January 14, 2021
* Gold & Silver get sold once again on Wednesday
* A Big day of economic data tomorrow, will the markets care?
Good Day… And a Tub Thumpin’ Thursday to you! The sun did make a short time appearance yesterday, as clouds owned most of the skiy for most of the day. It’s important to the Florida Chamber of Commerce that the sun made an appearance (for about an hour). That way the Chamber gets to count it as a day with sunshine. They love to call out the number of days with sunshine that they have in a year… I woke up this morning with a sore throat, and I don’t think it came about because I yelled at the walls yesterday! Earlier this week I woke up with an ear ache, but that lasted one day… I’m hoping this dryness in my throat also lasts just one day! When the nights here become warmer, I’ll head out to the deck, with my Bose Bluetooth speaker, and sing along with the music from my phone… So, I need a strong voice! HA! Speaking of music from my phone, Modern English greets me this morning with their 80’s hit song: I Melt With You…
Yesterday brought about more selling in Gold… I think the price manipulators achieved their directive with their massive short Gold paper trades, that caused the price of Gold to fall more than $100 in the last week… Their directive? Well, first, the short sellers want to drive the price of Gold down so that they can close out their existing short trades at profits, and…. To scare short term buyers of Gold into selling their Gold… Of course long term owners of Gold, that hold it as 1. A diversification, 2. Hedge against dollar weakness, 3. Store of wealth, and have no intention of selling… And if anything they would look to buy more at cheaper prices…
I had a couple of dear readers ask me to explain how the price manipulators get these engineered takedowns to work… And I will… but not today… I really need to have time to decide how I’m going to say things so that everyone gets it… So, maybe next week…
OK, the dollar bugs didn’t exactly rule the day yesterday, as most of the currencies traded in a very tight range… The Dollar Index ended the day at 90.45, up from 90.27 so the dollar bugs did gain some ground on the day… The stupid CPI (consumer inflation index) showed a .4% gain in December, but that still has annual inflation around 1.80%… And Core Inflation was only up .1%… And that brings me to the discussion of how the Bond boys were seeing inflation rising, but it’s just not… The velocity of money is falling once again, and that news basically brought bond yields back a bit and brought their trend of rising every day to a halt.
John Williams over at Shadowstats.com did his usual recalculating of CPI the way it used to be calculated before Clinton and Greenspan saw to it that CPI would never be calculated the same again… And Mr. Williams shows that CPI is really running around 4.5%… So, do you think that IF CPI actually showed 4.5% inflation, that the Fed would be pulling the dust covers off their rate hike machine? Or would they let inflation run a little hotter? Before you answer, let me remind you of what I told you the other day about how the Fed can’t hike rates…
I don’t know about you, but there are things that I buy that I see the price increases in, and then there are things like Big Screen Tv’s that prices on them keep going down. As with other technology do-dads… But in the end it all comes back to the velocity of money… And as long as the Velocity of Money is going down, we won’t see inflation run hotter, or even get off the ground to run… I’m just saying…
A lot of people are talking about “pent up demand” and how when released will cause a huge surge in economic activity here in the U.S. Well, for a brief discussion of “pent up demand” here’s David Rosenberg on his Twitter handle: “I keep hearing about “pent-up demand.” But how does this apply to services? Are people who used to get haircuts monthly going to make up the spending loss by visiting the barber 2x monthly post-pandemic? Makes no sense but people just talk without understanding basic economics.” – David Rosenberg on Twitter…
In The overnight markets… there’s been some drifting of the currencies and metals… Gold is down $1 and Silver is up 4-cents this morning, and the I just don’t think there’ll be any major movement today until we see the color of Joe Biden’s stimulus plan, which is on the docket to be shown to the world today. I got a kick out of a headline story on Bloomberg that said, “It should be hard for Gold to do anything but appreciate” Well, whoever wrote that needs to step back and see what the price manipulators have done to Gold’s price in the last week!
I received a phone call from good friend Dennis Miller yesterday, and he was chuckling out loud over something I wrote yesterday, regarding my discussion of former CFTC Chairman, Gary Gensler apparently getting the nod to lead the SEC.. I said that I was calling B.S. on his ability to be a hard nosed regulator… In my opinion, he couldn’t see the trees in the forest if he stood right smack in front of the forest! And I don’t mean to be mean to him, I’m just saying if he was the Commodities regulator, and never once found any indication of price manipulation, then he’s either blind or didn’t look… I’m just saying…
The price of Oil backed off and slid downward in the past 24 hours, and trades this morning with a $52 handle… I know that the Oil business in the U.S. has gone to hell in a handbasket, and that’s a real shame because we, as a country had become energy independent. I would think that $50 price of Oil would be enough to bring some of the shale producers back, but not all of them… A couple of the big Oil companies filed for bankruptcy last summer…
So… The U.S. Data Cupboard has the Weekly Initial Jobless Claims for last week, the first full week of Claims since the week before Christmas! Tomorrow’s Data Cupboard will have December prints of Retail Sales, Industrial Production and Capacity Utilization, and Business Inventories… So, one of the more busy days for economic data I’m really getting tired of reporting bad economic numbers and the markets just ignoring them… But that’s the opposites world we live in these days… As Jackson Browne sings… These Days I sit on cobblestones, and count the time in quarter tones to ten… I think that’s what I’ll start doing on days when there’s economic data to report, as that should be much healthier for me!
To recap… The Gold sellers were back in force yesterday, causing a $10.60 loss in Gold on the day. Chuck thinks the price manipulators achieved their goals last week of scaring the short term buyers of Gold into selling… The dollar bugs won a little ground back from the currencies yesterday, and in the overnight markets… there’s just been some drifting of both the metals and currencies…
For What It’s Worth… Ok… Remember The Big Mac Index? Times in the past were that currency traders waited anxiously to see what the Economist mag. Would say each year about their Big Mac Index, and what currencies were undervalued and which ones were overvalued… Longtime reader Bob, sent me this link and I thought that it was FWIW worthy… It’s about the Russian ruble, and the Big Mac Index, and it can be found here: Russian Ruble Is World’s Most Undervalued Currency on Big Mac Index – The Moscow Times
Or, here’s your snippet, for those of you feeling squeamish about reading a Russian newspaper article, here are just some bits: “The Russian ruble is the world’s most undervalued currency, according to the Big Mac Index, compiled by British newspaper The Economist.
Based on market exchange rates, the Russian currency should be worth three times more against the U.S. dollar — 24 rubles per $1, rather than the 73.8 the currency was trading at Wednesday.
The Big Mac Index compares the price of the famous McDonald’s burger across the world. After accounting for differences in living standards — measured by GDP per capita — the ruble comes out as the most undervalued of the 55 currencies tracked by The Economist.
“A Big Mac costs 68% less in Russia ($1.81) than in the United States ($5.66) at market exchange rates,” The Economist said in its latest update to the index, published Tuesday.
“Based on differences in GDP per person, a Big Mac should cost 39% less. This suggests the ruble is 47.3% undervalued.”
The ruble has come out as “undervalued” against the dollar on the Index for the last nine years. The currency slid another 20% in 2020 on a combination of the coronavirus pandemic, a slump in global oil prices, geopolitical risks related to the U.S. election and the fallout from the Novichok poisoning of leading Kremlin critic Alexei Navalny last August.”
Chuck again… Ok, in the “old days” of currency trading this would be HUGE news to traders, and they would be making trades to bring the ruble back in line, which would mean they would be buying rubles and driving the price higher… Those were the days my friend, we thought they’d never end, we’d sing and dance forever and a day…
Market Prices 1/14/21: American Style: A$ .7765, kiwi .7206, C$ .7893, euro 1.2151, sterling 1.3656, Swiss $1.1242, European Style: rand 15.1270, krone 8.4796, SEK 8.3145, forint 295.56, zloty 3.7353, koruna 21.5581, RUB 73.63, yen 104,00, sing 1.3256, HKD 7.7535, INR 73.06, China 6.4633, peso 19.78, BRL 5.3135, Dollar Index 90.33, Oil $52.76, 10-year 1.10%, Silver $25.32, Platinum $1,117.00, Palladium $2,422.00, Copper $3.63, and Gold… $1,844.00
That’s it for today, and until next Tuesday, as Monday is a holiday… Our Blues started their new season last night in Colorado… The NHL did our Blues a real bummer in the league’s realignment… St. Louis was put in the western Division, away from their rivals, Chicago and Nashville. And most of their away games will come on so late that most St. Louis fans won’t be able to stay awake to watch them! UGH! I was able to stay awake for the 1st period and the Blues looked good… I woke up in the middle of the night, as usual, and checked the score on my phone, to see that the Blues had won the game 4-2. I’m really bummed out about this realignment for our Blues.. I hope management gave the league hell for doing this to the St. Louis fans… I told you earlier in the week that I was rereading the book 1984, and since I first read it in the early 70’s, I had forgotten most of it, so it’s like a new book to me! Tell me if any of this seems familiar to you: This is Big Brother’s slogan:
War Is Peace
Freedom is slavery
Ignorance if Strength…
Seems very familiar to me… Oh, and did you hear that Ron Paul had his Facebook account shut down? More censoring of free speech… Hmmm….. Ok, time to go… Oh, and look what’s playing that seem so apropos… It’s R.E.M. taking us to the finish line today with their song: it’s The End of The World …. “it’s the end of the world, and I feel fine…” I hope you have a Tub Thumpin’ Thursday, and a nice long holiday weekend, and please Be Good To Yourself!
Chuck Butler