Stocks spent the week more or less in a holding pattern, making a move higher on Monday, but flattening out as the week progressed, especially Tuesday through Thursday. With the political focus now shifting to the relief bill in congress, stocks should rise and fall with the narrative from Capitol Hill. If the legislation appears likely to sail through congress intact, expect stocks to continue the corona rally that began in late March of last year. Any delays or roadblocks to full passage of the bill will be seen as negative for stocks and the economy overall.
Along with Republican defectors in the Senate, Democrats holding a majority in both houses should be able to breeze the bill through and onto Biden's desk in short order. While news outlets are calling for passage of the bill by March, judging by how expediently the Senate whipped through the sham impeachment, there is little doubt that a boost to the economy is an urgent priority for the free-spenders in congress.
Despite all the rhetoric addressed toward the "green" economy, the price of oil continued to mark higher during the week. WTI crude, closing out at $59.73 Friday on the NYMEX, is at its highest price since the last peak at the end of 2019. In the week ending December 23, 2019, WTI priced at $61.72. A move beyond the mid-60s would put the current price at levels not seen since 2018, when Oil reach the mid-70s.
What's driving the price of crude is the slowing of COVID-19 cases, hospitalizations, and deaths, a narrative which is going to become pre-eminent as Spring arrives, with mass vaccination emerging as the hero. As usual, the mainstream media will shield the public from the ultimate truths regarding the entirety of the corona-crisis, but the effect will be a return to more normal lifestyles, with mask mandates and lockdowns out of the picture. The new powers-that-be need a robust recovery to cement their mental hold on the unsuspecting American public and nothing could be more poignant than an end to the scourge of the pandemic, for which Dr. Fauci and no doubt many legislators in Washington, DC and beyond will claim credit.
Whatever the scenario, putting the coronavirus episode behind will be a great relief to the general public, which only wishes to get on with living without overhearing government restrictions and dictates. Such an outcome would increase demand for oil and derivatives, especially heating oil and gas at the pump.
Bitcoin is on the verge of surpassing $50,000 as of this writing, topping out at $49,700 - a new all-time high - overnight Sunday. There's a very real possibility that $50,000 bitcoin could be a reality at the opening of US markets on Monday.
Treasuries continued to be under pressure, as the yield on the 10-year note exceeded a one-year high again, posting 1.20% on Friday. In affirmation, the 30-year bond yield rose to 2.01%, also a one-year high. Putting those numbers into perspective, all maturities have negative real yields, meaning holders are losing money against inflation. A five-year note loses 1.85% of value, while the 10-year is marginally better, losing only 1.01 in real, inflation-adjusted terms. the 30-year, at current valuation, loses only 0.16% annually.
Regardless on risk profile, investors must take note of this trend, which has been gathering momentum over the past year. As inflation expectations rise, and real price inflation in goods and services materializes, fixed income vehicles will struggle to keep pace via higher yields. With the treasury complex at the base, investors will be less inclined to hold these money-losing assets, leading to a vicious cycle of escalating rates and advancing inflation.
A meltdown in the bond market is an event multiple times more significant than a stock market rout and should be at the top of every astute investor's watch list. Money has been fleeing fixed income in search of higher returns, but that condition becomes exacerbated when price inflation becomes endemic. With the Federal Reserve turning its money-printing marathon into a sprint, the likelihood of a bust in treasuries poses a serious present danger to overall financial stability.
Precious metals continued to be supressed to a maximum degree, though signs of breakage in COMEX silver are beginning to emerge. Gold bounced higher midweek, jumping from the close on Friday, 2/5, of $1810.80, as high as $1843.40 before closing the week at $1,822.43, a far cry from the all-time high of $2063.68 this past August.
Silver took an alternate path, rising from $26.90 to $27.36 over the course of the week, most of the gains occurring on Monday and Friday, while slumping midweek. This particular pattern between gold and silver is remarkable, given the events for the prior two weeks. It suggests that not only has the COMEX and spot price regimes decoupled from the market price, but also from silver's counterpart in the gold COMEX complex.
If so, this could be a startling development, signaling a return of silver to a more reasonable and historically-relevant price in relation to gold. With the current gold:silver ratio at 66.66, it is still a good distance away from historical measures of 16:1, 12:1, or even the global mining ratio, currently estimated by First Majestic CEO Keith Neumeyer at 8:1. Movements in the GSR (gold:silver ratio) are often tiny and barely perceptible, but they may have larger impacts on the general economy than given credit.
Here are the most recent prices for common gold and silver items sold on eBay (numismatics excluded, shipping - often free - included):
Item: Low / High / Average / Median
1 oz silver coin: 36.32 / 53.90 / 42.40 / 41.48
1 oz silver bar: 38.14 / 55.00 / 44.21 / 43.85
1 oz gold coin: 1,945.23 / 2,050.00 / 2,002.22 / 2,006.29
1 oz gold bar: 1,945.23 / 2,304.95 / 1,997.00 / 1,948.36
According to established methodology, these figures put the new Single Ounce Silver Market Price Benchmark (SOSMPB) at $42.99, another increase, surging past last week's benchmark of $41.22.
What the eBay sales are broadcasting is that demand for all manner of gold and silver is reaching manic levels. Contributing to the runaway price of silver are the restrictions on volume purchases and shipping delays at online retailers. Many are still nearly out of stock, and certainly out of stock on the most popular items.
Further indication of the disconnect from COMEX spot price and real world market pricing is the silver dollar offerings from the US Mint, wherein ALL of their one ounce inventory is either unavailable, limited, or pre-order. The takeaway is that even at inflated prices - the lowest-cost one-ounce silver dollar is $67.00 (the currently unavailable West Point Silver Eagle) - Eagles and other silver dollar products from the mint are not to be had.
On eBay, sellers are bound by common practice to deliver within reasonable time frames, unencumbered by mass pricing which restricts dealer inventories and induces shipping delays. With that in mind, it is not inconceivable to believe that some dealers will begin adding premia to market prices for immediate delivery, should demand persist and supply remain slow-paced. If demand for 1,000-ounce silver bars, which are commonly used by COMEX, the LBMA, and industrial users increases substantially, one would normally expect a massive spike on the COMEX, though the rigging in that market has become so extreme as to necessitate purposeful mispricing, i.e., lying.
According to the Silver Institute, global demand is set for an eight-year high of 1.025 billion ounces in 2021.Given that this estimate is extremely conservative, $100 an ounce market price for finished one-ounce silver products by year's end is surely not out of the question.
All of the week-long activity in global markets leads to an unmistakable conclusion: that the world currency markets are closing fast on a global resturcturing, one that may already be underway and being taken advantage of by the best clandestine minds and investment houses, making the following quotation particularly prescient.
Gold is the world’s only monetary asset that has no counter-party risk, and is the only cross-nation, cross-language, cross-ethnicity, cross-religion and cross-culture globally recognized monetary asset.
-- Song Xin, Party Secretary and President of the China Gold Association, "Gold will Support Renminbi as it Moves to Join World," 2014. (Link is in Mandarin.)
It's easy to extrapolate the above statement to include silver and Bitcoin, making a triumvirate of monetary assets available to everybody on the planet as global fiat currencies such as the $US, euro, yen, pound, yuan, and franc continue to lose purchasing power at accelerating rates.
At the Close, Friday, Febraury 12, 2021:
Dow: 31,458.40, +27.70 (+0.09%)
NASDAQ: 14,095.47, +69.70 (+0.50%)
S&P 500: 3,934.83, +18.45 (+0.47%)
NYSE: 15,369.60, +72.52 (+0.47%)
For the Week:
Dow: +310.16 (+1.00%)
NASDAQ: +239.18 (+1.73%)
S&P 500: +48.00 (+1.23%)
NYSE: +72.52 (+0.47%)
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