us ppi falls 1% cpi falls 0.2% qeiii coming!

Hey Gold Bugs

While we wait for the Greek elections there are a lot of significant positive fundamental events that are occurring that will amplify our gains in gold shares in the coming months that we need to keep an eye on.

Additional Monetary easing by the US Federal Reserve in the form of Quantitative Easing (Money Printing) or Operation Twist (Selling short term bonds less than 2 Yrs Maturity while buying longer term bonds to increase the short term money supply) will seriously be looked at in the next two months.

Slowing employment growth in the US where new jobs fell to less than 59,000 in May, unemployment rose last month to 8.3%, coupled with slowing European Union, where 30% of US exports are sent have added weight to future money printing sessions or Rounds of Quantitative Easing as it is officially known in recent weeks.

The main objective of any Central Bank is to maintain price stability while assisting the govt in keeping employment levels strong.

Price Stability as described by the US is average inflation sitting between 0.5-2% per annum. Anything above 2% is seen as too high, requiring monetary restriction, anything below 0.5% is seen as too low, requiring monetary easing. Since the UF Federal Reserve currently has their cash rate at 0.25%.

Inflation on Wholesale Goods or the Producer Price Index was -1.0% after last month’s figure of -0.2%, tomorrow’s CPI will be released and is forecast to show a -0.2% after a 0% change last month. Clearly the trend is showing that deflation is occurring in the US.

This gives the US Federal Reserve scope to activate another Round of QE of between $400Billion and $600Billion or Operation Twist of a similar amount of money in the next 30-60 days.

The last two times that this occurred, commodity prices and shares jumped in the subsequent 6-9 months in late 2009 and mid 2010.

Cheers Nectar


Wholesale Prices in U.S. Fell 1% in May on Cheaper Energy

By Alex Kowalski - Jun 13, 2012 10:50 PM ET

Wholesale prices in the U.S. dropped in May by the most since July 2009 as costs of energy and food decreased, easing pressure on companies to pass expenses to customers.
The producer price index fell 1 percent, more than forecast, following a 0.2 percent decrease the prior month, Labor Department figures showed today in Washington.

Economists projected a 0.6 percent decline, according to the median estimate in a Bloomberg News survey. The core measure, which excludes volatile food and energy prices, climbed 0.2 percent for a second month.
) -- Retail sales in the U.S. fell 0.2 percent in May for a second month as slower employment and subdued wage gains damped demand, a sign the world’s largest economy is cooling, Commerce Department figures showed today in Washington.

Wholesale prices in the U.S. dropped 1 percent in May, the most since July 2009, following a 0.2 percent decrease the prior month, Labor Department figures showed. Betty Liu, Dominic Chu and Michael McKee report on Bloomberg Television's "In the Loop." (Source: Bloomberg)
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Slower global growth that’s tempering demand for raw materials may allow producers to hold down costs and preserve margins, a benefit to consumers facing weaker income gains. Limited inflation also provides Federal Reserve officials with more room to stimulate the U.S. expansion.

“The signs are that inflation pressures are dissipating fairly quickly,” said Jeremy Lawson, a senior U.S. economist at BNP Paribas in New York. “From a producer perspective, it means import costs are low so they can maintain relatively healthy margins. For consumers, it provides some relief, adds to purchasing power, at a time where their incomes are being constrained by very weak wage growth.”

The median estimate for the producer price index was based on forecasts from 76 economists. Projections ranged from a decrease of 1.5 percent to an increase of 0.3 percent. Core wholesale prices were projected to rise 0.2 percent for a second month.
Retail Sales

Retail sales fell in May for a second month as slower employment and subdued wage gains damped demand, another report today showed. The 0.2 percent decrease followed a similar drop in April that was previously reported as a gain, Commerce Department figures showed today in Washington.

Stock-index futures remained lower after the figures. The contract on the Standard & Poor’s 500 Index expiring in September fell 0.6 percent to 1,312.7 at 8:50 a.m. in New York.

In the 12 months ended May 2012, companies paid 0.7 percent more for materials, the smallest gain since October 2009. The core price index increased 2.7 percent in the same period.

The decline in the overall index was led by a 4.3 percent slump in energy prices that was the biggest since March 2009. The cost of liquefied petroleum fell the most since December 2009, and gasoline prices dropped 8.9 percent, the report showed.

Cheaper Food

The cost of food decreased 0.6 percent, the most this year, reflecting a drop in prices of meat, fruits and soft drinks.
About 25 percent of the increase in core prices in May was attributable to a 0.7 percent gain in the cost of pharmaceutical preparations, the report said.

The price of passenger cars rose 0.2 percent last month and was up 1.2 percent from the prior 12 months.
Prices of capital goods climbed 0.1 percent last month after a 0.2 percent rise in April.

Price pressures eased all the way down the production line, according to today’s data. The cost of intermediate goods dropped 0.8 percent, the most since October. Prices for crude materials, those used at the earliest stage of production, declined 3.2 percent.

The waning of raw material costs is good news for businesses hesitant to raise prices while consumers face an unemployment rate of 8.2 percent. The Thomson Reuters/Jefferies CRB commodity index has fallen 17 percent through yesterday from a five-month high in February.

Raw Materials

Diminished demand for commodities from abroad will probably help keep inflation in check. The expansion in the 17-nation euro region stagnated in the first quarter from the same time in 2011, government data show.

“Raw material costs we do see moderating this year,” said David Meline, chief financial officer of 3M Co. (MMM) The St. Paul, Minnesota-based maker of Post-it Notes and fuel system tune-up kits expects input price inflation of 1 percent to 2 percent in 2012 compared with 4 percent last year, Meline said during a June 5 investor conference.

The outlook for inflation is “subdued,” and price gains will probably remain at or slightly below the 2 percent level that’s in line with central bank policy makers’ goal of stable prices and maximum employment, Fed Chairman Ben S. Bernanke told the Joint Economic Committee of Congress last week. Still-high unemployment and retreating oil and gas prices “should continue to restrain inflationary pressures,” he said.

Fed Meeting

The Federal Open Market Committee, which sets the course of central bank policy, meets next week. The group may address a cooling U.S. expansion, the weakest job growth in a year and a widening financial crisis in Europe.

Producer prices are one of three monthly inflation gauges reported by the Labor Department. The consumer price index, due tomorrow, is projected to drop 0.2 percent in May after little change the prior month, according to the median estimate in the Bloomberg survey. The cost of goods imported into the U.S. fell 1 percent last month, reflecting lower costs for food and fuel, Labor Department data showed yesterday.

To contact the reporter on this story: Alex Kowalski in Washington at [email protected]