Initial Jobless Claims Vs. Unemployment Rate

Initial Jobless Claims are a leading indicator for the Civilian Unemployment Rate.

Initial jobless claims report the number of individuals who have filed for unemployment insurance benefits in the previous week (mostly involuntary layoff). This gives us near real-time data on the state of the labor market. The blue chart leads the red chart with a 3 month delay.

LIBOR Vs. Jumbo CD

Typically, the certificate of deposit rates or CD rates follow the LIBOR rate.
But since 2015, something weird happened. The LIBOR rate moved higher along with the Fed Funds rate, but the CD rate stayed at around 0%.

This means that banks don't want to pay out depositors, possibly to maximize their own profits. Also, another reason is that banks have too many deposits.

Retail Sales Growth is Slowing Down

What happens when the CME gets involved

PPI Vs. CPI

The producer price index (PPI) measures the prices of output from producers. The PPI is a leading indicator for the consumer price index (CPI). As producers see their output costs go up, they will pass these costs on to the consumer. As producers can't pass on all of their costs to the consumer, there is a delay of a few months between the PPI and the CPI.

There are two measures for inflation CPI and PCED. The PCE Price Index is preferred by the Federal Reserve because it is composed of a broad range of expenditures. Another difference between the PCE Price Index and CPI is that the PCE Price Index is also weighted by data acquired through business surveys, which tend to be more reliable than the consumer surveys used by the CPI.

The 10 year break-even inflation rate = 10 year bond - 10 year tips. It represents a measure of expected inflation and is a leading indicator for the CPI.

The CPI and PCE are both important indicators of U.S. inflation. While CPI is more important from the perspective of an individual, PCE is more important from the perspective of monetary policy. 

The CPI and PCE do not cover identical categories of personal spending. The PCE has a broader scope than the CPI, as it captures the expenditures by both rural and urban consumers. Unlike the CPI, the PCE includes expenditures from non-profit institutions that serve households.

The Fed has given preference to PCE due to its broader scope and “chained base” for calculations.

Segments contributing to inflation can be found at the Truflation website.

Platinum is a buy

When we look at the platinum supply and demand, things are getting worse for platinum. The automotive demand has been going down sharply and we are in platinum surplus now.

But the price of platinum is now at $800/ounce, which means that a lot of producers are having losses. Lonmin and Impala are going to go bankrupt in a year from now. That means that we will see around 2 million ounces less production, which will put the supply and demand balance back into deficit. Platinum price will need to go up.

Moreover, there is one interesting development. Fuel cell cars are going to hit the market in the coming years and they need platinum. So I see platinum demand to go back up due to fuel cell cars in the coming decade. But this depends on market penetration, if the industry decides fuel cell cars are not the future, then the outlook for platinum will be dire.

Conclusion, it is a good time to get into the physical platinum market. Go buy a platinum ETF.

Gold Forecaster Index

The "Gold Forecaster" index was created by Albert Sung, who theorized that the gold price could be predicted by a formula using leading economic indicators.

The red line comprises all metrics that are bullish gold and looks at their change in sentiment. The blue line is the gold price. Whenever the red line is above zero, the gold price will go up with a delay of 6 months.

This is a real game changer in the world of precious metals. I call this the "Holy Grail".

The following chart is the same index, but the trade balance is replaced by import and export air freight numbers because this gives us a faster data point.

Be sure to read the gold and silver checklist as well.