The Government Data Farce Continues

The naked shorts in silver, who had the upper hand by sending silver back below $35, are going to be in for a real surprise by the speed and strength of the silver market when it turns  - James Turk, KWN interview LINK

A quick comment on today's "robust" retail sales report.  More appropriately labelled, "robustly reported" retail sales report.  First, don't forget that this is a Government-calculated and reported number.  In this report, the second footnote states: 

Estimates are concurrently adjusted for seasonal variation and for holiday and trading day differences, but not for price changes  LINK

Please note:  "adjusted for seasonal variation" AND the effect of inflation is NOT removed.  So these numbers, aside from the the likely problematic data-gathering, statistical compilation and mathematical formulas of "seasonal adjustment," are inflated by real inflation. In other words, the numbers reflect gross dollar sales, not growth in unit sales.  Even if you adjusted them by the Government-calculated CPI, they would still be overstated because the Government CPI number is fraudulently incorrect by several multiples.  John Williams - who does exhaustive work on the Government numbers - had this to say about the number:  "With overall consumer inflation in February likely accounting for more than half of the 1.1% headline monthly sales, the residual reported sales would not be statistically significant."

Let's say that there might have actually been a small increase in retail sales - again, I would argue that on  a real-inflation-adjusted basis, unit retail sales likely declined.  But what might be driving a growth in the nominal number, besides inflation and "seasonal adjustments?"   Take a look at this chart of consumer credit - the numbers come from the Fed, the chart from John Williams' Shadow Stats report:

Nothwithstanding the fact that the massive growth in student loans is - in and of itself - quite horrifying, but you'll note that it looks like the so-called household "deleveraging" is coming to an end.  In fact, as we've discussed in the past, the "deleveraging" was really the erasing - writing off - of credit card, auto and mortgage debt by the big banks.  If your pour through the numbers in the report that I linked above, you'll see that a preponderance of spending took place in food and gasoline.  These are necessities that people often use credit cards to purchase.  Ergo, the growth in consumer credit.  To the extent that retail sales are "growing,"  the "growth" is fueled by 1) inflation and 2) the purchasing of necessities on credit.

When you dissect the numbers - and remove the Orwellian stench draped around them by the media - you can really see that this retail sales report is not only problematic, but actually reflects fundamentals problems in the system.

Perhaps this is why gold and silver have rallied a lot higher today after the initial aggressive attempt by the paper manipulators on the Comex to hit them hard when the retail sales report was released.  The precious metals usually smell the "truth" emanating beneath the b.s.  This metals market reminds me a lot of the character of the market in late 2005, when silver was trying to break through $7.75 to get to $8.  I used to trade silver pretty much around the clock back then.  I remember they kept trying to take silver down below $7.50 (I also vividly remember Gartman saying gold would go back to $450 from $550 - note:  gold ran from $550 to $735 and Gartman missed the entire move).  After several aggressive attempts to smash poor man's gold, silver made 7 month run that took it over $14.

Myself, several long-time colleagues AND several respected analysts all believe that the metals market is "percolating" for a big, extended move higher.  Again, there will be a lot of volatility (like today), but at some point in the near future, we will likely see a move that takes gold and silver back over their highs of last April and likely continue significantly higher.