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The Doc & Eric Dubin cover a lot of ground on this week’s show, including:

  • Doc’s report on physical market trends and our outlook for precious metals

  • Constructive mining shares & general metals price action despite Friday’s trading

  • Asian-based physical demand remains strong;  shortages are still being reported

  • The Fed & Treasury starting to lose their grip on the bond market, as free market forces begin to overwhelm manipulation- the bond market may well roll over before Bernanke can get out of Dodge!

 

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# # # #

By The Doc & Eric Dubin

Another month has come and gone.  We’re glad May is in the rear-view mirror.  After April’s cartel attack, precious metals have needed time to heal.  But we’re not entirely out of the danger zone.  The cartel could attack at anytime, as they appear to have been doing during New York’s Friday morning session — well before the general equities market rolled over, which only added further pressure to the precious metals sector.

 

Statistically, Fridays have proven to be precious metals downside days ever since the cartel stepped-up their price management efforts last fall.  Gold peaked in early October.  There have been 35 Friday Comex regular session closings since October 1st.  Twenty-five closings have seen prices fall, accounting for just over 71% of the time. (Note:  we used Thursday, March 28th data to replace March 29th, when markets were closed for Good Friday).  Trading on Fridays has also seen quite a few large percentage decline days during this period.

 

Given consistent outright physical shortages in Asia, we expected May to have closed marginally higher.  This was not to be, and it certainly isn’t surprising to see a “tape painting” hissy fit executed to close out the month.  However, there have been multiple failed attempts to crash the market below $22 silver and $1320 gold.  Last week we underscored the importance of the cartel’s embarrassing Sunday evening raid and total failure to sucker in more hedge fund shorting.  Prices rocket back up on Monday, May 20th.  This week, we saw another example of a strong rebound Wednesday and Thursday.  Thursday, in fact, was quite telling because the cartel seldom permits strong follow-through and they were simply blown out of the water, with mining shares signaling continued strong accumulation by “smart,” longer-term oriented money and gold slicing through $1400 towards the end of the day like a hot knife through butter.

 

We continue to believe precious metals will perform reasonably well this summer, with much higher prices coming during the third and fourth quarters.  The bottom-line:  fundamentals have not changed and globally, physical market demand continues to exceed Western-based paper market selling.  With time, paper market pricing will be dragged higher.  We can already see the start of an uptrend in gold, and silver is marking time, moving sideways but showing hedge funds have no interest in shorting below $22.

 

gold-eod

 

silver-eod

 

The Bond Market Is Flipping Uncle Ben The Bird

The mainstream consensus appears to believe the world is on the mend and the precious metals bull market is dead.  However, a few glitches are starting to appear n the Matrix.  The biggest red flag is something we brought to your attention last week: the US long-term bond market is rolling over and yields are on the rise.  The trend continues and it’s quite striking.

 

10yr-yield

 

This shift basically started at the start of May.  The rollover in the highly interest rate sensitive utilities sector is also confirming this profound change.

 

utilities-xlu

 

There are only a handful of conclusions one can draw from this data — and Mr. Market is most certainly sending a loud message.  US long duration bond yields rise when one or more of the following is happening or will soon happen: 

  • Rising expectations for economic acceleration, along with rising inflation expectations

  • Insufficient demand for long duration US bonds

  • Rising expectations of future US dollar weakness in terms of real purchasing power

  • Reduced confidence in the long-term fiscal and budgetary health of the US economy

 

Regardless of what’s causing this back-up in rates, each of these possible causal factors are supportive of higher bullion prices.  Period.  Furthermore, just where do you think all this money in the bond market is going to flow?  Investors are desperate for yield.  It’s highly likely that at least for the initial phase of rising interest rates, the general equities market will see an increase in demand.  For the better part of this entire QE fiesta, hedge funds, investment banks and other “hot money” investors have known all along that betting on declining bond yields during a period where the economy was weak was a reasonable speculation.  Afterall, with the Fed backstopping the market, odds of profitable short-term trades were high — no more.

 

The Federal Reserve and Treasury have been working their tails off to keep the bond market under control.  They are losing their grip.   Market forces are starting to overpower bond market manipulation.  Uncle Ben might be planning his exit this year, but the bond market looks like it’s going to roll over faster than he can skip town.  He has lived by manipulation, creating a hollow, so-called recovery.  Perhaps manipulation will be his undoing.  If bond yields continue to move much higher you can kiss any notion of a sustained housing recovery goodbye.  Bank balance sheets will also suffer because the value of the bonds they hold will decline.  For the sake of properly recorded history, it would be wonderful to see this pompous ass Fed Chair remain in office just long enough to be held accountable for the market distortions his tenure has created.

On that note, here’s to a warm summer!  – Eric Dubin

 

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  1. Hey Bernanke could just start backpedaling now and claim credit for rising interest rates because after due diligence the FED arrived at the conclusion that it will be a softer landing for the economy if rates start rising now as opposed to later.   Yeah that’s it.  I don’t know when we’ll see $49 Silver again but when it does happen it will seem like it occurred with the blink of an eye.  100% appreciation…that’s what I’m gunning for.  

  2. Why can’t we use the basic of basics of fundememntals when interpreting  the crap they shovel us ?  TA is useful, but not needed  whenn describing manipulation as its weakest link.  The language shows up when history repeats itself.  Rome will fall especially when sprinkled with greed for the demise of current system.  How low can you go?  Or which wrench will meltdown the system coming from far left field no one expected?   I am now interested in the basics than the technicals because I am not surprised of the crap given with a pretty bow tie.

    • It’s kind of funny when the “kick around technical analysis” theme comes up related to anything I author because 90% of my research time is spent working with fundamentals and open source intelligence.  In fact, for over 20 years one of my biggest pet peeves has been a deep skepticism of anyone that uses ONLY technical analysis to understand the markets;  most that fall into that camp have tremendously myopic vision as a result. 
       
      All that being said, there are many aspects of some schools of technical analysis are astoundingly helpful when attempting to paint a full, and most true as possible picture of our world.   If a tool is helpful even in the slightest bit, I’m glad to add it to my tool bag. 
       

  3. Bernanke is not in ‘dodge’; on the contrary. Apart from his obvious problem of guilt and stress which has turned him rapidly grey, he is sitting pretty and will NEVER worry about his own financial and physical survival now, during and after the great reset, because he is top among the ‘family’ … Shalom.

  4. We went from Bill Holter’s Force Majeure was the end game all along! “The COMEX will default in the next week or several weeks and people will be “settled” with dollars, no more metal will be delivered!  So, knowing that “game over” has arrived, they are dumping a massive volume of  paper contracts with impunity to push the metals prices as low as possible before the “default.” ” back on 15APR13 to “cartel attacks” in June. Well, I am glad we settled that debate. 

  5.  
    I know its a tad off topic but…
    Throw me a bone here please.  I’m looking for a link to US Mint 2013 Mintage Figures for 1oz AG Eagles.  The only one I can find is broken.  On the way there I passed 2013 AG Eagles at $48.95!!! Cant be so can it? Can it?
     
    Anyway I found this.  Go to 05:58 for the biggest silver bars you ever did see.
    .

     

  6. Does anyone have the premium price history for dealers on silver eagles and/or Canadian Maples? 
    With record sales coming out of both of these mints–it makes perfect sense for them to increase their dealer costs/prices. Unless of course they are, as part of the US government, complicit in this price suppression scheme. In other words, their motives to sell at lower prices is to purposely maintain an illusion which is detrimental to the operation of the business itself.
    Frequent shortages out of the US mint shows a clear economic problem. If the US mint was selling their silver at the equilibrium price there would be no shortages i.e. the amount of silver produced would equal the amount of silver sold. To solve this problem, they would simply have to increase their prices. I am very curious to see how much profit the US Mint is losing by keeping their prices artificially, too low.
    I do notice the NY mint is still selling silver eagles at very high premiums –but this isn’t dealer cost. I see this as promising, nonetheless. And maybe, just maybe the Mint is being forced to slowly give in to natural market forces.
    I will probably look to put together something in excel with estimates for Revenue, Profit, Demand and Cost functions just to see how foolishly the mint has been operating.This should be interesting.

  7. Conflicts of Timelines. This text from KWN, those of us who are retired will never see any benefits.
    Sprott/KWN 06/01/13
     
     Today billionaire Eric Sprott told King World News the reason why a massive panic is coming and what investors can do to protect themselves.  Sprott also spoke about the non-stop financial chaos central planners are faced with “24/7.”  This is the second of three written interviews with Sprott that will be released today.  Below is what Sprott, who is Chairman of Sprott Asset Management, had to say in part II of this remarkable series of interviews.
     

    © 2013 by King World News®. All Rights Reserved. This material may not be published, broadcast,
    rewritten, or redistributed.  However, linking directly to the blog page is permitted and encouraged.

    June 1, 2013

     

    Sprott:  “What has me worried is we are in a financial system where the banking system is massively over-levered, where governments are massively over-levered, where entitlements cannot be paid, and so from an economic approach we all know that somewhere in the next 5 to 10 years it’s going to be a disaster.

     
    Pensioners will be told, ‘You know that social security check we promised you, we can’t pay you that.  We’re going to have to cut it 20%, or we are going to have to change the retirement age.’  There seems to me nothing but problems because the central planners have organized everything to try to stem what should have happened starting in 2000 when the Nasdaq broke.  

     
    We had a damn mania and they’ve been fighting it ever since.  And they end up creating one problem after another…. 

     

    • @Ranger
       
      While there are several ways this could all play out, my thought is that there will be significant changes made to the SS and other benefit systems in the US but that these will not significantly affect current retirees.  That would be an incredibly stupid political blunder if those with the least amount of time to react to financial changes were forced to accept change to which they cannot adapt.  Because of this, those under age 55 will be where the biggest changes occur.  Many of those now in their 30s and 40s are not expecting to receive ANY SS benefits, so will be least opposed to the changes needed to get these systems solvent.  
       
      One of the changes is likely to be means testing such that those with plenty of money on which to live get reduced or no benefits.  Once those people are already receiving SS benefits, however, it will be politically difficult to snatch them back.  Because of this, my wife and I both took our SS benefits at age 62, me in 2010 and her in 2011.  We would not starve, lose our home, or have any other dire financial emergency without this money but, dammit, it is OUR money and we want at least some of it back.  This is not an unearned benefit but is something that we earned, that was taken from us against our will, and that has been managed with gross incompetence ever since.  Getting this money out of the government’s hands and into our own hands will at the very least allow MUCH better financial management to be applied to it.
       
      For the past 20 months, I have been using this money to build my silver and gold stacks.  I only have a little gold but plan to rectify that ASAP.  The recent price pull-back in gold has been a great entry point and I have 10 gorgeous 1-oz. gold Maples in my stack that will soon expand to 15 oz. and then to 20 oz. with 2 additional orders.  Not sure what I will do at that point but we will see when the time comes.  In any case, I do not regret starting benefits early because I have no expectation of a longer than normal life due to our family health history.  If that turns out not to be the case, no problem.  I will gladly accept a few more years and will not worry about not getting the absolute maximum benefit from the SS system.

    • ed, you are right on SS, while it makes me sick, i am assuming all the $ i am putting into This are flushed, i would be tickled to see 25c on the dollar.  hopefully evryone in my generation feels the same and is planning accordingly, i dont think that is the case and that is a recipe for a scary place to be in 40 years.

  8. DV  that video from Johnson is very telling.  Over on Harvey’s channel there is a commentator, Mark Grant,  who generally provides some real wisdom regarding most of the important topics that we read about, discuss and ponder.  He quoted Frank Herbert, author of Dune, and how the group think of elites are their Achilles heel and the means to know them and potentially defeat them.
     So let’s see what the elites will do.
    First off, elites of any type are human.  They are interested in survival and keeping what they have accumulated, stolen or hoarded.  They are also on a big bus rocketing down the road, driven by a person who porports to know the way to some  secular salvation within a redoubt, bivouac or safe haven. 
    In reality there is no safe haven. 
    The world is very small and a person can be gotten to pretty easily, if not by the ordinary folks, most certainly by those other elites who think that one their own is going to throw them under the bus.   Perhaps we, the people, can recruit a John or Jane Galt from their ranks who will aid us.  We can hope for that, hopeful in the chance that his or her humanity will ovecome the need to remain in the ranks of the elites.  Allies came come from that side.
    Just because they are part of a group who’s interests are focussed on retaining power and wealth, it remains clear they are not on the same page.  But they do talk and they do believe their own propaganda, just we believe our propaganda.  But when you combine politics, religion and money into one communal group-think at the highest levels, you are not  going to get consensus, for either internal dissention will crop up or these people will fail to take into account the unintended consequences of their actions as they are imposed on the common man.
    Just because they are wealthy and powerful it would be ill-advised to assume they are on the same page regarding their overarching plans for us.  Their wealth and power is there for one and only one reason.  We, the people, have given it to them, conceded our power and handed it over to them.   We, the people, can be wily and just as capable of seeing to our own well-being. We, the people are just as able to take it away from them be removing the sham circumstances that allowed them to assume or seize power
     We don’t speak with a completely united, common voice, but we are almost instinctively capable of recognizing that we are being played and manipulated, even if it takes a momtonously long time to come to grips with our plight as we handed our power over to the hands of the elites,  whoever or whatever they are. 
    Here  is the source of  my optimism.  That these uber-mensch are no more capable of controlling us, in large part due to their own motivations and weaknesses, than we are capable of controlling ourselves without a serious assessment of our weaknesses and motivations.  They are no better than us, collectively smarter than us or any more able to controlling us in the long pull.   If we take stock of our resources and reserves and focus our thinking on our strengths, we can win the fight by outthinking the foe.
    I posed a question to a former Marine, a very good friend of mine, possessing as martial a  spirit as mine.  Since I never served in the military I asked him a question that I could only guess as to the answer.   Can a small force of heavily armed men with a large reserve of ammunication defeat a numerically superior force?  My friend was in the  Vietnam FOBs during the mid 1960′s.  His command as a First Lt was to take the fight to the NVA, keeping them off base and wary of moving southward into South Vietnam.  High body counts were the order of the day.
    These Teufel Hunds built a reputation amongst the NVA regulars and even the Chinese and Russians who were their advisors (my friend spoke Russian) who accorded them the respect worthy of  fearsome fighters.  The squad and platoon strength of these Marines forces were able to counter  company-strength NVA troops, often defeating the insurgents or at least sending them packing. More often than not, the NVA thought they were fighting company strength units when it was as often as not, the fighting force was platoon at most.
    I mention this since people like us on this site and others can  also form groups who are committed to the task of thwarting or even defeating those who would impose themselves on us. These forces will  continue their actions since they are incapable of changing their thinking or course.  They are as stuck in a Hegelian Dialect of their own making as anyone else who has not thought out their present dilemma.
     Asymmetrical warfare can be fought in a non-violent manner, by education, research and understanding what we face as a common foe. The foe will always be there but like the Mr. Smiths of the Matrix, they canbe defeated.  Everyone has their weak points.  Knowing their human weaknesses and fighting the foe with our wits, certain in the knowledge that we can outhink and outfight them in the long pull means that we can regain our way of life, or at least retain what we have.
     
    Remember.  A small heavily ammo-ed up force able to move quickly and quietly, with the resolve and commitment of unity in their complement, can wage a war of attrition and instill fear in these uber mensch, sending them packing back to their towers and castles. Our force of arms is the internet, physical metals, knowledge and a commitment that will not flag in face of a tough fight.  Cheers

    • Do you think they understand the repercussions?  Do they control every aspect of our lives without any resistance?  Have they lost control already?  Does their models accurately predict future outcomes?  Have we gone past the point of no return and all hope is lost?  Are we in shark filled waters without the knowledge and understanding that we are in trouble?  Are the governmental controls, fiscal and monetary policies, wars, depletion of resources and corruption a sign that everything is breaking down?  How can we save ourselves with the purpose to help others in the process?  Will anyone listen?  How bad is it going to get?
       
      These are the questions that this community is wanting answers for. Not if gold and silver is going up in the near future.  It’s not about gold and silver.  It’s about preparing for a tough time ahead.  It’s about being a adult and trying to figure out these questions.  To find a quantitative approach using logic and reason.  To filter out the bullshit by the MSM and now the alternative media.  Using math and historical evidence not a biased, ideological way of thought.   Personally, I think they lost control.  Their models don’t work.  The numbers don’t add up.  Timing is the key.  It’s impossible to accurately predict the timing of when, not if.  I have linked twice on this site the June 2003 FOMC minutes of the Fed.  It’s over 200 pages long, so that eliminates 99% of the people who would read this document.  This is coming straight from the Fed.  They talked about the QE, operation twist, fed fund rates, interest rates to zero, balance sheet expansion,  and unwinding these positions if they decided to go down this path.  This meeting was 10 years ago!  It was predetermined and thought of a decade ago!  These are not new operations by these organizations.  They understood and knew if they did these types of monetary policies it would be practically impossible to unwind these positions.  It would change monetary policy forever.  They feared deflation and decided to drop the Fed fund rate to zero.  They synthetically and artificially rigged the interest rates by using derivatives like put option and swap agreements.  It’s all in that one single document that hardly anyone has read.  We act stunned by what is happening now.  If we can just take a little time and research their own words, they tell us directly what they are going to do.  Instead, we get propaganda pieces by the MSM and the alternative media misrepresenting their future actions. 
       
       

    • @AGXIIK
       
      Good post.  It started some thoughts of my own in this regard.
       
      The elites are most definitely not immune to generational conflict.  It is always possible that younger elite members will reject the creative constructs of their parents in preference to formulating their own.  It is entirely possible that they will evaluate what their parents have done and continue to do and reject it based on the damage it is doing to humanity.  If this happens, it is likely that part of it will be due to the rebirth of religion in these young elites.  That could give them an appreciation for the best values inherent in most religions and the direct application of them to the human condition.  Doing this would allow them to have a profound influence on humanity, possibly for thousands of years to come.  They are already impossibly wealthy, so they should recognize that they have few real-world needs that their wealth cannot accommodate.
       
      Yes, a small, heavily armed, well supported, and mobile force can present a number of very difficult problems for a much larger force that is less mobile.  Organization without becoming overly centralized could be the key in such a conflict.  Secure and reliable comms would be critical.  Sniping and sabotage are very disruptive activities that can be carried out by a small force, particularly if they can melt away to other locations by the time that major forces are mounted to engage them.  They can also disappear into a supporting civilian population.  If sufficiently successful, there is little doubt that the federal forces would eventually start offering food, money, and other incentives for civilians to inform on patriot forces.  A few informers brought to justice, however, would likely dissuade that sort of unpatriotic behavior.
       
      Unfortunately, much as I would like to agree, I cannot agree that militia forces could instill the least bit of fear into the hearts of the elite.  They will not be in any of the battles.  Their henchmen will, of course, but they are considered as expendable assets and there are plenty of people who can be persuaded by various means to join up and replenish their diminished ranks.  The real trick in waging such a fight for freedom, of course, is having the necessary support to equip and resupply patriot forces over a long period of time.  This would likely have to be for several years, at least, and would have to have a number of successes to maintain troop morale.  Think of George Washington and the struggle he faced in the bitter cold of Valley Forge.  That was a forge, alright, and the combination of cold weather, minimal supplies, disease, and a plethora of well-supplied opponents was almost their undoing.

    • I always hear “The government has planes and drones and missiles”. My answer is always so they get 10 people out of a very distributed force that is doing exactly what you said, sniping and hiding. The more patriots they kill the more will join in the fight.
       
      And the elite may run to some bunker but once it is discovered someone will find a way in and drop something nasty in their hide out. Pump propane down their air vent and when it seems right add fire. Blevy explosions underground are nasty.

  9. DV, Yes Ben does discuss all of his solutions to combat deflation over 10 years ago, he has a few remaining tools in his box.
    1. Buy any form of debt, including corporate and foreign, I even think he mentions any asset, which could include stocks!   Ben could end up buying state bonds, and even foreign bonds, that balance sheet is going to continue to grow in the coming years, $3-4 trillion is just the start in my opinion. 
    2. The final tool is gold, and devaluing the dollar relative to gold.
    I think the issue is, the Fed has a lot more time than many think, the balance sheet can expand to a much larger size than most would think, this has been planned out many years ago, the point is to buy time, they are not losing control at all,  things are going according to plan.

  10. After posting above, I read a quip from Ben Franklin that got me to thinking about mobility.  Franklin noted that people fall into 3 groups; those who are immovable, those who are capable of movement and those who can move!   The more counter party risk one assumes, the more holdfasts that grow from the mind and body, like coral and lichen clinging to their natal rocks;  the move vulnerable one is to change and the more resistant one is to change. Merkel and Hollande dance together like sugarplum fairies, not realizing their time is short; the people will throw them over. 
     Billionaires are mortal. Their asset bases are  very large targets.  The smalls, like us, can live without the counterparty risks evolved and formulated  from the beginnings of the  100 year experiments from the Federal Reserve Bank and the income tax enforced by the IRS.  In my opinion, the chains are beginning to crack and erode if for no other reason than their extended age.  Bonds wear thin in time.  Bonds are also toxic assets that always destroy the holder; the destruction coming more quickly if issued by a soverienty.   All it might take is a small chisel to cut the metal.  A small interest rate increase accomplished the same thing.
    From those not-so-humble beginnings of the Fed and IRS,  great powers and vast fortunes evolved, both  protected in their  growth and  aided and abetted by these two Quasimodo terrors  which  each have increased their weight, pressing more fiercly with their boots on the backs and necks of the American citizens.
    What’s grown  from those two tyrannical entities has tested the patience of the American people, the framework of this country, the Republic and Constitution. It’s weight is felt across the globe.  The time has come to rid ourselves of this tyranny. The Constitution has been shredded for decades, now little more than confetti to be thrown by us from tall buildings as elites roll down Wall Street in massive limosines.   Too many of us cheer these people from our debt laden domiciles, saluting our slave masters.
    Instead of confetti, large weights, grenades and molotov cocktails can also rain down on these evil people.
    Slaves are only slaves if we allow our masters unfettered control over our lives.  We alone allow this slavery. We have only ourselves to blame for our slavery, no matter in what form it exists in our lives. 
    The masters are also enslaved,held fast  by the slaves they keep.  Slaves require care and feeding.  But WE have the power to move, unfasten ourselves from our moorings and leave or flee the premises or plantation.  It’s not about  cutting metal chains. It’s about removing debt from our lives, shedding the rule of FIAT and repudiating the tactics of the masters so that the masters cannot control us; ruthlessly  dictating all the elements of our lives.  Cheers.  Stay calm and slave on—NOT.

    • “The masters are also enslaved,held fast  by the slaves they keep.  Slaves require care and feeding.”
       
      And therein lies the instability of the slave-master system.  When the US Civil War started, slavery was already in serious decline due to its lack of economic viability.  Any number of historians believe that in another 10-12 years, it would have completely died out without any help from Mr. Lincoln… or the 600,000 lives that were spent in “preserving the union”.  Not that the US Civil War was really about slavery, of course.  

    • And removing debt can be done as simply as refusing to pay anymore. Let them foreclose, go buy something cheaper for cash, or rent or live with friends. Credit card debt? Unsecured, tell them to stuff it, claim it is fraud when collections come around, force them to court to try and collect. Hide all your assets by them in places they can’t reach. They go after your paycheck switch jobs of you can, make them lose money at every turn.

  11. DV  answers to your questions
    no, yes, yes, no, no, no, yes, unite(circle the wagons), yes, bad (mathematical certainty)
    On the other side–good.
    Short answers.  I am rationing myself to 2 fatuous gasbaggeries a day.

  12. “Rising expectations for economic acceleration, along with rising inflation expectations”
     
    I seriously need to know what sources of information that people are getting on this inflation thing. I have looked high and low I can’t see anything to suggest high inflation.
     
     
    Table of Inflation Rates by Month and Year (1999-2013)

    Year
    Jan
    Feb
    Mar
    Apr
    May
    Jun
    Jul
    Aug
    Sep
    Oct
    Nov
    Dec
    Ave

    2013
    1.6
    2.0
    1.5
    1.1
     
     
     
     
     
     
     
     
     

    2012
    2.9
    2.9
    2.7
    2.3
    1.7
    1.7
    1.4
    1.7
    2.0
    2.2
    1.8
    1.7
    2.1

    2011
    1.6
    2.1
    2.7
    3.2
    3.6
    3.6
    3.6
    3.8
    3.9
    3.5
    3.4
    3.0
    3.2

    2010
    2.6
    2.1
    2.3
    2.2
    2.0
    1.1
    1.2
    1.1
    1.1
    1.2
    1.1
    1.5
    1.6

    2009
    0
    0.2
    -0.4
    -0.7
    -1.3
    -1.4
    -2.1
    -1.5
    -1.3
    -0.2
    1.8
    2.7
    -0.4

    2008
    4.3
    4
    4
    3.9
    4.2
    5.0
    5.6
    5.4
    4.9
    3.7
    1.1
    0.1
    3.8

    2007
    2.1
    2.4
    2.8
    2.6
    2.7
    2.7
    2.4
    2
    2.8
    3.5
    4.3
    4.1
    2.8

    2006
    4
    3.6
    3.4
    3.5
    4.2
    4.3
    4.1
    3.8
    2.1
    1.3
    2
    2.5
    3.2

    2005
    3
    3
    3.1
    3.5
    2.8
    2.5
    3.2
    3.6
    4.7
    4.3
    3.5
    3.4
    3.4

    2004
    1.9
    1.7
    1.7
    2.3
    3.1
    3.3
    3
    2.7
    2.5
    3.2
    3.5
    3.3
    2.7

    2003
    2.6
    3
    3
    2.2
    2.1
    2.1
    2.1
    2.2
    2.3
    2
    1.8
    1.9
    2.3

    2002
    1.1
    1.1
    1.5
    1.6
    1.2
    1.1
    1.5
    1.8
    1.5
    2
    2.2
    2.4
    1.6

    2001
    3.7
    3.5
    2.9
    3.3
    3.6
    3.2
    2.7
    2.7
    2.6
    2.1
    1.9
    1.6
    2.8

    2000
    2.7
    3.2
    3.8
    3.1
    3.2
    3.7
    3.7
    3.4
    3.5
    3.4
    3.4
    3.4
    3.4

    1999
    1.7
    1.6
    1.7
    2.3
    2.1
    2
    2.1
    2.3
    2.6
    2.6
    2.6
    2.7
    2.2

     
     

    • you believe that crap? Now go look on shadowstats and calculate the inflation rate using real data, not the crap the government has massaged to death

    • When dealing with Monetarists like the Arseholes in the Fed, you got to use their figures. I agree that prices are high everywhere, here in the UK prices of goods in the supermarket have spiraled at an alarming rate. But…is this because of inflation, or something else? if the money supply hasn’t increased as it should have (monetary inflation) then it must be coming from somewhere else.
       
      Do I believe in the Fed/Boe/ECB figures. Yes. From a monetarist perspective. Banks have not taken the QE as they should have, they just parked it at the Fed. This means that the velocity of money just isn’t there. Without this, there won’t be inflation. You match this up with employment figures, salary figures etc. this creates the real picture of the economy. If there was monetary inflation, then the employment figures would show more gainful employment. Salaries have risen mind in over 3 years as they should have. Maybe the Year on Year cost of inflation is catching up to shoddy employers not paying more money.
       
      But there is a problem, Helicopter Ben wants inflation. He isn’t shy about it, he needs inflation. His mantra has always been, anything except deflation.  If QE isn’t creating the money in the system like he wants, then there is no velocity of money. This brings down inflation. Exactly what I am seeing in the official figures.
       
      by the way, I always check prices. My favourite is the “Mr Kipplings Manor house Cake” check. Back in Jan 13 it was £1.35…today…its a whopping £1.45.

    • Just had a thought, could increased consumer prices be because imports are getting more expensive? I don’t know about the US, but in the UK we import a heck of a lot of food produce.

    • @WaitingForSilver:  The bond market is a forward looking discounting machine, especially when it’s not being screwed with by the Fed.     When rates rise, it most certainly is doing so at least to some extent on account of “Rising expectations for economic acceleration, along with rising inflation expectations” and perhaps a combination of the other factors I noted above.  The fact that reported rates of inflation have been low in the last few years has little to do with what the bond market is sniffing out when it comes to the future.
      There will come a time when the velocity of money will accelerate organiclly.  It will also accelerate when internationally-housed dollars start flowing back home following a change to the global reserve status of the dollar.

    • The trouble with the purchase power parity principle to foodstuffs is that almost all nations distort agricultural prices, and the specific foods in question differ for each country.   For example, subsidies given to Japanese rice farmers are very high, whereas wheat (used in the bun on a Big Mac in Tokyo) is imported, most likely, and costs more than wheat grown in America. 
      The principle of the “Big Mac Index” generally makes sense and it’s a reasonable guide.  But few people ever point out that it has flaws. 

    • @Flying Wombat,
       
      Yes it is flawed. You hit the nail on the head. But it does point out, that even with the money exchange, it doesn’t really matter about the exchange rate. That’s something that a lot of people don’t understand. Its not always how many pounds to the dollar, its also what you can get for your money. I think the big Mac index is a great tool for showing this up. Where I live in the UK, its very close to Continental Europe, there has been more tourists of late than for many many years. I asked a couple of German friends about it, they said England prices are cheap compared to the Euro area. Considering the exchange rate favours the pound when dealing in Euro, I was shocked by this. Also Europe didn’t do QE, slammed on the breaks with austerity measures whilst the UK did QE. So why is it cheaper in the UK, when we import nearly everything from the continent?

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