- Gold & Silver kick some tail and take names later on Friday…
- The RBNZ meets this week, what will they do?
Good Day… And a Marvelous Monday to you! What a great Weekend for yours truly! It all started on Thursday, when we learned that my darling daughter, Dawn, was OK, and going home from the hospital. Then we attended a tasting bar that was tremendous! Friday, I saw my oncologist, and then went to lunch with former colleagues, and friends, Steve, Dean, and Brooks… I hadn’t seen Brooks for 20 years! And my beloved Cardinals cant stand prosperity, as they could only take 2 of 3 from the Red Sox… Triumph greets me this morning with their song: Fight The Good Fight…
Well, how about that move in Gold & Silver on Friday last week? Gold gained $38.90 and Silver gained $2.01! And then I read over the weekend that these huge gains are expected to continue… Well, that’s fine with me, but did the people making these claims completely forget about the short paper traders? Oh, well, no need to throw bad thoughts on this huge rally, so, I’ll move on…
Gold finished the week at $2,415.40, and Silver finished the week at $31.58… Copper kicked some tail too ended the week at $5.05! It was as if suddenly the light bulb came on over the heads of traders and investors and they realized that there are shortages in these metals VS demand, and that has always generated higher prices!
The dollar. on Thursday gained back a little of what it lost on Wednesday last week… And then remained stuck in the mud on Friday, ending the week at 1,245 in the BBDXY… The dollar traders were non-existent, and had evidently battened down the hatches and went for cover… The reason? Well, apparently, the slight slip in the STUPID CPI caused the markets to believe that this slip indicates a rate cut… Oh brother! I wish these people coming up wit these thoughts would crawl under a rock and stay there!
Speaking of the STUPID CPI… Good friend, Dennis Miller, of www.milleronthemoney.com sent me this note from www.deepnewz.com : “The U.S. Bureau of Labor Statistics (BLS) has decided to exclude coffee prices from the Consumer Price Index (CPI) inflation data starting April 2024, specifically removing it from the index as of April 30, 2024. This decision comes amidst reports of a significant increase in coffee prices, which rose 27% last month and 78% since September 2023. The April 2024 CPI inflation report, set to be released on May 15, 2024, will be the first to omit coffee price inflation, a move criticized by many as a method to manipulate reported inflation rates.”
See why I call CPI, STUPID? When items in the basket of goods gets to expensive, they just remove it a put something in its place that’s not expensive, thus they are able to keep inflation from really showing its true rate!
On a sidebar, I always giggle when I write STUPID CPI, because my grandkids always tell me that I’m not supposed to say “stupid”, and I always respond, well tell that the Lucy and all the kids on the Charlie Brown stories! Besides, I’m an old man now, I can say what I want!
Oh, and Bill Bonner had this in his letter on Thursday: “Dozens of Democratic lawmakers signed a letter to President Biden, pleading with him to act on high grocery prices that have been slow to fall as inflation has come down. “
Chuck again… apparently the Democrat lawmakers want the President to sing an executive order that would bring CEO’s of companies accused of having high prices to court and send them to jail… Now… you tell me why that would be of use to our country, as long as these same lawmakers keep over spending and causing inflation themselves, which causes these higher prices? Shouldn’t these lawmakers be looking for ways to cut deficit spending? Now THAT would be novel! I’m just saying!
OK, in the overnight markets last night… Well, once again, I put the cart in front of the wagon… The dollar bugs went to work overnight and bought dollars to get it out of the mud, and through my whole thoughts on the dollar direction in the gutter… The BBDXY gained 2 index points overnight, and the currencies don’t look so healthy this morning, but it’s early, and we have a full day of trading ahead of us, so let’s not get to negative Nelly…
Gold is up $14 to start the day/ week today… Before I went to bed last night, I checked on Gold and it was up over $20… So, apparently there was some profit taking overnight… Silver, is down 8-cents to start the day/ week today… The Safe Haven demand for Gold & Silver has really set in right now, as everyone is thinking the Fed Heads will cut rates, probably in September… That would be my best guess as to when the Fed Heads will try to disguise what they are doing, but we all know that they are cutting rates to allow inflation to eat away at the debt…
The price of Oil has a $79 handle to start the day/ week today… And the 10-year’s yield is 4.42% to start our week… The thought about rate cuts has really entered into the bond picture, folks…
Well, the price action in the dollar to close out last week, was interesting to me, in that over the years, I’ve seen many times when the dollar didn’t move for a couple of days, and if my memory isn’t failing me right now, I would say that we normally see the dollar start to lose ground after these brief pauses… It’s as if the dollar bugs were waiting for something to show them that they are wrong, that they need to sell… When nothing arrives, then they go ahead to start to sell… Selling begets more selling, and pretty soon, you have a weak dollar trend…
The only caveat to that thought is there is the Exchange Stabilization Fund, and the PPT uses to save the dollar from going into a weak trend… In the past we didn’t have this treasure chest of funds to use to save the dollar… You may recall me questioning just how many times the PPT can reach into the treasure chest of ESF and intervene in the markets… So, there’s that to think about too…
We’ll have to really be on the lookout for signs that the ESF is out of funds…
And what should investors do when the dollar heads to a weak trend? The should back up the truck to buy currencies and metals that’s what! In a real stealth-like manner the euro is inching toward 1.09, it wasn’t that long ago that we saw the euro around 1.06… The rest of the currencies, sans yen, have gotten out of their respective sick beds, and are taking small steps toward recovery…
Shoot Rudy, even Bloomberg.com even sees this dollar rally as fading, here’s one of their headlines: “The dollar’s recent rally is at risk of stalling as cooling US price pressures and China’s recovery give traders a reason to sell.”
I read this last week where short traders in Aussie dollars (A$) have been licking their wounds, as the A$ defies them and keeps inching higher… Remember back in the day, when I told you about how the Japanese investors were buying A$’s and kiwi, because they could increase their interest rate on their money? I wouldn’t doubt for a minute that this scenario isn’t still being played out…
And Australia’s kissin’ cousin across the Tasman, New Zealand, has seen their currency, kiwi, break out of it bear cycle, and return to chasing its kissin’ cousin… The Reserve Bank of New Zealand (RBNZ) will meet on their Wednesday (Our Tuesday) and discuss rates… it is thought that for kiwi to take the next step in breaking out of its bear cycle, is for the RBNZ to hike rates one more time in their rate cycle…
There was a time when I would be all over what the RBNZ was doing, but these days are not the same… The RBNZ, has become much like the other central banks in the globe, and I don’t like that one iota! But, be it as it may, I think the markets are looking at the RBNZ with rose colored glasses, and thinking they will hike rates… Hmmm…..
OK, back to the strong rally in the metals last Friday… Silver topped $30 for the first time since 2013… And then it was going down from it’s $50 high… Remember when I was interviewed by a magazine and I called Silver the “new Gold”? But that was then, and this is now, and it looks like Silver is going to outperform Gold on a percentage basis, once again… It still takes 80 ounces of Silver to equal an ounce of Gold, and so the ratio hasn’t suffered yet, but it should narrow a bit as we go along.
I read this last weekend that most of Silver’s move was short covering… I can only hope, wish and pray that that’s true!
I wonder if LOLA aka Goldman Sachs is going to revise their call on Gold? You may recall them saying a couple of months ago, that they believed that Gold would reach $2,400 this year… I warned you at that time, that when these Casino Banks come out with calls like that, it means they are long the asset and need buyers… But, what happens, when the call comes in early? You change your mind, is what! And now the calls for Gold will be coming in for a higher price… Be Ready… And hold on to what you’ve got!
The U.S. Data Cupboard was not kind to the dollar as we ended the week last week with April Retail Sales at 0% growth, Industrial Production at 0% growth, and Weekly Initial Jobless Claims remaining above 220,000…
After last week’s Datapallooza, this week’s Data Cupboard doesn’t have much in terms of real economic data for us until Friday this week… So, the dollar is on its own this week, and that usually spells problems for the dollar… I’m just saying…
To recap… The dollar was stuck in the mud late last week, but Gold & Silver (and Copper) got firmly on the rally tracks and kicked some tail and took names later as we ended the week. Chuck points out why he calls CPI, STUPID… And even Bloomberg.com is talking about the dollar rally being over…
For What It’s Worth… Ok, I mentioned Copper above a couple of times, and will keep that momentum going for Copper in the FWIW article today… And it can be found here: Goldbugs Waited Years For A Massive Comex Short Squeeze, And Finally Got It… Just In The Wrong Metal | ZeroHedge
Or, here’s your snippet: “For much of the past decade, gold bugs religiously tracked the physical gold inventory located in the various gold vaults that make up the Comex system, eagerly awaiting the day when there would be more deliverables (via paper shorting of gold) than physical in storage, sparking a historic, Volkswagen-like short squeeze. Well, the day of a historic Comex short squeeze finally arrived… only it wasn’t in gold but in the far less precious metal that is copper.
It all started one month ago, when we reported that in an attempt to enforce sanctions against Russia that actually worked (as opposed to the joke that is the western “oil embargo” now openly breached by absolutely everyone), the “US, UK Banned Deliveries Of Russian Copper, Nickel And Aluminum To Western Metals Exchanges.” There, in our conclusion, we wrote that “history has taught us that the market will price in some “full-sanction” risk premium which when combined with the current macro bid (reflation narrative, electrification, “copper is the first AI commodity” etc.) means we expect a complex wide rally.” Little did we know how truly historic said rally would be just one month later.
As anyone who has been following the recent moves in the price of copper – which is hitting daily record highs – knows by now, a massive dislocation between the prices for copper traded in New York and other commodity exchanges has rocked the global market for the metal and prompted a frantic dash for supplies to ship to the US.
The source of the disruption, as Bloomberg reports, is a record short squeeze that has driven up copper prices on the Comex exchange to the point where the premium for New York copper futures above the London Metal Exchange price has rocketed to an unprecedented level of over $1,200 per ton, compared with a typical differential of just a few dollars.
The blowout in that price spread has wrong-footed major players from Chinese traders to quant hedge funds, all of whom are now scrambling for metal that they can deliver against expiring futures contracts!
Adding fuel to the fire, the surge in the price is not just driven by technicals but also reflects the surge of interest from speculators after forecasts that long-term copper mine production will struggle to keep pace with demand.”
Chuck again… How long ago did I first write about there being a shortage in Copper? But those short paper trades kept Copper’s price from exploding upward… But now those short trades are getting squeezed, and it couldn’t happen to a better crowd!
Market Prices 5/20/ 2024: American Style: A$ .6683, kiwi .6115, C$ .7342, euro 1.0863, sterling 1.2698, Swiss $1.1000, European Style: rand 18.2232, krone 10.6788, SEK 10.6861, forint 354.78, zloty 3.9173, koruna 22.7659, RUB 90.99, yen 155.75, sing 1.3564, HKD 7.7996, INR 83.32, China 7.2324, peso 16.57, BRL 5.1041, BBDXY 1,245.65, Dollar Index 104.53, Oil $79.76, 10-year 4.42%, Silver $31.50, Platinum $1,072, Palladium $ 1,008.00, Copper $5.05, and Gold… $2,429.02
That’s it for today… Well, this week will bring the Cubs to St. Louis for the first time this year! The new baseball schedule has each team playing every team, and the divisional games between teams have been cut down to 12-13… I don’t care to play every team, not doing so was what made the World Series magical… I’m just saying… I suffered through a lot of bleeding this past weekend, it really does get old, folks… And a royal pain! But… I’m still here, and kicking! So there’s that! Thin Lizzy takes us to the finish line today with their song: The Boys Are Back In Town… I hope you have a Marvelous Monday today, and I hope you will Be Good To Yourself!
Chuck Butler