Growing Acceptance Of Gold As The World’s Premiere Currency

Headlines tend to focus relative strength/weakness between fiat currencies. For example, the Mexican peso is setting fresh highs against the dollar. While the peso is setting new highs against the dollar, it’s setting performing poorly against gold. The steep and accelerating trend of the global price of gold (including the peso) illustrates gold’s growing acceptance as the world’s premiere currency. See charts below.

US Dollar Gold:


Mexican Peso Gold:


Yuan Gold:


Swiss Franc Gold:


Real Gold:


Canadian Dollar Gold:


Australian Dollar Gold:


Headline: Mexico's Peso Closes Stronger, Sets Fresh 2-Year High Vs US Dollar

Mexico's peso continued its steady appreciation versus the dollar Friday, reaching its strongest closing level since Oct. 2008, after a key U.S. data report pointed to a gradually improving labor market.

The peso was quoted in Mexico City closing at MXN11.9925 to the dollar, according to Infosel, compared with MXN11.9895 shortly after the open and MXN12.0090 at Thursday's close.

Source: online.wsj.com

More Social Unrest, Currencies Turmoil: Jim Rogers

More social and political turmoil is likely in the future so commodities prices will continue rising, renowned investor Jim Rogers, CEO of Rogers Holdings, told CNBC Thursday

Charts of interest:

Nasdaq 100 (QQQQ) And Nasdaq 100 Diffusion Index (DI)


Source: cnbc.com

Inside the Employment Report

An unexpected decline in unemployment rate from 9.4% to 9.0% is extremely deceptive. The secular trend in the civil labor force (see chart below) illustrates the following:

(1) A noticeable deceleration in the growth of the labor force growth since 1956.
(2) The trend in labor force growth deteriorated noticeable after 1973, 2000 and 2007.
(3) The year-over-year contraction in the labor force that began in 2009 is one the strongest and most sustained on record.
(4) The above trends suggest a gradual deterioration in the growth rate of US labor force since 1956. This gradual deterioration has been replaced by a noticeable contraction since 2009. This trend toward a small civilian labor represents a structural change to the economy that supports it; It’s a structural change that is impacting standard of living for all Americans.

Civilian Labor Force (CLF) And Year-Over-Year (YOY) Change:


Headline: Unemployment falls to 9.0 pct., only 36K new jobs

The unemployment rate dropped sharply last month to 9 percent, the lowest level in nearly two years. But the economy generated only 36,000 net new jobs, the fewest in four months.

The January report illustrates how job growth remains the economy's weakest spot, even as other economic indicators point to a recovery that is strengthening.

Source: finance.yahoo.com

How Much is a Nickel Worth? More than Five Cents, Says Michael Lewis (VIDEO)

What's commonly known as Gresham's law, the debasement of currency causes the hoarding of good (old) relative to bad (new) money, is not a new human behavior. This tendency had been observed as far back as the 5th century BC. It's becoming clear that the public is beginning to relearn a very old monetary lesson.

Source: tvsquad.com

Punt!

A newsflash on financial TV, taken directly a Fed speech, stated that food inflation was reflection of increased demand from emerging markets. Perhaps, this is why the inflation/deflation (disinflation) debate still finds a forum today despite the secular trends.

Headline: Inflation or Disinflation??

Labor costs are often cited as a reason why the U.S. is not heading into an inflationary period, even as commodities prices continue to soar.

Today's report on productivity and labor costs showed that the American workforce was more productive in the fourth quarter, but it also showed continued downward pressure on wages.

Employee output per hour rose at a 2.6 percent annual rate, but labor expenses, expected to rise, fell 0.6 percent quarter-over-quarter. Economists, when measuring inflation, look at the smoother, year-over-year trend which shows a 0.2 percent decline in labor costs.

Source: finance.yahoo.com

Inflation Everwhere, But Still Nowhere To Be Seen?

Inflation is everywhere, but still nowhere to be seen? Not for long.

The true meaning of the headline below would not be missed by the citizens of any hyperinflationary experience throughout history (i.e. Weimar Republic).

Headline: Companies Stock Up as Commodities Prices Rise

Companies contending with rising commodity prices are stockpiling rubber tires, cotton clothing and other goods, a maneuver that is aimed at insulating them from inflation but also could contribute to it.

Spice-maker McCormick & Co. stocked up on some ingredients and Monro Muffler Brake Inc. bought extra tires and motor oil, assuming prices of those goods will keep rising. Anton Sport, a small athletic-wear wholesaler in Tempe, Ariz., amped up its fabric purchases to avoid higher prices.

Source: online.wsj.com

Secular Up Trend In CRB Foodstuffs

Currency devaluation drives inflation. CRB Foodstuffs (butter, corn, hogs, sugar, wheat, etc) are extremely sensitive to it (devaluation). Rising prices, particularly food prices, tends to increase the dependency of the public on social programs. Inadequate or failed social programs, which often work contrary to market forces, often fester into public "rage" over time. This dependent and vicious cycle, however, will continue as long as devaluation remains an acceptable cost/benefit option. In other words, kick the can down the road as long as possible, because the alterative is far worse.

Expect some experts to call "double top" soon. A break to new highs, however, appears inevitable. Discussions about more quantitative easing (QE3), receiving very little public attention, reveals more about health of the recovery than a month’s worth of headlines on the subject.

CRBFoodstuffs And Year-over-Year (YOY) Change:


Headline: Authoritarian governments start stockpiling food to fight public anger

Commodities traders have warned they are seeing the first signs of panic buying from states concerned about the political implications of rising prices for staple crops.

However, the tactic risks simply further pushing up prices, analysts have warned, pushing a spiral of food inflation.

Source: telegraph.co.uk