Will The Reports On The Gigantic US Trade Deficit Ever Push The Price of Gold and Silver Higher (in US dollars)?

There were a bunch of financial reports this morning. But the one that caught my attention was the US trade deficit. Essentially, the rest of the world provides the US with stuff and they get US fiat in return. The U.S. trade deficit in goods widened 6.3% to $102.7 billion in July, according to the Commerce Department. IMHO this should have crushed the US dollar and this should have led to the price of gold and silver in US$ going higher. But the other reports were mostly good news, so interest rates went up, pushing the US dollar index (DXY) higher, and a drop in the price of gold and silver futures was what actually occurred.

The US trade deficit reports are seldom market moving news. But for gold and silver investors that are protecting themselves from US dollar debasement it's a data point that seems like it should be meaningful. How much longer will the rest of the world want to hold US dollars and give us stuff in return for fiat as the US debases the dollar via the enormous trade and Treasury deficits?

Size of US Treasury Note Auctions This Week Is Stunning Given April Is Rare Month When Net Revenue Is A Surplus

As I type this, this morning's price of silver is down over a dollar an ounce and gold is down over $64 an ounce. But glancing at the size of the US Treasury Note auctions has me more convinced than ever that an upward trend is the price of gold and silver continues to be inevitable.

The US Treasury is auctioning $173 billion in notes this week. The ongoing debasement of the dollar in order to cover the immense US spending deficit seemingly ensures that the price of gold and silver is headed higher.

Treasury Note Auctions This Week

$69 Billion - 2 Year Notes - 2/23/24

$70 Billion - 5 Year Notes - 2/24/24

$44 Billion - 7 Year Notes - 2/25/24

Total - $173 billion in Note auctions this week

Last year, the US ran a deficit in 10 out of 12 months. April was a rare surpus month ($177 billion) due to the timing of the April 15 tax deadline. But regardless of the fact that the Treasury may be in surplus this month, there is little relief in their need to raise dollars via auctions.

Am I making too big a deal out of one deficit figure? Maybe. The total being raised by the US Treasury this week is lower than most recent weeks. Specifically, Bill sales are lower than most recent weeks ($215 billion this week versus $300 billion or higher weeks not being unusual.) And there are not any bond auctions this week.

Regardless, the growing amount the US Treasury needs to auction off every week to refund the expiring $34 trillion in debt and to cover the deficit is eventually going to crush the US dollar and lead to the price of gold and silver skyrocketing higher

Protect yourself from US dollar debasement. Consider allocating a significant percentage of your investment dollars to precious metals. 

Personally, I am a fan of silver because it offers more leverage than gold. However. this also makes it more risky than gold as the downside moves, as well as the upside moves, are larger than for gold.

If you are interested in direct exposure to the price of silver, take a look at the PSLV etf. It's the silver ETF preferred by many silver bulls. 

My favorite option for buying silver is offered by First Majestic. Their prices are competitive for all buyers, and they offer a $0.50 an ounce discount to stockholders.   

Full disclosure - I'm a First Majestic stockholder (stock symbol - AG). 

2024 Is Likely To Be Another Year With A High Level Of Hurricane Intensity

According to https://tropical.atmos.colostate.edu/Realtime/index.php?arch&loc=northatlantic, the accumulated cyclone energy of North Atlantic cyclones has been above 95 for each of the past 8 years (2016 thru 2023) and above 100 for 7 of the last 8 (2022 was the outlier with 95). Comparing this result to the previous 30 years, 14 out of the previous 30 years had accumulated energy below 95 (47%). I doubt many readers of this blog will be surprised by the fact that years with accumulated cyclone energy of North Atlantic hurricanes with high intensities are becoming more frequent.

I conducted this review because I speculated it highly likely that given the warmer ocean temperatures, that the Carribean Islands, Atlantic and Gulf of Mexco coastal communities are likely to be devastated by the next round of hurricanes following the flip of ENSO to La Nina.

However, when comparing accumulated energy years to El Nino and La Nina years, I found that while there is definitely a correlation, it is not as strong as I had expected to find https://ggweather.com/enso/oni.htm. While El Niño generally tends to suppress Atlantic hurricane activity, and La Niña tends to enhance it, an eyeball review of the results suggests that it does not appear to be highly predictive of whether there will be destructive hurricane activity in 2024. Thus, if there is a flip of the ENSO cycle from El Niño to La Niña, as some forecasters are predicting, it makes a devastating hurricane season more likely but not a certainty.

While coastal communities may not be as vulnerable to hurricanes in 2024 as I had supposed before starting this review, I fear that the warmer ocean temperatures will lead to more devastating Atlantic hurricanes in the not too distant future during both El Niño and La Niña years.

Why Do The Gullible Folks In The Right Wing Echo Chamber Think That A Regional Winter Cold Snap Proves That Global Warming Is A Hoax?

We're in the midst of winter and much of the US is in the middle of a cold snap. Shocking, right? Yet, as typically happens during a regional cold snap the right wing echo chamber is filled with posts claiming that frigid weather during winter and rescheduled NFL games proves global warming to be a hoax. These claims ignore that the portion of the U.S. hit by this cold snap is a fraction of global surface area. Moreover, it is common for localized incursions of Arctic air masses to be compensated for by warmer-than-normal conditions in other areas of the mid-latitudes.Frankly, anyone that is paying attention should realize that weather is so variable that regional US cold temperature records are commonplace even while locations south of the equator are sizzling. For reference, from January 2020 through November 2022, 91% of 245 locations measured had more record heat than record cold. 

Here's a news flash, when the US suffers through what is likely to be the hottest summer in recorded history during 2024 with hot temperature records being set throughout the country, there will almost certainly be cold records set during the winter season south of the equator. However, it seems probable that globally the hot temperature records will be about 3 times as frequent as the cold termperature records.

If along the lines of climate science deniers, I was to cherry pick a variable data set to make an outrageous claim, it would be that sea level rise has gone parabolic. Check out the chart below. The increase in sea level between May 4 and September 29 is a bit frightening. If the 4.7 mm (0.36 inches) increase in sea level rise is extrapolated out to a full year, that's about 0.8 inches of sea level rise per year and over 8 inches per decade. Whoa, sunny day flooding is already becoming a problem. Eight more inches of sea level rise by 2034 would convert sunny day flooding from a major nuisance into a coastal real estate catastrophe. Even if there is another 0.8 inches of sea level rise in 2024, it will be a problem for low lying coastal cities such as Charleston.

However, a close review of the chart indicates that upward spikes occurred in 2011-2012 and 2014-2015 and were both followed by declines in sea level. Thus, reversion to the mean of about 1/8th inch of sea level rise per year seems at least as likely as a continued rise of 0.8 inch a year. 

https://climate.nasa.gov/vital-signs/sea-level/

In conclusion,  the right wing echo chamber is very effective at amplifying climate disinformation. They cherry pick data, utilize obscure data sources, and make a big deal of the wildest faulty predictions made by individual climate researchers which never obtained widescale acceptance. On the other hand, climate science researchers don't need to do any cherry picking as the results of a warming planet are abundant.

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