A Couple of Friday Morning Observations...

"Advance" retails sales estimates for April were released by the Commerce Department today.  The "adjusted" headline number showed a .4% "seasonally adjusted" increase in total retail sales over March and an 8.8% "adjusted" increase over April 2009.  Looking at the unadjusted numbers, however, April sales took a drop from March (maybe because April has one less day), and if you strip out the gain in building materials/hardware, April sales plunged vs. March.  I suspect a large part of the building materials gains were price increases.

How realistic are the "adjustments" and are they to be trusted?  Doubtful.  Here's what the Census Bureau says about the adjustments: 

Adjustment of estimates is an approximation based on current and past experiences. Therefore the adjustments could become less precise if current competitive pressures, changes in consumer buying patterns during holiday periods, and other elements introduce significant changes in seasonal, trading-day and holiday patterns.

They give us a table of the adjustment factors but do not go into detail about how the factors are derived. You can explore the issue with this link:  Orwell Smiles.  Here's the full blown Census Bureau retail sales reports:  Orwell Giggles.  You decide.

As for the price action in gold and silver, today is the second trading day in the last 6 that we've had a disconnect between the action in the stock futures and gold/silver.  This is extraordinarily significant.  Historically during this bull market in metals, when I would wake up to see the SPX, Dow and oil futures all getting hammered, I would have expected to see gold down $20 and silver down 50 cents.  But not today and not last Thursday.  The world is finally starting to understand the true nature of real currency vs. fiat paper and this view is being expressed in today's price action (and last Thursday's).  As this disconnect becomes more frequent, look out above for the metals.  And on a gold/XAU or HUI ratio basis, the mining stocks have room to at least double vs. gold here. 

If the dollar starts to rollover, we are going to see a very violent and extended move higher in gold, silver and the mining stocks that will make believers out of all but the very worst charlatans on CNBC and Bloomberg.  And the junior mining stocks will rip off 300-1000% gains.  Got gold?  Orwell is laughing uncontrollably now.