HardAssetsInvestor

Written by Brad Zigler  |

April 29, 2011

Inflation Scorecard: New Highs Scored By Gold Aren’t Universal

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Real-time Monetary Inflation (last 365 days): 3.8%

The euro and the Swiss franc held off bullion this week, to rise 0.5 percent and 0.4 percent, respectively. Other world reserve currencies swooned before gold, though, setting all-time lows. Sterling gave up 0.2 while the yen fell 0.9 percent.

For dollar-denominated assets this week:

• Thursday's London morning gold fix was 1.7 percent higher at $1,531 after averaging $1,512; COMEX spot last settled at $1,531 for a 2.2 percent gain; New York prices also averaged $1,512 for the week; average daily COMEX gold volume fell 8.1 percent to 153,070 contracts, while open interest inched down 136 contracts to 537,810.

• COMEX gold inventories ticked up by 15,853 ounces (0.5 tonnes) to 11.035 million and now cover 20.5 percent of open interest; 1.94 million ounces are available for delivery, but immediate demand for COMEX bullion doesn't presently exceed 20,200 ounces.

• SPDR Gold Trust (NYSE Arca: GLD) vault assets declined by 0.6 tonnes (19,483 ounces) to 1,229.6 tonnes.

• Projected volatility for gold, measured by the CBOE Gold Volatility ETF Index (CBOE: GVZ), spiked 1.3 percentage points higher to 17.4 percent.

• The average one-year gold lease rate increased 3 basis points (0.03 percent) to 0.37 percent.

• Junior gold mining shares, proxied by the Market Vectors Junior Gold Miners ETF (NYSE Arca: GDXJ), nosed 0.1 percent higher, while larger-cap producers within the Market Vectors Gold Miners ETF (NYSE Arca: GDX) declined 1.3 percent; the S&P 500 Composite climbed 2.3 percent.

• The broad market's correlation to gold producers fell a point to 29 percent, while bullion's coefficient to the blue-chip index dropped 21 points to 6 percent.

• NYMEX WTI crude oil jumped 1.3 percent to $112.86, dragging the gold/oil multiple down to 13.5x.

• Gold futures continued to price in expectations for steady-to-lower rates with narrowing calendar spreads; on Thursday, the one-year COMEX contango stood at $7.50 an ounce; London's forward market spread shrank 7.2 percent.

• One-year TED spreads widened by a basis point to 0.53 percent.

• The Treasury yield curve was compressed 3 basis points by all-round softness in rates.

• The euro rose 2.6 percent vs. the U.S. dollar to an average $1.4650 cross rate Thursday.

• The Monetary Inflation Index's rolling 365-day change averaged 3.3 percent, up 6 basis points from last week; at today's rate, the real return on three-month Treasury bills is -182 basis points.

3-Month T-Bills: Real Yields (Adjusted For Monetary Inflation)

Note: Explanations of the Scorecard's indicators can be found in the Hard Asset Investor's primer articles, "Deciphering The Inflation Scorecard: Why Gold?" and "Deciphering The Inflation Scorecard: Part 2."