India’s silver imports are up a staggering 60 times what they were last year. Also, paper gold short sellers will be overwhelmed and a look at more problems across the globe.
October 15 (King World News) – Fred Hickey: “Gold -$15 this AM following big CPI/PPI-driven rally to $1800 this week. Hedge funds used their muscle (levered futures paper gold selling) yesterday to keep gold from exceeding important $1800 level and this AM is the counterattack.
India’s Silver Imports Up 60X
Gold selloff has nothing to do with the $ (down today) and bond yields only slightly higher. But as the Times of India story shows, real physical buying of gold is very strong: “imports shot up eight-and-a-half times to $5.1 billion in September 2021” Silver imports up 60x year-over-year.
Battle Rages: Paper Gold Short Sellers Will Be Overwhelmed
As a result of continued huge physical (real) gold buying in India, China and elsewhere around the globe, the levered gold paper futures sellers (mostly NY & London hedge funds) will eventually be overwhelmed. Until then (levels just north of $1800 – not far away) the battle rages…
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Problems Will Continue Well Into 2022
Peter Boockvar: I mentioned yesterday that unless we have more trucks taking stuff off the docks of ports, it really doesn’t matter how many hours a week port workers work. Here is an anecdote from Heartland Express, a short to medium haul truckload carrier, in their earnings call yesterday. The underline is mine.
“Freight demand has continued to be strong and has reached unprecedented levels throughout the 3rd quarter of 2021 and we expect these trends to continue for the remainder of 2021 and well into 2022. We also believe that hiring and retention of employees has reached levels of unprecedented challenge across our industry for both carriers and shippers. We continue to partner with our customers who have had to navigate their own employment related disruptions in order to deliver our strong operating results during the quarter.
We believe that this shared challenge of hiring and retaining both drivers and other supply chain critical employees will continue in the year ahead. To address that challenge, we have increased wages and enhanced the compensation features for our drivers multiple times in the last 12 months. We will continue to invest in our drivers, our fleet of revenue equipment, our terminal locations, and technology to ensure our drivers receive a rewarding level of compensation along with the tools to have a safe and successful career at Heartland Express.”
This is what JB Hunt, another large trucker said today in its earnings press release: “We believe labor shortages across the industry in both rail and truck networks and at customer warehouses are at the core of the supply chain fluidity challenges limiting our asset utilization and capacity.”
Meanwhile In Japan
As Japan still has most of its nuclear plants shut post Fukushima, they import just about all of their energy needs and the yen right now has become a proxy for energy prices. The higher prices go, the lower the yen goes vs the dollar as Japan needs more dollars to pay for the higher prices. Here is a chart this year. What’s going to happen when the Chinese have a digital currency and the Japanese can buy crude from them in digital yuan? The use of the US dollar will never be the same.
So Go Energy Prices, So Goes The Yen
Canadian Dollar Flexing Its Muscle
In contrast, the Canadian$, a good proxy for energy prices but in the other direction, is trading today at its best level since July 5th vs the US dollar and is approaching levels last seen in 2015.
COMMODITY BULL MARKETS GOOD FOR CANADA:
Canadian Dollar Continues To Strengthen vs US Dollar
China Says Expect Bankruptcies, No Bailouts
So what is one of the steps the Chinese authorities are taking to ease the residential real estate stress that is going on? Bloomberg is reporting that “China is loosening restrictions on home loans at some of its largest banks, according to people familiar with the matter.” Authorities know they need to eat into the excess inventory and provide cash to the developers. Fortunately though for the buyers, prices are falling sharply and maybe some bargains can be had for them.
We also did hear finally from the PBOC on Evergrande and they said risks to the financial system are “controllable” and unlikely to spread also according to Bloomberg. Zou Lan at the PBOC said today that they are using “market oriented and rule of law principles” to resolve this. Bankruptcies and no bailouts are definitely market oriented so that seems to be their perspective on that point which I think is a good thing. Rule of law though in China is whatever they want it to be when they want it.
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