Here are the latest news items and commentary on current economics news, market trends, stocks, investing opportunities, and the precious metals markets. We also cover hedges, derivatives, and obscura. Most of these items are from the “tangibles heavy” contrarian perspective of SurvivalBlog’s Founder and Senior Editor, JWR [1]. Today, we look at the overhang of European energy derivatives. (See the Derivatives section.)
Precious Metals:
Silver prices see short squeeze, testing resistance near $20, up 6% on weak dollar [2].
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As expected, the silver-to-gold ratio is reversing. When I last checked (on Thursday, September 15, 2022) the ratio was down to 86-to-1. The long-term trend will put it south of 30-to-1, so it certainly isn’t too late to do some ratio trading, if you can find an agreeable coin dealer.
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Silver sharks circle the COMEX Whale [3].
Economy & Finance:
Two recent headlines:
- Railroad union votes to authorize strike that could hammer economy [4].
- The threat of a strike still looms, despite a tentative agreement. Here’s why [5].
JWR’s Comments: Railroads crisscross America, and they are the lifeblood of agriculture, industry, and commerce. Any disruption of rail traffic for more than just a few days would surely devastate already shaky supply chains for both raw materials and finished goods. Take a minute to ponder this map [6]. Livestock feed, crude oil, refined fuel, and bulk chemicals are quite dependent on reliable rail transport.
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Video interview: Fed will raise interest rates to 4% ‘hell or high water,’ says former Fed Vice Chair Clarida [7].
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Americans Spent More on Taxes in 2021 Than on Food, Clothing and Health Care Combined [8].
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Pat Cascio suggested this news item: US Army Recommends Struggling Soldiers Apply For Food Stamps [9].
Commodities:
Some useful charts provided by Ed Yardeni: Market Briefing: Commodities Prices [10].
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OilPrice News reports: Europe’s Natural Gas Shortage Could Trigger A Food Crisi [11]s.
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World food commodity prices dip for fifth month in a row in August [12].
Derivatives:
Energy Trading Stressed by Margin Calls of $1.5 Trillion [13]. The article befins:
“European energy trading is being strained by margin calls of at least $1.5 trillion, putting pressure on governments to provide more liquidity buffers, according to Norway’s Equinor ASA.
Aside from fanning inflation, the biggest energy crisis in decades is sucking up capital to guarantee trades amid wild price swings. That’s pushing European Union officials to intervene to prevent energy markets from stalling, while governments across the region are stepping in to backstop struggling utilities. Finland has warned of a “Lehman Brothers” moment, with power companies facing sudden cash shortages.
‘Liquidity support is going to be needed,’ Helge Haugane, Equinor’s senior vice president for gas and power, said in an interview. The issue is focused on derivatives trading, while the physical market is functioning, he said, adding that the energy company’s estimate for $1.5 trillion to prop up so-called paper trading is ‘conservative.'”
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EU to Discuss Urgent Interventions as Energy Crisis Escalates; Euro Nears 20-Year Low [14].
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Countdown to Phase 6 Initial Margin [15].
Forex & Cryptos:
Reuters: Poll – All roads lead to strong U.S. dollar: FX strategist [16]s. JWR’s Comments: In the long term, the Dollar is doomed. It is just enjoying relative strength, for now. I like Mike Maloney’s characterization of the Dollar versus other currencies. To paraphrase him, he quoted the movie The Two Jakes [17]: “The world’s fiat currencies are like a bunch of lepers. They are all terminally ill. The Dollar looks strong, only because it is the leper that still has the most fingers.”
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Over at Larry Greenberg’s great Currency Thoughts blog: Another Rate Hike in Peru [18].
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BRICS’ reserve currency: An attempt to reduce the dollar’s dominance? [19]
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A year on, El Salvador’s bitcoin experiment is stumbling [20].
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Why Ethereum Price Is Unlikely To Dump After “The Merge” [21].
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Forbes: 10 Best Cryptocurrencies Of September 2022 [22].
Tangibles Investing:
Mortgage rates hit 5.89% — highest level since the 2008 housing crash [23]. JWR’s Comments: This rate will mean that about 40% of would-be buyers will no longer qualify for a loan. If rates continue to rise, then that will mean that it will narrow the pool of buyers to mostly cash buyers, and the housing will tank.
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Collectible Weapons: How to Protect Your Wealth – and Your Family – With Valuable Guns [24].
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While inflation is raging, firearms production has caught up with demand. So gun prices have leveled off, and in some cases are even falling. Here is an example, over at Palmetto State Armory [25] — one of our affiliate advertisers: PSA PA-15 16″ Nitride M4 Carbine 5.56 NATO MOE Rifle and a PSA Dagger Compact 9mm Pistol, for $749. That is quite the package deal!
Provisos:
SurvivalBlog and its Editors are not paid investing counselors or advisers. Please see our Provisos [26] page for our detailed disclaimers.
News Tips:
Please send your economics and investing news tips to JWR [1]. (Either via e-mail or via our Contact form [27].) These are often especially relevant because they come from folks who closely watch specific markets. If you spot any news that would be of interest to SurvivalBlog readers, then please send it in. News items from local news outlets that are missed by the news wire services are especially appreciated. And it need not be only about commodities and precious metals. Thanks!