TOILET PAPER, CHICKS AND GOLD BARS

I’m not counting any chickens. ~ Jeff Bridges  

How’s your Sheltering-in Place (Sh-i-P) coming along? We’ve been at it since Monday, March 16, which seems like... The SF Bay Area counties now have extended their Sh-i-P orders through May 3. Further extensions, with masks, are only a matter of time.

Don’t worry, this blog doesn’t get within 6 feet (or should it be 27 feet, see here) of casting judgement on how rigorously any of us are following our Sh-i-P rules. It is only semi-virus-related so I consider it mildly other-worldly, since covid-19 occupies 110% of the public’s conscious attention, or so the media presumes.

Instead, this blog centers on toilet paper (TP) and chicks 🐥 (not the Dixie kind) that have flown off stores’ shelves, just like TP. For more fiscally-focused folks, I also consider gold, a precious metal that humans have valued through innumerable crises of every sort, including ones like this one.

It’s an understatement to say many aspects of people’s behavior have been changed over the past several months, during this initial chapter of covid-19. Countless folks’ expectations have become frenzied by Sh-i-Ping, the Administration’s pinballing, sometimes deceptive messaging and the media’s ceaseless proliferation of coronaviral stories – letting us know for example when Papua New Guinea registered its first coronavirus case. Such untethered expectations change personal consumption patterns, create panicked, feverish purchasing and subsequent emptied shelves. Voila, resulting scarcities of toilet paper, chicks, and glass gem popcorn seeds, among other items.

Toilet Paper: (FYI, the use of the colon as part of this subsection title is purposeful.) What is it with TP anyway? Normally it is an ordinary, inexpensive consumer product that sells for $0.67 per roll at Costco, when it’s in stock. That’s very different than TP’s price in Venezuela, where hyper hyperinflation has taken its toll. A roll of TP in Caracas costs at least 2,600,000 bolivars. Yet another of the multitude of reasons to not live there.

Toilet paper has been around for a good long time. The first documented human use of TP happened in China during the 6th century AD – 15 centuries ago. In Ancient Rome, a sponge on a stick was often used, and, after use, placed back in a pail of vinegar. In other locales, wealthy people wiped themselves with wool, lace or hemp. Less wealthy folks used rags, wood shavings, leaves, grass, moss, water, snow, seashells, or corncobs. The rise of publishing in the 18th century led to the use of newspapers and cheap, popular books’ pages for cleansing.

However, actual rolls of TP didn’t accompany toilets until more recent times. Commercial toilet paper began in the mid-19th century, with a patent for roll-based dispensers filed in 1883. Indoor plumbing first started to be placed in American homes in the mid-1800s. In 1940 nearly one-half of US houses lacked hot piped water, a bathtub or shower, or a flush toilet. Toilet paper dispensed from rolls was first popularized in 1890 when the Scott Paper Company began selling it, coinciding with mounting use of indoor, flush toilets. Now more than seven billion rolls of toilet paper are sold yearly in the US. Over time, deflation has struck the rolls. The size of a general single sheet of TP has shrunk 26% since 2000. Nothing’s sacred.

Today’s TP scarcities recall another shortage when Johnny Carson joked in his December 19, 1973 Tonight Show monologue that “there is an acute shortage of toilet paper.” There really wasn’t any shortage; on stage, he verbally made it up.

The first OPEC oil embargo also was happening when Johnny joked and created large amounts of public anxiety as well as blocks-long queues at gas stations. Carson’s audience apparently found his jest more frightening than funny. His “news” sent large numbers of shoppers into grocery stores to buy and hoard toilet paper. Thus an actual shortage was born. The Scott Paper Company urged people to stop panic-buying their product. Nevertheless for several months, TP was in short supply or actually absent from store shelves. TP was bartered for, traded, and even sold on the black market.

 That was then, the present-day TP shortage, shown above, arose from consumers’ anxiety-driven purchases, but not from a misplaced joke. It has been happening not just in the US, but in Australia, New Zealand, Hong Kong and Japan. Why? Perhaps shoppers fearful of coronavirus quarantine measures have stockpiled essential supplies to last out a week or two (or more) of isolation. In Hong Kong, ambitious thieves actually held up a supermarket to steal a TP delivery.

Buying TP is a relatively cheap action and satisfies people’s need to think they are “doing something” when they feel at risk. Also, customers may sense that buying TP is part of their crucial “preparation process” for Sh-i-P. Finally, TP is utterly non-perishable, has few straightforward substitutes and is one of the rare products someone can buy in larger-than-normal quantities that is guaranteed to be eventually used before it goes bad. Hence, large expanses of emptied-out TP shelves exist here, as displayed above. Not to worry; breathe deeply, it’s hopefully temporary.

Chicks. Everyone loves baby chicks, especially at Easter-time. Demand for new chicks is off the charts this year. Flocks of people have been rushing to raise backyard chickens amid their coronavirus concerns and egg shortages. Hatcheries report an increased demand for baby hens as more people want to grow chickens for eggs, meat and companionship. Baby chicks are certainly cute, as shown below, and look great under the Easter bush.

 The USDA reported last week that the national inventory of shell eggs decreased 10% for the second consecutive week and the nation-wide supply of Large eggs declined 14%, characterizing the current run on chicken eggs across the nation. As a consequence, wholesale prices for shell eggs continue to show sharp daily increases, rising to levels not seen since March 2018. In some areas, wholesale prices of eggs have tripled during the past three weeks, which has spurred more panic buying of eggs and chicks.

This year, Cackle Hatchery, based in Missouri, has seen its chick sales rise 100%. It’s been so hectic at McMurray’s Hatchery in Iowa that callers wanting to order chicks have been put on long holds. The hatchery is nearly sold out of chicks for the next month. McMurray’s has seen a rise in “homesteader types” and others who want to raise their own chickens. A growing number are first-time, wanabe chicken farmers.

“This has to do with the perceived hoarding that is going on,” Bud Wood, McMurray’s owner and president, said of the surge. “People are afraid they won’t be able to buy eggs and chickens in the grocery store, and they don’t want to have to go to the store and possibly be infected.” “They’re panic-buying chickens, like they did toilet paper,” stated Tom Watkins, McMurray’s Vice President.

My daughter Lindsay and her family have already raised backyard chickens several times, and are about to start anew. As a veteran chicken-raiser she offers the following observations. Newly-hatched chicks are fragile creatures that first take careful indoor tending, including the use of heat lamps to keep them warm. Her kids have likened them to little-dinosaurs. Once they’re living outside, you must keep your chickens safe from predators. One of their chickens was picked off by a dive-bombing hawk while they were still young, and several others met their demise by racoons. Be prepared for the long-haul; it takes six to nine months for them to mature enough to produce eggs. Once they’re big enough, letting them free-range in a large run during the day means your yard’s bug population will surely decline because of their constant search for food, as well as have more nutrient-rich eggs and happier chickens. Remembering that they’re farm animals is key; they’ll poop everywhere and their cage needs to be cleaned out regularly. However, you can use their composted droppings as a high-nitrogen fertilizer in your newly-created virus “victory” garden. (Don't use fresh chicken manure, it'll burn the plants.) Finally, if you add a bit of cayenne pepper to their food, you’ll get really gorgeous orange-yolked eggs, that aren’t spicy. Yum.

Gold. Given the deep drops in stock prices and increased market volatility, demand for gold is rising, even for 400 troy ounce (27.4 lb.) bars similar to those in Ft. Knox’s vaults. There are over 368,000 golden bars at Ft. Knox which used to “back” our dollar until 1971. Thank goodness the market for gold and gold bars isn’t closed like your favorite local bar is. You’ll want that quarantini for home delivery, right? So let’s take a shallow dive into gold, where unlike TP and chicks, shortages don’t exist, yet.

 Gold is a precious metal that has been used for coinage, jewelry, and other arts throughout recorded human history. The first precious metal coins, made of electrum an alloy of gold and silver, were used as money around 600-500 BC in several places around the ancient world; in China’s Yellow River valley, in India’s Ganges River valley and by the king of Lydia in western Asia Minor (modern Turkey). The Lydian coins weighed anything from a slender 0.006 troy ounces up to half an ounce, varying by value. These coins were stamped with animal heads, such as lions and rams to discourage counterfeiters.

The world’s largest gold producer is China, by a large margin. The US, the fourth biggest producer, supplied 253 tonnes in 2019. About one-half of all gold produced is used in jewelry, 40% in investments and 10% in industry. Overall, there is about one ounce of refined gold in the world for every person. Being a mature commodity, the world supply of gold increases at approximately the same pace as population growth. The several gold crowns that I “wear” in my mouth thus have accounted for an infinitesimally miniscule portion of “industrial” gold usage.

Many investors look to gold in periods of market turmoil because they believe it holds value through recessions better than other assets. And guess what is now coming to an economy and stock market near you, a recession. Over 10 million Americans filed for unemployment benefits in March. Precious metals like gold have often served as a hedge against market volatility, political instability, currency weakness, and economic collapse. Demonstrating this increased demand, the price of gold has recently risen, as shown below.

GOLD SPOT PRICE, March 19 to April 3, 2020 

Will investors turn to gold as covid-19 continues its horrific assault on our health? Or will it be fools’ gold? If the nastiest predictions about the economy’s second quarter performance become valid, it’s certainly possible gold will be good. Will it be another golden age? Exceedingly unlikely.