Inflation Scorecard: Prices Bottoming

By Brad Zigler

Real-time Monetary Inflation (last 12 months): 4.6%

Data published by the U.S. Bureau of Labor Statistics this week shows U.S. inflation continuing to bottom. Year-over-year, the Consumer Price Index slipped 0.2% in October, its shallowest decline since March. Wholesale prices for finished goods, metered by the Producer Price Index, fell 1.9% annually, also the smallest decline since March.

Key inflation markers notched in the week ending Thursday include:

• Gold fixes in London averaging $1,130 an ounce; Thursday morning's fix at $1,136 put gold prices up 1.8 percent for the week; COMEX spot settlements averaged $1,135.10, up 3.2%.

• Gold financing costs in London increased as lease rates fell; the financing curve flattened when one-month forward rates rose faster than three-month rates.

• Gold stocks had a strong week, especially junior issues; the smaller stocks making up the Market Vectors Junior Gold Miners ETF (GDXJ) gained 8.4% for the week versus the 5.5% rise chalked up by the senior issues in the Market Vectors Gold Miners ETF (GDX); the contemporaneous pickup in the S&P 500 Composite was 0.7%.

• Crude oil prices rose modestly as the nearby NYMEX contract for West Texas Intermediate crude settled at $77.46 on Thursday, up 52 cents for the week; the cost of three-month roll continued to increase, this week rising 9 cents to $2.07 a barrel.

• The gold/oil ratio also inched higher, to a 14.7x multiple.

• On Thursday, the yield on three-month Treasuries weakened, while the London Interbank Offered Rate softened only slightly; the TED spread—the yield premium demanded in interbank lending—widened to 26 basis points (0.26%), its highest reading since Aug. 20.

• Treasury long bond yields fell to 4.29%, just 8 basis points higher than rates six months ago; the Treasury curve flattened 8 basis points this week, to 4.28%.

• The U.S. dollar continued to strengthen this week against the euro; cross rates averaged $1.4921 in interbank trading, reflecting the greenback's 0.6% appreciation.

• On a year-over-year basis, monetary inflation spiked 32 basis points higher, to 4.6%, making the real yield on three-month Treasury bills -4.41%.

Real (After-Inflation) Yields On Three-Month T-Bills

Comments

[Boxed Merlot]

Key inflation markers notched in the week ending Thursday include:
• Crude oil prices rose modestly as the nearby NYMEX contract for West Texas Intermediate crude settled at $77.46 on Thursday, up 52 cents for the week; the cost of three-month roll continued to increase, this week rising 9 cents to $2.07 a barrel.
• The gold/oil ratio also inched higher, to a 14.7x multiple.


On Nov 14 08:59 AM The Greatest Rip Off of our Time wrote:

> Here are a few fun facts:

> By 2008, a barrel of oil was traded 27 times, on average, before
> it was actually delivered and consumed.

> …diesel inventories are already at a 25-year high inventory level
> per last Wednesday's DOE report.

> Refineries are running at a near all time operating low at 80 %.
>
> It still costs refiners on average about 20 to 30 cents per gallon
>
> Diesel fuel is a by-product from making gas, yes a waste product
> so why is that so expensive?


On Nov 20 04:36 AM Donald Ingram wrote:

> News out of England today (complete with photos) shows ten loaded
> oil tankers anchored in Lyme Bay off the coast of Devon. Some of
> the locals have stated that they first started showing up at the
> end of August. Why are they here? Money that's why! They are waiting
> for the price of oil to rise before off loading. Since there is lots
> of capacity for their cargoes, it doesn't take rocket scientry to
> figure out that they are purposefully withholding the oil from the
> market so as to generate more profit.


A barrel of oil trades 27X before getting burned up in my car? How many of those 27X did it pass through GS/JPM/Bankers w/o borders, who each time, in addition to siphoning off product for themselves and increasing the cost, constricted its flow to create the hypertension plaguing the economic health of the nations of the world? The cancerous greed of any entity that has no recognized geographic borders, national/legally binding constituency to be accountable to and exists only to weaken its host is in need of divine eradication. And if this is what’s done with a “physical” commodity like oil, who in their right mind would consider allowing these forces to “trade” ether commodities like “carbon credits” that don’t require physicality at all? Obviously, this tumor’s influence has infected the central nervous system to the point the body can no longer make objective decisions to heal itself. imho

2009 Nov 20 12:53 PM