Don't Ruin All The Beautiful Gold Mining Charts

Sign of a top.

Jeffrey Snider has been doing the yeoman's work of pointing out the lack of inflation.

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Consumer prices, in broad terms, fell 0.5% year-over-year. Food prices are responsible for some of the deflation, with the pork problems being mediated, but in other sectors there’s as much negative pressures. Non-food prices in China’s CPI were down (0.1%) year-over-year last month, too.

Demand internally cannot be anything other than still seriously weakened.

Producer prices likewise continue to fall, indicating the same but including the external economy. The Chinese PPI dropped by 1.5%, with factory gate prices declining 1.6% compared to the year before. While those represent a modest improvement from discounted pricing over the months before, it’s really not all that much nor anywhere quick enough to suggest overcapacity isn’t still a dominant factor.

Inflation is highly psychological, but there's no sign of it yet. There's a very big shock reaction to the panic of March 2020, a panic that went beyond financial markets. It's assumed the psychological lift will keep going, but maybe this was all a bear market rally. To new highs sure, but that's an artifact of the amount of stimulus. The assumption going forward is more stimulus and recovery leads to inflaiton. It might. The odds of it happening next year are good because Biden will pass his big budget. However, it's also possible there's no recovery and a huge stimulus is needed to keep the economy stable. M2 money velocity is plunging towards 1.0, below that level it indicates Fed policy is rapidly losing effectiveness.

I still have all my mining shares, many great setups on charts, breakouts imminent or underway in some silver miners. Yet a nagging sense that everyone has assumed that which may never arrive.