Marc Chandler – Looking At The Two Blades Of The Market Scissors – Inflation and Slowing Growth
Marc Chandler, Managing Partner at Bannockburn Global ForEx, joins us to recap the key market moves off the continued geopolitical tensions in Ukraine, and how other macroeconomic trends factor in. Marc feels that there are 2 main blades to the scissors cutting through markets 1) Inflation and 2) a slowing down of growth.
We start off by looking at how inflation and fiscal policies boosted inflation and the prices of commodities were already spiking higher, and now they are spiking even further due to Russian sanctions, and everything from metals to energy is pressuring all markets from businesses to consumers, which just slows the growth of the economy down even further. Next we shift over to the bid coming in to safe haven assets like the dollar, bonds, and gold, and that gold is moving up in almost every currency. Marc reviews a number of currencies where there are some different trends on commodity currencies and emerging markets than we are seeing in the actual commodities, and outlines the news and central bank moves he feels will move the markets in the near term.
Thanks for podcast suggestion……… Dr. P……. was a great one…….. IMO…..
She covered a lot of territory…..
BTW………. I posted this over in the ORPHAN SECTION(political section)
Jerry: Glad you took the time to listen. I learned a bunch. Have a whole different outlook now. Hope she’s right about the future. Although, we have to get there first. Have a good one.
Gold is up nicely around $1965 and this looks to be a pretty solid weekly close for the first week of March, following up the strong monthly close in February over $1900.
Silver is also still outperforming Gold up to $25.71.
How about Dr. Copper making a new all time high today, currently at $4.93…. really close to breaking through the $5 barrier?
https://www.investing.com/commodities/copper-streaming-chart
silver miners have been extremely poor vs silver.
Who needs the political risk I guess. Plus, they are in the business of selling silver in exchange for dollars. How much sense does that make?
XAU has been in a near 30 year downtrend vs gold, and the ratio is once again coming up against the declining 600 week MA, just like it did back in 2008.
Maybe the miners are predicting a liquidity crisis, just like they did back then.
Hugh Hendry posited that mining stocks would be terrible investments since the more dire the economic situation became, the higher the risk of expropriation and mine nationalization.
Whatever the cause, there has to be a reason the market has been discounting the mining stocks for such a long time and looks like it will continue to do. People have been saying “Just wait until gold clear $X, then the miners will play catch up.” Well it hasn’t happened in 30 years, and yet it has had every reason to have a bull market vs gold over the last 15 years (unless Hendry’s theory is correct).
My question to mining bulls is, what will the catalyst be for mining stocks to outperform gold, because higher gold prices isn’t it.
Well lately Silver has been starting to outperform Gold again, and SILJ has just started to outperform GDXJ again, which are both bullish developments for the sector. On really bullish periods for the PM sector the Silver stocks do outperform the Gold stocks, like in 2016 and 2019 or from the pandemic low of March 2020 through the #SilverSqueeze of Feb 1st 2021. This next bullish leg will be no different.
Since the lows of January 28th, GDX and SILJ are up almost 30% while gold is up 10%. 3 to 1 leverage isn’t bad at all for GDX and SILJ will improve significantly as it always has when the sector gets going.
As I pointed out recently, the miners in general have been doing well considering the continued selling pressure on the conventional stock market but the silver stocks will improve the most as things settle down a bit and more people wake up to the big trend changes taking place in stocks and the gold space. Right now, most retail investors probably think that stocks are just undergoing another correction and not beginning a long bear market. Managed/big/smart money knows what’s happening so the gold sector will continue to improve until the rest figure it out. Then it will really move.
Palladium off like a rocket …………. did I see up $175…….$2895…….
Yep. Palladium, like Nickel, is a big commodity produced by Russia, and the sanctions are just driving up the prices in many key commodities that Russia produces from Oil and Nat Gast to Wheat.
Granted the commodities were really oversold on historic levels relative to general equities and other asset classes like real estate, so a re-rating has been long overdue. The commodities already started running over the last few years as a result of all the money printing leading to higher inflation, and got another boost during the pandemic with even Trillions more dollars being created, but this geopolitical tension has really boosted the commodities even further.
You got me to look OOTB. Palladium up to $2957. Wowzers!
Big swing……… in the last year….. $1600plus…… to today….. $2900……..
Russia Crisis Shifts This Metal Into Overdrive
By Sean Brodrick on March 3, 2022
“With Russian tanks rolling into Ukraine, many investors are turning to gold … and that makes sense.
Throughout history, gold has proven itself to be the ultimate safe harbor.”
“However, there is a metal poised to outshine just about every other metal in this crisis.
And it ain’t gold.”
“I’m talking about palladium, which on Wednesday rose to a seven-month peak.
The immediate driver is the worsening Russia-Ukraine crisis, and palladium prices look poised to go a lot higher.”
https://weissratings.com/en/wealth-wave/russia-crisis-shifts-this-metal-into-overdrive
Might have to trade in some gold…… and platinum ……..
THANKS FOR THE ARTICLE>………………
According to an end-2021 market report by specialty-metals refiner Johnson Matthey …
Last year saw a deficit in palladium supply of 829,000 ounces.
This year, Johnson Matthey expects the deficit to increase. And that’s BEFORE any sanctions hit.
Maybe not trade my platinum,,,,,just yet…….. Sean says…
Hey, Russia also produces 15% of the world’s platinum. Could prices of that metal be headed higher?
Bought back into Wallbridge today.
Doc, did you buy more Gazprom OGZPY@1 today? or LUKOY@7 ?
WOW! I haven’t even looked at Wallbridge since last year. It looks compelling here in the depths of depression.
The real fireworks for gold haven’t happened yet. When The U.S. must face China over Taiwan the only option they have is to turn tail and run. The ICBM’s that China has that are aircraft carrier killers are going to teach The West that they are living in 1942 when the carrier was a potent weapon. Fast forward to now and the casualties The US will face will be catastrophic, their carrier fleet was designed for a war eighty years ago. Life has moved on and cruise and hypersonic missiles will render The US navy arsenal useless.
The Western World still thinks that because they were victors in The Second World War, that they are invincible. That is very dangerous military thinking.
The rest of The World understands the importance of gold, we in the west are going to get a lesson that we can’t forget about honest money, or living in a World where we won a war that is no longer relevant. DT
Military weapons are often developed based on which politician has the most influence coupled with a Defense Contractor with the greatest ability to support a politician. It takes years to develop a weapon system and obsolescence can occur before it is completed, particularly in a faster moving tech world.
Edit: Billy Mitchell proved a floating Navy was at risk. Nuclear submarines with nuclear weapons have proven to be a deterrent.
Dick, I can’t quite see the U.S. taking on China. If Vietnam could win…I agree about the west about to get a lesson in honest money although China has printed up a lot of funny money of their own.
When was the last audit on Fort Knox? (Could be the last nail in the Russia- Russia- Russia coffin of USA corruption…
Pippa Malmgren on Macro Voices. Posted earlier but it is the best interview I’ve heard all year. If you’re interested in strategic thinking and world affairs, you will learn plenty. If her hopeful future develops, I’d be interested in opinions on PMs. Take the time…………https://www.macrovoices.com/