Checking On China

Checking On China 

In spite of the fact that China's exports and imports officially rose quite dramatically last month, (indicators that the Asian giant is not doing as poorly as previously thought), the price of gold rose today. Silver did the same, though in afternoon trading both metals are off their earlier highs.

It will take a day or so to fully assess what the China data means. Almost every number they produce is for public consumption and suspect, as if they were running the world's largest chamber of commerce. Often their boosterism is at odds with more independent measures.

For instance, in January, imports of raw or finished industrial materials rose very dramatically. But, those materials would not have come close to entering the manufacturing pipeline in the same month they were booked. In the months previous, November and December, the imports of those same sorts of materials fell drastically. One would think that the months leading up to an industrial surge would have required more, not less, raw and semi-finished materials in order to feed the Leviathan.

Tomorrow will bring more review from precious metals analysts and traders on this issue.

Although it hasn't been mentioned much as a factor in the precious markets, it is important that the House of Representatives passed a "clean' debt ceiling bill. Although there might be some rear-guard fighting by right-wing Senators, it is also expected to pass the upper chamber.

What does that give us? Stability. A sense of a return to normalcy. It allows for better business planning and therefore more rational assignment of investment dollars.

We said a few months back that, although it seems counterintuitive, tapering will actually be good for gold. The artificiality of the bond buying quest has started to be wrung out of all the markets. So far, so good. Let's hope the wringing out doesn't turn into the wringing of any financial necks.

Finally, chairwoman of the Fed Janet Yellen will speak to, and answer questions from, the Senate Banking Committee tomorrow. Her message will not be materially different than the one she made in front of the House yesterday. 

The only thing to watch for is a Senator who needs to make headlines. You never know what one of them might say.