Here is a bit more ammo for gold bulls — they are not even thinking about a tightening policy.
November 25 (King World News) – Danielle DiMartino Booth at Quill Intelligence: Born Alexander Steel Graham in Patrick, Glasgow, Scottish cartoonist Alex Graham studied at Dumfries Academy and served in the Argyll and Sutherland Highlanders during World War II. After the war, he began selling cartoons to magazines like the New Yorker, Punch and Women’s Journal. One New Yorker cartoon in particular, gained an afterlife to infinity and will be forever cherished by fans of sci-fi B-movies. Run on March 21, 1953, it depicts two extraterrestrials addressing a horse with a flying saucer parked in the field behind them: “Kindly take us to your President!” Little did Graham know that his work would launch the iconic “Take me to your leader,” that’s been associated with extraterrestrials ever since.
Since December 1995, the Conference Board has taken economists, investors and students to the leader of the business cycle by way of its aptly named leading index. For you economic historians, in the three prior decades, the U.S Department of Commerce shepherded the Leading Economic Index, or LEI. The Conference Board’s more recognizable consumer confidence index, released the first Tuesday of every month, feeds the LEI along with its peer index via the University of Michigan.
Over time, the Conference Board’s consumer expectations have a decent .57 correlation to the annual trend in real consumer spending on a current quarter and one-quarter lagged basis. That’s why traders reference it as a check on credit and equity investments in the consumer discretionary and consumer staples sectors. But that’s just scratching the surface…
Billionaire and mining legend Ross Beaty, Chairman of Pan American Silver, just spoke about what he expects to see in the gold and silver markets and also shared one of his top stock picks in the mining sector CLICK HERE OR ON THE IMAGE BELOW TO HEAR BEATY’S INTERVIEW.
Consumer expectations is broken down three ways — future business conditions, future employment conditions and income expectations. All three look out over a six-month horizon. We favor income expectations — the spread between those who anticipate an increase minus those expecting a decrease. Consumers know their income’s prospects but may struggle to identify with the more nebulous notions of business conditions and employment. The ebb and flow of income expectations guides current spending and more importantly, consumers’ willingness to spend tomorrow’s income today through higher borrowing, like credit card usage.
The Conference Board survey asks more than just the five questions that comprise the headline confidence index. Given the keen focus on the path of interest rates, we homed in on the one ascertaining consumers’ interest rate expectations. And what do you know? Households’ interest rate expectations are also leading in nature.
To display household rate expectations’ moxie (left-hand graph), we leveled the playing field with income expectations and consumer spending first by normalizing all three series using year-over-year percent changes. Then, we z-scored them to illustrate deviations from the mean adjusted for volatility. The 1988 starting point was the first year all three series overlapped. Our key takeaways:
- Prior to the down move in income expectations and consumer spending in the last four recessions, falling household interest rate expectations led the way.
- Household interest rate expectations was the first to register a significant above-trend recovery relative to income expectations and consumer spending.
- Income expectations and consumer spending’s respective recoveries stretched out longer in the 2007-09 Great Recession relative to the relatively shallower and briefer 1990-91 and 2001 recessions.
- The 2020 COVID-19 recession showed a much deeper retrenchment for consumer spending compared to any other recession since 1990; the decline in income expectations was on par with that of the Great Recession.
If household rate expectations precedent holds, the flirtation with positivity since August should be seen as an encouraging sign for the future path of the COVID-19 recovery. That said, the follow-through to true economic healing has been predicated on a sustainable bounce back in consumer spending. The virus’ resurgence has the potential to postpone that process and delay the upward movement in interest rates that households and investors have been told to expect.
It can’t help that one of the sell-side’s narrative pillars is crumbling. We’ve been told to worry less about this third wave as it’s “only” hitting smaller cities that account for less in the way of aggregate U.S. economic output. That plot has been upturned in recent days as the nation’s most populous state, California, announced a near-record 15,329 cases Tuesday. Hospitalizations have doubled since the start of November and the state’s health authorities have warned the daily death rate could top the peak of 200 recorded in late July. Densely populated New York and New Jersey, which already have the highest per capita death rates in the nation, are also combatting fresh surges.
As millions of family members travel on crowded planes and trains to reunite in the coming days, the uncertainty factor will continue to grow. No fans of being in the dark, we checked in with Opportunity Insights for a real-time take on the sector most sensitive to a retrenchment in consumer spending – Leisure and Hospitality Job Openings (orange line). What we found was that after weeks of steady improvement, the latest batch of data for November 13 showed a sharp retrenchment back to recent August lows.
Anecdatally (new word – like it?), General Electric has just announced that despite the vaccine on the horizon, it was pushing through a fresh round of layoffs at the conglomerate’s jet-engine business due to the permanent damage being inflicted on commercial air traffic. Such headlines will continue to be welcome by market participants as validation that the leaders of the Federal Reserve and now the Treasury are not even thinking about thinking about tighter policy in any form.
Also of importance…
Judd: Another Massive Gold Deposit With High Grade?
John Lewins: “Eric, we just reported some additional results from development we are doing on the Judd vein. Judd is a parallel vein to Kora, and as you know Kora right now is close to 5 million ounces of 10 gram per tonne resource that we are currently mining. We have been Mining Kora for three years and it has averaged 15+ grams per tonne of gold.
Judd sits parallel, about 200 meters away from Kora. We just reported the second set of results from Judd and it was 223 meters of continuous development right on the vein. The last 114 meters of development averaged 3.7 meters of 13.6 grams per tonne and we are seeing a pickup in grade to the South. The last face we announced was 5.5 meters at 110 grams per tonne. We also had an intercept of 7.25 meters at 256 grams per tonne, 25 meters above and 25 meters south of that face. This was one of the ten best gold intercepts in the world this year. This is a vein that doesn’t have a single ounce of resource.
So we are now evaluating this new vein system at Judd, and it has a strike length similar to Kora — a 2 kilometer strike length. And it is literally right next to our underground development just 50-100 meters away. Importantly it has the potential to be another Kora. Certainly these initial results are quite frankly outstanding.
We will also be announcing record throughput and ounces of production from Kora. So we are seeing great success with the drill bit from exploration, but at the same time production is ramping up as a result of our investment that has doubled our production. K92, stock symbol KNT in Canada and KNTNF in the US.
This is an incredibly important audio interview with Alasdair Macleod discussing the plunge in gold and silver and everyone around the world should listen to it immediately by CLICKING HERE OR ON THE IIMAGE BELOW.
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