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Energy Podcast Excerpt and Metals Refinery Risk

Market Rundown

Housekeeping: Goldman and GoldFix on Metals refining and mining, CTA Update, ADP Payrolls is unreliable , and an excellent monthly Geopolitical recap

Market Rundown:

Good Morning. The dollar is up 106 points. Stocks are down about 1%. Bonds are very weak. Gold is down $21. Silver is down 38 cents. Crude oil is down $2.00. Nat Gas is up 16 cents, Crypto is mixed, and Grains are mixed with Wheat up.

Bottom line:

Judging from the looks of what we are seeing, this is the rest of the world starting to panic. If you are looking for a catalyst for the Fed to ease, it may come from all the countries starting to cry uncle from the weaponized dollar. The main battle here is: can the US get Russia/ China to tap out economically from deflation before the EU/ROW taps out from inflation. This includes all the collateral damage we are now seeing with that concept in play.


Goldman on Payrolls

Although the updated ADP data show a strong historical correlation with BLS private payrolls, the relationship has broken down over the last year. Accordingly, we view today’s report as an incrementally negative signal for August job growth but have left our forecast for nonfarm payrolls unchanged at +350k (mom sa)

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Goldman and (GoldFix) on Metals Refining:

In metals that are used and highly energy dependent like Aluminum, there are now cutbacks being introduced. For Precious metals this is not as big a deal at first. Why? Because they are not as easily "consumed" or destroyed as aluminum and copper are. And refining is not mining.

It becomes a much bigger deal for metals later AFTER the above ground stocks have found their way into stronger hands which theyare doing now. So for now, Silver will trade at cost of production, and destroy miners. Whereas, aluminum will trade at levels not profitable for refiners with explosive energy costs.

One important difference between now and the 1970s for miners. Miners performed extraordinarily well almost concurrently with the rallying prices. That was in part because mining supply chain energy costs did not explode until much later in the cycle. Not so this time.

Costs of production are rising well before metals will. It is different for them. Be aware of that in your miner calculus. So when price leads miners again, there may be some lemons in the mix that cannot compete in RoR. Finally, some miners may be selling hedges in the hole again like in 1999 which will limit their upside in a rally .We say this with a lot of confidence.- VBL

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Geo Political Roundup

In this month’s edition:

  1. Tension with China Rises over Taiwan

  2. Russia | Ukraine Update

  3. U.S. Competition with Russia in Africa

  4. Afghanistan, Pakistan, and Iran

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TD CTA Position tracker ( Our analysis)

The shorts are back, and getting very comfortable. All it means is playing from the short side is making enough money for them to only panic in a massive move…

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Zen Moment:

The comeback kid

The full video is for paid subscribers