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Gold has traded between $1,340 and $1,359 so far today…as of 10:15 am Pacific, bullion is $11 an ounce higher at $1,349…Silver is up 4 cents at $19.78…Copper has added 3 pennies to $2.18…Crude Oil has advanced another 83 cents to a 5-week high of $46.57 on producer speculation, while the U.S. Dollar Index has tumbled more than three-quarters of a point to 94.81…

The trigger for greenback weakness and, in turn, Gold’s strength overnight was a paper from San Francisco Fed President John Williams who argued that central bankers and governments must come up with new policies to buffer their economies against persistently low interest rates that threaten to make future recessions deeper and more difficult to avoid…

Setting higher inflation targets, tying monetary policy directly to economic output, instituting government spending programs that automatically kick in during economic downturns, and boosting investment in education and research are all policies that should be considered, Williams stated…without such changes, he warned, policymakers will find themselves hamstrung…

“There is simply not enough room for central banks to cut interest rates in response to an economic downturn when both natural rates and inflation are very low,” Williams said in the latest issue of his regional Fed bank’s Economic Letter…

U.S. Inflation Remains Muted

Mixed U.S. economic data this morning, highlighted by muted inflation which the Fed continues to struggle with…the Labor Department reported this morning that the Consumer Price Index was unchanged (as expected) in July, following a 0.2% rise in June…annual inflation fell to 0.8% last month, compared to June’s reading of 0.9%…core inflation, which strips out volatile food and energy prices, rose only 0.1% last month (less than expected), following June 0.2% rise…

Meanwhile, housing starts rose more than expected in July as building activity increased across the board, while industrial output jumped 0.7% last month vs. a consensus estimate of 0.3%, though June was revised downward…

Will European Banks Start Hoarding Cash In Top Secret Locations?

The Financial Times reported this morning that some European banks and insurers have recently started considering the idea of hoarding cash in high security vaults in top secret locations as interest rates sink below zero across much of Europe…such a practice could undermine central banks’ ability to use negative rates to boost growth…after the EU’s most recent rate cut in March, private sector banks are paying what amounts to an annual levy of 0.4% on most of the funds they keep at the euro zone’s 19 national central banks…this policy is intended to spark economic growth by incentivizing banks to lend money to businesses instead of holding on to it, but the policy has cost banks around €2.64bn since rates became negative in 2014…

The “Loony Left” In Denial

Marcus Gee is yet another one of the Globe and Mail’s left-wing columnists who’s in complete denial about the state of the world and the U.S. economy, and he gave everyone further evidence of that in his piece published last Friday…

“Battered by the financial crisis and the slow recovery that followed, the American economy has been gathering steam,” Gee declared (what GDP numbers has he been looking at???).  “The unemployment rate in July stood at just 4.9% (look beyond the headline number). House prices have bounced back (won’t produce a major boost to economic growth).  Wages are growing (at too weak of a pace). The stock market (poor gauge) is setting records,” Gee further exclaimed in his piece, “Donald Trump & The Power Of Negative Thinking.”

Then of course he had to mix in a paragraph from his favorite politician, Barack Obama, words the President delivered in his State of the Union Address last January…

“All the talk of America’s economic decline is political hot air.  Well, so is all the rhetoric you hear about our enemies getting stronger and America getting weaker.  Let me tell you something. The United States of America is the most powerful nation on Earth. Period…it’s not even close.”

Yes, the U.S. is still the most powerful nation on Earth; however, its power and influence around the globe have declined alarmingly under Obama (hence the world has become a much more dangerous place), while things are far from rosy on the economic front…

One obvious retort to Gee’s comments, besides real statistics that destroy his assertions, is that if the U.S. economy is actually gathering steam and all’s good, as he and his fellow liberals contend, why is the Fed so fearful to raise interest rates by even a quarter of a point?…can an economy supposedly “gathering steam” not withstand just a second tiny rate hike in a decade?…

Recession Indicators

It’s not a widely-held view at the moment that the U.S. economy is tilting toward a recession, but there’s nonetheless plenty of evidence to suggest that it is…perhaps one very reliable indicator of pending U.S. economic trouble has been staring us in the face for months – the steady rise in the price of Gold…

The 85-month-old U.S. expansion (as slow as it has been) is already the 4th-longest in more than 150 years and starting to show some signs of aging with corporate profits under pressure and GDP waning…the economy, like a slow moving bicycle that needs just a puff of wind to knock it over, remains vulnerable to a shock because growth has been so feeble, averaging just about 2% since the last downturn ended in June 2009…

Last month, in case you missed it, Deutsche Bank predicted that the U.S. has a 60% chance of entering a recession in the next 12 months – the highest probability since the Great Recession…they cited shrinking yields – the difference between yields for long-term and short-term bonds – as a warning sign…

A new American record will be set if the next President doesn’t have a recession to deal with…the longest expansion the U.S. has ever had was 10 years, beginning in 1991…U.S. fiscal policy is already a mess, and to make matters worse the Democrats have moved even further to the left by embracing some of the socialist ideas of Bernie Sanders…socialism destroys wealth – many millennials haven’t read history, but they may learn soon enough from first-hand experience…

America Was Already In A Recession The Last 6 Times This Happened!

As Daniel commented yesterday…

U.S. federal tax receipts are rising just 1.2% yoy on a rolling 12-month average, slowing dramatically from what was a 13.4% yoy growth rate since 2013…the last 6 times tax receipt growth slowed this dramatically, the American economy was already in recession…

Restaurant Sales – Another Canary In The Coal Mine?

As Daniel also mentioned, Americans aren’t dining out as frequently over the past several months – an ominous sign…July in fact was the worst month for restaurant sales since 2000 and 2007…stalwarts like McDonald’s, Starbucks and Yum! Brands have each voiced seeing a “new wave of caution”…Buffalo Wild Wings said consumers are very reluctant to spend discretionary money…

Not only is this a troubling sign for the underlying economy, it’s a bad sign for job growth…waiters and bartenders have represented a significant portion of Obama’s “recovery” over the past 6 years…if large restaurant chains continue to feel the pinch, not only will they be doing less hiring, each will be doing more firing (a $15 minimum wage is also a good reason to cut back on employees)…

Certain analysts turned quite bearish recently on restaurant stocks…Andy Barish (what a last name!) at Jefferies downgraded multiple restaurant chains, saying he was “calling the top of the restaurant cycle” after an “extensive” study suggested that the “industry has at least 18 months of challenges ahead” in terms of softer same-store sales and higher labor costs…

Another respected analyst wrote, “The catalyst for the current weak pre-recessionary restaurant spending trend is likely multifaceted – U.S. politics, terrorism, social unrest, global geopolitics, economic uncertainty – but, if history is a guide, we warn investors that restaurant-industry sales tend to be the ‘canary’ that lays the recessionary egg.”

On Sunday Jon checked out one of his favorite restaurants in Vancouver, Red Robin, a popular gourmet hamburger establishment (featuring other delicious foods as well) in B.C. and the U.S. – there’s no good reason for the stock to be down sharply but it is…

Red Robin (RRGB, NASDAQ) is off 45% from its late 2015 all-time high, and while there’s a good chance of a near-term technical rebound as per this 15-year monthly chart, the disturbing part of this technical picture is the declining 500-day moving average (SMA)…the same trend started in 2007 in RRGB and in other restaurant stocks, more than a year ahead of the beginning of the previous recession…

Food for thought!…

In Today’s Morning Musings…

1. CRB Index gains new momentum…

2. Purepoint Uranium (PTU, TSX-V) hits 2.5-year high…

3. IDM Mining (IDM, TSX-V) drills 9.2 g/t Au and 50 g/t Ag over 20.3 m (true width) at Red Mountain…

Plus more…click here to read the rest of today’s Morning Musings and all BMR exclusive content, through a risk-free Pro, Gold or Basic package, or login with your username and password.