the current occupants of congressional seats amrks a new low in American politics, with the bar already pretty close to ground level.
The only way for the politicians to go seems to be up. Almost anything they do would qualify as an improvement over their performance the past three months wherein they've accomplished absolutely nothing. Perhaps, if lowered expectations are to be the norm, Americans might be best off ignoring anything they do, propose, or pontificate upon. As a group, they've proven themselves about as useful as a band-aid would be on a broken arm.
Less dependence on the whims, actions, and predilections of elected (and non-elected) masters in Washington DC, or even at state and local levels might not be a novel idea, but it is one which, unfortunately, the country is moving away from at an alarming pace. From Wall Street to the neighbors next door, everybody seems to have their hands out, seeking solutions from people who not only don't have any, but are the proximate cause for the fix we're in to begin with. COVID-19 has accounted for illness and some additional deaths, but government's response will result in fracturing an already fragile society and severe damage to the national psyche, and we're still not even close to the horrors that await us come the elections in November.
We might as well sacrifice lambs to a mythical sun god for all the good the politicians are doing.
Maybe if everybody just stayed home and refrained from voting at all, some of these posers and self-appointed magistrates of rule-making might get the message that they're neither needed nor wanted.
Fat chance of that. And please, whatever you do, do not watch or support any sporting event on TV that does not allow fans into the arena or stadium. Games without fans is like having a steak without seasoning nor a baked potato or vegetable, or a hot dog without mustard or even a bun. It's just not very appealing.
With that, here's a look at recent prices for popular precious metal items on ebay (shipping - often free - included):
Item: Low / High / Average / Median
1 oz silver coin: 32.52 / 37.99 / 35.01 / 35.00
1 oz silver bar: 32.99 / 36.90 / 35.49 / 35.99
1 oz gold coin: 2,010.00 / 2,152.82 / 2,072.02 / 2,061.61
1 oz gold bar: 2,000.00 / 2,153.95 / 2,077.05 / 2,073.58
The result of our review here is interesting in that silver, which suffered a nearly 15% decline in the futures market, barely skipped a beat. This is primarily due to two overriding factors: first, the price of spot silver locked in on Friday August 7 was $28.33, which wasn't far from the closing - post-smackdown - price on Friday, August 14, $26.70. The $1.63 change is hardly notable, being a decline of just over five percent. Second, silver is still - relative to gold - very inexpensive, thus, the very active physical market is still willing to pay hefty premiums to acquire the metal. Normally quite volatile, silver futures and spot prices do not change from Fridays at 5:00 pm ET to Sundays at 6:00 pm ET.
Prices paid for gold coins and bars were more consequential, down, on average, $74-$80. The median gold coin was down by more than $100 compared to the prior week.
Downtown Magazine has also launched a new page showing historical prices for these same items since Money Daily began tracking them on April 18. Prices are recorded every Sunday morning at approximately 8:00 - 10:00 am. Numismatics and specialty items are excluded, resulting in a regular, rational reading on what people are actually paying, an advancing necessitating diversion from the atypical gyrations in the futures markets.
While futures and spot prices have been the norm for some time, they may have outlived their usefulness for millions of savers, stackers and small speculators who seek a semblance of regularity and steadiness in their investments and currencies. We hope to expand upon tracking historical prices to include prices from the more popular dealers on the internet in the near future. We trust their cooperation may prove to unshackle the precious metals from the tyranny of arbitrary paper price discovery and the machinations of central bankers and their cohorts.
At the Close, Friday, August 14, 2020:
Dow: 27,931.02, +34.30 (+0.12%)
NASDAQ: 11,019.30, -23.20 (-0.21%)
S&P 500: 3,372.85, -0.58 (-0.02%)
NYSE: 12,902.50, -16.64 (-0.13%)
For the Week:
Dow: +497.54 (+1.81%)
NASDAQ: +8.32 (+0.08%)
S&P 500: +21.57 (+0.64%)
NYSE: +136.66 (+1.07%)
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