Is The Consumer “Recovering?”

Let’s breakdown the December trade deficit numbers released today.  For all of December, the trade deficit was $40.6 billion, roughly in-line with expectations and up $2.7 billion from November.  The media is already pointing to the fact that imports increased by $5.1 billon from December to November as the signal that the U.S. consumer has returned and the economy is improving.

But let’s look at the golden truth.  The total value of goods imported in December was $116.6 billion, up $2.9 billion from November.  Of that, $22.5 billion was oil, up $2.7 billion from November.  THUS, of the total amount of the increase in goods imported from November to December, $2.7 billion – almost 100% – of that was oil. Does that look like the consumer is spending more money on “consumables and durables?”  Rest assured, the full amount of the value of oil imported was from higher prices.  The consumer in this country is now spending an even bigger percentage of his monthly paycheck on oil.  THAT is bad for the health of the economy.

What is more interesting, in terms of the inflation picture, is the fact that China appears to be taking measures to “repatriate” inflation back to the U.S. by raising interest rates and slowly strengthening the value of the yuan.  This will cause the price of Chinese imports (i.e. Walmart, Best Buy, Target, etc) to rise in value, further exacerbating the accelerating price inflation in this country.

This will be GREAT for gold/silver.  Make no mistake about that.  And another little tidbit of news that you won’t find reported on most U.S. media sources is that Viet Nam, the 5th largest importer of gold in the world, just devalued its currency by 7% – a huge amount in terms of currency devals. Here’s the LINK This will further fuel inflation in Viet Nam AND further fuel the demand for gold by the population in that country.

It’s so simple to weed thru the garbage reported in this country to get at the truth. It’s stunning how few people are interested in doing this.  I just heard about someone I know, who I thought had a lot of money socked away.  It turns out he’s scrambling now to make ends meet.  This is someone who used to be a big corporate executive and I tried to convince him to unload his real estate and move into gold over 8 years ago…oh well, it is what it is…Have a great weekend everyone (Avete una grande fine settimane, ognuno)