- Currencies & metals rally on Tuesday…
- But the dollar fights back in the overnight markets
Good Day… And a Wonderful Wednesday to you! Well, so much for a sweep for the Cardinals, as they lost last night to the Brewers 3-2… 1-run games have a been a bugaboo for the Cardinals this year… They loaded the bases in the 9th, but couldn’t get a run across… UGH! I had held out hope for a sweep, but now, must be resigned to knowing that my beloved Cardinals will not make the playoffs this year, again…. Yesterday, was my darling daughter Dawn’s birthday, and when I sent her a birthday text, she responded that her present was the first day of School… YIKES! We, never started school until after Labor Day when I was young… Those schools didn’t have air conditioning, so that would have been awful had we started early like they do now…. Todd Rundgren greets me this morning with his song: Can We Still Be Friends?
Well, the selling of the dollar continued yesterday, but this time not as widespread, and damaging to the dollar… The euro climbed above 1.11 yesterday, and the rest of the currencies are all kicking the dollar’s tail and taking names later… There’s a mea culpa for the BLS to talk about today, so you’ll want to stick around to hear about thtat, and realize that all this time, Chuck has been telling the way it should be done, for the BLS…
Gold saw the short paper traders yesterday, limit Gold’s gain for the day, but the shiny metal found a way to fight back and gain $10 on the day, and Silver saw the same gauntlet laid down by the short paper traders, but managed to gain 18-cents… Gold closed at $2,514.50, and Silver closed at $29.52…
Bonds were en vogue yesterday, and the 10-year’s yield dropped to 3.81%… I read a peace yesterday where the author thought it was time to look to allocate to bonds once again, as his thoughts were that stocks were going to see some tough times, and bonds should be bought instead… Nothing new there, as it has always been a case of when it was time to sell stocks, the seller then bought bonds…
The price of Oil remained trading with a $74 handle yesterday… I don’t know what it will take to get investors interested in Oil again… You would think that a story that hit the newswires last week that the State of Maryland was scrapping their EV Buses and going back to diesel busses, would be something that enticed them to think about Oil again… Oh well… The Petrol Currencies are the ones that feel the pressure of a weak Oil price, and that’s why I follow the price of Oil so closely…
In the overnight markets last night… Well, hold the phone, the dollar got bought overnight… HUH? Well, it is what it is, and even in a long-term trend, it’s not a one-ways street, there will be times when you might think the trend is over, only to see the underlying trend come back even stronger… So, the dollar got bought overnight to the tune of 2 index points in the BBDXY… The euro still held onto the 1.11 handle, and the currencies don’t look weaker this morning, so we’ll just go with that and move along…
Gold starts the day down $14, and Silver is down 20-cents… Right now, it appears to be profit taking, but any move below $2, 500 for Gold would become quite suspicious… This gives the procrastinators an opportunity to buy before Gold takes off for higher ground again… What are you waiting for? A gilded invitation to buy? Well, that’s not to be, so you’ll have to do all by yourself… Sorry for the drill sergeant talk, but C’mon, if glove fits, what are you waiting for?
Ok, Chuck calm down… Man, did I have an awful night of sleep last night, with me hacking and coughing most of the night, I finally got back to sleep around 5:30 a.m. This morning, and then turned off the alarm, and tried to make up for lost sleep… So, that’s why this letter is later than usual… Sorry about that…
The price of Oil remained trading with a $74 handle overnight, and the 10-year’s yield trades this morning with a 3.80% yield…
OK… Well, I told you above that there was a mea culpa by the BLS regarding the number of jobs they had reported in the last year… (Chuck says, as long as you’re fessing up you might as well talk about the last 30 years of trumped up jobs reports with jobs created out of thin air… ) Here’s Bloomberg.com with their thoughts on this: “(Bloomberg) — US job growth in the year through March was likely far less robust than initially estimated, which risks fueling concerns that the Federal Reserve is falling further behind the curve to lower interest rates.
Goldman Sachs Group Inc. and Wells Fargo & Co. economists expect the government’s preliminary benchmark revisions on Wednesday to show payrolls growth in the year through March was at least 600,000 weaker than currently estimated — about 50,000 a month.
While JPMorgan Chase & Co. forecasters see a decline of about 360,000, Goldman Sachs indicates it could be as large as a million.
There are a number of caveats in the preliminary figure, but a downward revision to employment of more than 501,000 would be the largest in 15 years and suggest the labor market has been cooling for longer — and perhaps more so — than originally thought. The final numbers are due early next year.”
Chuck again, and yesterday, I questioned why the markets ignored revisions to data… I think the markets will have noticed this large of a revision, folks… You know, you can lead a horse to water, but you can’t make it drink… That rings a bell here… The markets have been led to the cross in the road with this data information, which way it takes is up to them…
Well, that was a doozie to start the day with, eh? For years, people thought I was barking up the wrong tree, pointing out the Birth/Death model that the BLS uses, as a hedonic adjustment… Well… Look who was right, all along?
Pam and Russ Martens are back to reporting problems for the banks with this headline to your letter yesterday: “All the Devils from 2008 Are Back at the Megabanks: Leverage, Off-Balance-Sheet Debt, Over $192 Trillion in Derivatives, Shaky Capital Levels” Now that sound quite scary doesn’t it? If you’re interested in what Pam & Russ have to say here you can find it here: All the Devils from 2008 Are Back at the Megabanks: Leverage, Off-Balance-Sheet Debt, Over $192 Trillion in Derivatives, Shaky Capital Levels (wallstreetonparade.com)
Glass-Stegal would have prevented most of this… But we can thank the Clinton administration for striking down Glass-Stegal, and now all the cries from the rooftops about how we need Glass-Stegal once again, falls on deaf ears in Congress… They have other things on their minds, like should they vote for communism or capitalism… I’m just saying…
And I can’t stop thinking about Gold’s rise above $2,500… and so I turn to Bill Bonner, who had some thoughts on this, and I will share them with you here: “We direct your attention to the Dow/Gold ratio. In round numbers, the ratio was around eighteen in January… meaning, it took eighteen ounces of gold to buy the thirty Dow stocks. Now, it only takes sixteen.
For all the cheers, back slapping and celebration on Wall Street… over the Dow’s 3,000 point gain this year… stocks have actually gone down. In terms of real money — gold — they’ve lost about 10% of their value. Another way to look at it: the dollar lost value faster than stocks rose.” – Bill Bonner at www.bonnerprivateresearch.com
Thank you Bill… This Dow/ Gold ratio is quite interesting… I’ve explained it to you all before, but those that missed class that day… When the Dow/ Gold ratio goes down to let’s say 5, then it’s time then to buy stocks again, and use your Gold profits to pay for them…
The U.S. Data Cupboard yesterday, had nothing but Fed Head speakers on the docket, and today’s Cupboard has the FOMC Meeting Minutes from their last meeting, when interest rates were kept unchanged… The markets will be looking for any indication/ signs that the Fed Heads were ready to cut rate then, but waited for more data… If there are signs of that, then the dollar will have trouble again today… Beep, beep, that’s the sound of my truck backing up to the currencies, Gold & Silver dock… I’m just saying…
To recap… The dollar continued to get sold yesterday, and each day that goes by boldens Chuck some more to think that a long term weak dollar trend is in the cards… The euro has climbed above 1.11, and the rest of the currencies are all puffing out their chests right now… The BLS is going to have a BIG mea Culpa when the final numbers of the jobs created in the U.S. this year comes out next month… The Big Banks are all on board with Chuck in thinking that the monthly jobs numbers have all been made up, out of thin air, and Goldman aka Lola, thinks the revision will be north of 1 million jobs… YIKES!
For What It’s Worth… This came to me via the good folks at Gata… And it is a write up by James Turk regarding is Gold overvalued? Well, if you asked me, i would say no… And so does Mr. Turk, and you can find that article here: Is Gold Overvalued? | James Turk Blog (fgmr.com)
Or, here’s your snippet: “Gold may seem overvalued because of the recent record highs in its 6-decade ascent from $35 to $2500, but prices – like appearances – can be deceiving. What’s more, the value of any asset is more important than its price.
Price and value are too often conflated, which is a mistake. An asset’s price and the usefulness that determines its value are different sets of information that need to be viewed separately, but interrelatedly because price communicates an asset’s value. The undervaluation or overvaluation of anything are seminal circumstances that enable the informed observer to gain wealth because assets inevitably return to fair value.
The Difference Between Price and Value
Home prices provide a good example of the difference between price and value. Using the popular Case-Shiller Home Price Index, a home priced at $165k ten years ago is now being priced at $323k. Nevertheless, the home did not increase in value. It is the same house providing the same usefulness (shelter) it did a decade ago. Only its price has changed.
Gold – measured by the US dollar and the world’s other major currencies – closed at a new record high. Nevertheless, based on my objective calculation gold is undervalued. We can expect new records will be achieved as gold’s usefulness and undervaluation is recognised by ever more people, repeating what happened to it in the 1970s and many other occasions throughout monetary history.
Value is subjective. An uneducated journalist who did not understand gold’s usefulness got a cheap laugh years ago by calling gold a pet rock. This derisive term is still used from time to time to disparage gold, even though some people may own gold for contentment or peace of mind instead of a family pet. Regardless of why someone owns gold or how it is used by them, usefulness gives gold its value, which for 5,000 years has been and primarily remains its usefulness as money.”
Chuck again… Good write up there… My personal usefulness for Gold is to own it as a store of wealth… Period…
Market Prices 8/21/2024: American Style: A$ .6738, kiwi .6145, C$ .7357, euro 1.1117, sterling 1.3046, Swiss $1.1717, European Style: rand 17.9336, krone 10.5079, SEK 10.2367, forint 352.87, zloty 3.8564, koruna 22.5662, RUB 91.24, yen 145.38, sing 1.3070, HKD 7.7938, INR 83.93, China 7.1346, peso 19.21, BRL 5.4656, BBDXY 1,232.08, Dollar Index 101.41, Oil $74.04, 10-year 3.80%, Silver $29.32, Platinum $967.00, Palladium $960.00, Copper $4.20, and Gold… $2,500.40
That’s it for today and this week, as I’m sure you recall me saying that there would be no Pfennig on Thursday this week… You know I about fell out of my chair last week when I visited my oncologist, and she told me that it would take up to 8 weeks for my blood levels to get back to normal… I know, I’ve been very patient with cancer, but I’m already getting impatient with this weakness that goes with the low blood level… I do feel that my strength is returning, but at a very slow pace… I know, I know in the scheme of things, 8-weeks isn’t that long… So, suck it up buttercup! There will be no Butler Family Labor Day BBQ & Pool Party this year… And that makes me very sad… But I’m sure, it will return in 2025… At least I’m hoping! Golden Earring takes us to the finish line today with their great song: Radar Love… I hope you have a Wonderful Wednesday, and will Be Good To Yourself…
Chuck Butler