Boring - isn't it?
After the best part of three weeks bouncing around in the $US 430s, Gold is back to what it was doing in the month before that - bouncing around in the $US 420s.
The features of Gold's sojourn back into the $US 430s were an avalanche of dire US economic statistics - higher CPI and PPI levels, a two year low in quarterly economic growth, consumer spending growth continuing to exceed personal income growth, and durable goods orders hitting three year lows.
Then came this week, the week when the FOMC did as expected and raised yet another 0.25%, and Gold lost a little over $US 9.00. All of a sudden we are getting "good" economic news out of the US. The April employment report, for example, came in at 274,000, exceeding street expectations by over 100,000. 94% of these "jobs" came from what is called the Birth/Death model used by the US Department of Labor which: "assumes a predictable continuation of historical patterns and relationships." One wonders who got the historical relationships wrong this time, the Bureau of Labor or the (Wall) street.
At any rate, the US Dollar managed to eke out a small gain on the week thanks to a big surge in reaction to the jobs report. Gold, which actually opened above $US 430 on the day, fell the instant the report came out to close for the week at $US 426.90. The real action, however, took place on the Treasury debt markets where yields soared and prices plunged. The "reason" for this was given as the assumption that the Fed was going to go right on raising US rates, no matter how big the debt loads get.
As we said, boring, isn't it? The economic essentials have changed not one iota. The evidence keeps mounting. Debt issued by GM and Ford was downgraded to junk status this week by Standard and Poors. The US housing bubble still shimmers brightly as the switch from fixed to adjustable (lower) rate mortgages keep building as housing becomes more and more unaffordable to more and more people. Mr Warren Buffett is said to have "lost" his bet against the US Dollar - because it has risen over the past three months.
So, what's with the headline and what has it got to do with what we have written so far? What's with this "Truth In Advertising"?
We would like to draw your attention to what is without doubt the most striking URL we know of on the internet. Here is is:
So click the link already! Welcome back. As you can see, the link is to the website of the US Treasury's Bureau of Engraving and Printing. Yep, these are the fine folks who are in charge of actually printing the US Dollar itself. Now we ask you, has a website EVER been better named? And have you ever seen a better example of TRUTH IN ADVERTISING than the URL they have chosen to mark their particular niche on the internet?
As a stark contrast, we remember way back to the time when we first logged onto the world wide web and started to explore. That would have been in mid-late 1994 - a LONG time ago. We remember almost falling out of our chair laughing the first time we hit the website of the US Treasury itself. Right there at the top of the home page - used as a quasi logo for the site - was a large graphic of Gold coins. Needless to say, that graphic has long since been removed from the Treasury's website.
So what are we to make of this? If there is an exemplar of mendacity, it is the US Treasury using Gold coinage as a logo - an impramatur for its activities. Let's just say that this would have to go down in the pantheon of "misleading messages". In light of this, why choose a URL for the Bureau of Engraving and Printing which nails that particular department of the Treasury as being exactly what it is? There's no doubt that the Bureau is indeed a "moneyfactory". One would have to conclude that the Treasury sees this as being a good thing, and more to the point, assumes that most people visiting the Bureau's website would concur.
Either that, or they simply don't think that anybody pays any attention to URLs at all.
In the large scheme of things, this may seem to be a minor point. But it isn't. We are reminded of a delighful passage from Milton Friedman's "Free To Choose", a television series which he made way back in the early 1980s. In this episode, Mr Friedman has gained access to one of the large printing presses at the Bureau of Engraving and Printing. The press is busily "manufacturing" US Dollars at a speed faster than the eye can follow. Mr Friedman has been talking on camera about what he would do to "slow down inflation". With a gleeful glint in his eye, he turns from the camera and hits a big red button on the side of the press. The press stops.
We can't think of a better example of what is fundamentally wrong with the global financial system than the act of naming the government bureau in charge of producing what is legally used as the medium of exchange a "moneyfactory". It is delightfully perverse, even more so because most won't even notice it and most of those who do will just shrug and pass it by.
Now if the Treasury's Bureau of Engraving and Printing changed their actual NAME to "The Money Factory", we might be getting somewhere. That WOULD be blatant. It might just wake up enough people to make a difference. Right now, however, it's only in the URL. If this is some "fifth columnist" employee in the Treasury's idea of a cosmic joke, we can only approve.