Here is a look at the gold and silver bull markets, plus more inflation.

The Gold & Silver Bull Markets
April 6 (King World News)
Graddhy out of Sweden:  “One needs to really believe in the precious metals (pm) bull market. Without this solid belief, good mental shape and discipline, it will be very easy to mess things up during the coming pm bull market.”

More Inflation
Peter Boockvar: 
As measured by Caixin, China’s private sector service sector index for March gained 2.8 pts m/o/m to 54.3. That was better than the estimate of 52.1. Caixin said “The Covid flare ups that occurred in the fall and the winter have basically died down, and the services sector has quickly recovered with supply and demand expanding. Compared with strong domestic demand, overseas demand is still in need of improvement.

The measure for new export business remained in contractionary territory for the 2nd straight month, though the contraction was limited.” Assume much of that overseas softness was out of Europe. With respect to pricing: 

“Inflationary pressure increased as input costs and output prices remained high. Increases in raw material prices, labor costs and energy prices drove up the measure for input costs for the 9th straight month. Due to the rising costs, the prices charged by service providers remained in expansionary territory for the 8th straight month.” 

There wasn’t much reaction in Chinese stocks as they were flat overnight while Hong Kong was closed again. Also, the story on the front page of the FT yesterday saying the PBOC is telling banks to slow down their pace of extending credit is also being digested. The PBOC wants lending to be flat in 2021 vs 2020. Years of excessive lending/borrowing continues to be addressed via this and a higher tolerance for bankruptcies. The offshore yuan is unchanged while bond yields are up slightly…

To hear Sean Boyd discuss $3,000 gold and the big game-changer
for the gold market 

For a while I was highly respectful of the Reserve Bank of Australia because for decades they never fell for the allure of the inevitable boom bust policy of negative real interest rates, let along negative nominal and QE. No more respect from me after they got sucked into the zeitgeist of the belief in zero rates and QE. The board of the RBA met overnight and left rates at .10% as expected and said they don’t expect their inflation goals to be met “until 2024 at the earliest” and only then will they hike rates. Also, another round of QE is about to begin.

This is even though Australia has recaptured all the jobs lost during Covid. Yes, all of them. This even though they have another housing bubble. They even said “Given the environment of rising housing prices and low interest rates, the bank will be monitoring trends in housing borrowing carefully.” It’s like a bartender who gets their ‘client’ drunk and then crosses their finger that they’ll drive home safely. Sometimes they will but sometimes they won’t. And finally, this emergency policy stance will remain in place even though as they said themselves, “The rollout of vaccines is supporting the recovery of the global economy, although the recovery is uneven.

While there are still considerable uncertainties regarding the outlook, the central case has improved.” The RBA is falling for the same trap that most other developed country central banks have fallen for and not only has it proven almost impossible to get out of, it leaves central banks with so little new to address any oncoming challenges. A roach motel is what modern day developed country monetary policy has become. 

Either way, we’ve seen the market decide instead the level of rates past the Yield Curve Control of 3 years in Australia so the RBA is already impotent. The 3 yr yield is pinned at .10% but since December 31st the 4 yr yield (so only one yr past this) has gone from .18% to .60%. The 5 yr yield has risen to .83% from .33% and the 10 yr yield has jumped to 1.78% from .97%. This is why YCC is a dangerous game because in this instance it has failed and good luck to the RBA in getting out of it without causing disruption. In response to the uber dovishness, the Aussie$ is lower vs the US dollar while the ASX rallied by .8%. Aussie yields are down somewhat after last week’s rise.

While the vaccine roll out in the Eurozone has been forgettable, investor optimism that they will finally get their act together was clear in the Sentix index for April which increased to 13.1 from 5.0 and that was twice the estimate.

That’s the highest level since August 2018. The euro is little changed after recapturing the $1.18 level vs the dollar yesterday. Bond yields are up across the board and stocks are rallying again following the US. In the value vs growth debate, Europe certainly has plenty of the former and not enough of the latter.

ALSO JUST RELEASED: Gold Mining Stocks Are About To Skyrocket CLICK HERE.

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