Inflation Scorecard: Gold Sweeps Currencies
Gold made a clean sweep against the world’s reserve currencies this week, particularly the yen, which posted a record-setting 4.8 percent loss. Bullion notched a new record against the greenback as well, while it rose 2.1 percent vs. the Swiss franc and 1 percent in euro. Sterling yielded 0.5 percent to gold.
In dollar-denominated assets:
- London gold was fixed at $1,457 Thursday morning, 1.8 percent higher on the week, after averaging $1,443; COMEX spot last settled at $1,459 for a 1.4 percent gain; spot metal averaged $1,446 this week in New York; average daily COMEX volume toppled 47 percent to 140,399 contracts, but open interest surged by 31,919 contracts to 519,059.
- COMEX gold inventories fell 22,176 ounces (0.7 tonnes) to 11.011 million; 21.2 percent of open interest is now covered by warehouse stocks; 2.349 million ounces are deliverable, while immediate demand for COMEX bullion amounts to no more than 246,200 ounces.
- SPDR Gold Trust (NYSE:GLD) vault assets rose 6.0 tonnes (192,261 ounces) to 1,217.2 tonnes.
- Projected volatility for gold, measured by the weekly average of the CBOE Gold ETF Volatility Index (CBOE: GVZ), continued its decline, from 16.7 to 16.1 percent.
- The average one-year gold lease rate ticked down another basis point (0.01 percent) to 0.28 percent.
- A 6.3 percent gain in the share value of the Market Vectors Junior Gold Miners ETF (NYSE:GDXJ) outstripped a 4 percent rise in the Market Vectors Gold Miners ETF (NYSE:GDX); the S&P 500 Composite, in comparison, nosed 0.6 percent higher.
- The S&P’s correlation to gold producer stocks eased 2 points lower to 19 percent but the blue chips’ coefficient vs. bullion shot up 11 points to 10 percent.
- NYMEX WTI crude oil climbed 3.4 percent to $110.30, knocking the gold/oil multiple down from 13.7x to 13.3x.
- Gold futures traders continued to price in expectations for lower rates in their calendar spreads; the one-year COMEX contango was squeezed 60 cents an ounce, or 6.5 percent, to $8.70; London’s forward market spread widened 0.9 percent.
- One-year TED spreads widened 2 basis points to 0.50 percent.
- Another 2-point uptick in long bond yields, together with a drop in short rates, steepened the Treasury yield curve to 449 basis points.
- The euro rose 0.9 percent vs. the U.S. dollar to an average $1.4236 cross rate Thursday.
- The Monetary Inflation Index’s rolling 365-day change averaged 2.4 percent, up from 2.3 percent last week; at today’s rate, the real return on three-month Treasury bills is -130 basis points.
Real-time Monetary Inflation Rate
Note: Explanations of the Scorecard’s indicators can be found in the Hard Asset Investors’ primer articles, “Deciphering The Inflation Scorecard: Why Gold?” and “Deciphering The Inflation Scorecard: Part 2.”
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