- currencies and metals rally on Monday
- and the Swiss Nation Bank flans the flames of inflation….
Good Day… And a Tom Terrific Tuesday to you! One down, three to go… that has to be my beloved Cardinals battle cry for this week, as the Cubs are in town. Cards beat the Cubbies 8-2, with the Cardinals hitting four 2-run home runs… Showed some muscle!
After the previous night’s rally for the dollar and bonds, things calmed down a bit on Monday during the day session… The 10-year didn’t move and ended the day at 4.35% the same yield as it started the morning… And the dollar?
Well, the dollar lost its mojo yesterday… You know, the mojo the dollar held from the overnight performance… But that all changed yesterday, and the BBDXY lost 9 index points, to end the day at 1,208… That’s lower than Friday’s close of 1,211, so the dollar weak trend is still in place, and like I told you many times before a weak dollar trend is not a ONE-WAY street…
Gold had a very modest gain yesterday, erased the early selling and its $5 loss, to a gain at the end of the day of $10… at $3.37… Gold was higher during the day, but the short paper traders put a max on Gold’s rise… UGH! Silver gained 24-cents to close at $36.17…
And Oil? It fell out of bed, as the oil traders seem to believe that the hostilities are over and Iran will not do any more, and certainly not shut down the Strait of Hormuz… Oil finished the day trading with a $68 handle…
In the overnight markets last night… The selling of the dollar continued… I’m seeing the BBDXY as having lost 6 index point overnight… And the euro has recovered its losses incurred when the dollar rallied, and in fact, the euro is trading over the 1.16 handle this morning! That means that the rest of the currencies are all looking healthier and out of their sick beds.. Even the rout in the price of Oil yesterday and last night hasn’t been a factor in the Petrol Currencies this morning, as they are taking their main cue from the euro’s rally VS the dollar.
Gold is down $19 to start our day today… if you’re like me and you thought that this would be Gold’s best week performance wise, then you’re as confused as I was about the price action of Gold… I remember in economics class that there was a study done on price movements from geopolitical events, like the Israel / Iran conflict/ war… Here is what I remember of that study… When they cannot even devise a plausible way to twist the news into justifying market action,, their imaginations aren’t prodigious enough to concoct a credible causal story.
So, that’s the reason I think that Gold has not responded as we thought it would since the bombing started. Stupid markets… I was also taught something about the markets that I’ll share with you, that I leaned the first day on a trading desk… “The markets are never wrong, and you’ll go broke betting against the markets”…
I’ve tested that theory several times in the past, and I really don’t see why we have to just admit and take the idea that the market is never wrong… It normally takes some time for the markets to come around to my way of thinking, and if I had put large sums of money on the trade, I would have had deep pockets to last to the time that the markets came around…
OK, got it? I would use the selling of Gold as a buying opportunity, but then that’s just me…
The price of Silver is flat to up a penny to start our day… But at least Silver is back above the $36 handle… I was almost sick to my stomach when I saw that Silver had dropped to below the $36 handle a few days ago…
The price of Oil dropped another $2 overnight, and starts today trading with a $66 handle… The same holds trued here for my thoughts on the price of Oil… And the 10-year Treasury saw some ,more buying last night and the yield on the bond slipped further to a 4.33% yield to start our day today…
And in a case of “here we go again”… The Swiss National Bank cut its interest rate to zero last Thursday and did not rule out returning borrowing costs to negative territory in future, Aye, Aye, Aye… Say it’s ain’t so, Joe!
I really thought that we were through with negative interests! And Switzerland’s comment about negative rates got me thinking about the Fed Heads… No, they never did succumb to negative rates, but they did perform 3 phases of Quantitative Easing!
And the real interest rate in the U.S. was negative, when you factor in inflation… So, will we go back there again? Probably, why? Because we can, not that it will do the economy any favors, just bring back all the reckless borrowing at zero interest rates again, and fan the flames of inflation… But who’s counting?
Ok… my longtime friend, Dave Gonigam at the Paradigm Pressroom and his letter titled “5-Bullets” included a quote from James Rickards yesterday that was: “What do you think is the highest-performing major asset this year so far?” he asked rhetorically. “It’s gold!”
Chuck again… Yes, Gold has outperformed bonds, Oil, and stocks! Rickards also said that the ““Relax if you don’t own gold yet,” Jim advises. “This rally is just getting started. Central banks are the big buyers. The retail frenzy stage is still $5,000 away. So there is still time to get involved if it suits you.”
Thanks to Dave Gonigam for sending me his letter each day!
Ok… So, it was a delayed reaction to the conflict as I suspected yesterday… And the dollar saw sellers yesterday all day long. So, the euro is back to pushing the currency envelope on the dollar, with the rest of the currencies go chasing the dolar down the street…
The U.S. Data Cupboard for today has just the S&P/ Case-Shiller Home Price Index… and we can’t but should forget about the STUPID Consumer confidence for June… Remember, the bulk of the real data will come on Thursday, so we’ll talk about it next Monday, that is if everything goes to plan…
And speaking of housing… yesterday the existing housing report for May printed and it was the weakest print since May of 2009… So, Home Prices haven’t reduced enough and that doesn’t bode well for the Case/ Shiller Home Price Index now does it? I didn’t think so…
To recap… The dollar lost its mojo it held for one overnight session Sunday night. On Monday the dollar got sold and the BBDXY lost 9 index points! Gold & Silver were up, a bit, bonds were flat, and Oil got the snot knocked out of it! Gold outperformed stocks, bonds, and Oil so far this year… And some people still call it a barbaric metal… chuckleheads… And Switzerland cut their interest rates last week, and talked about them going negative if they have to… Chuck wonders when the Fed Heads will ask the question about going back to ZIRP and Q/E?
For What It’s Worth… Do you feel that the Gov’t is lying to you, when they say that inflation is going down? Well, that’s because inflation may be inching down, but prices that rose during the highest inflation in decades, refuse to come down… And that’s what this article talks about and can be found here: Why Prices Never go Down
Or, here’s your snippet: “Bidenflation is over.
But if you feel like prices still aren’t falling, you’re not alone.
Since Donald Trump took office, inflation has plunged from a Biden-era 5 percent to just 1.4%.
This is actually below the Fed’s target of 2%. Normally, at this point, the Fed would be trying to pump inflation since it’s “too low.”
Of course, for the American people, 1.4% is not “too low.” What they want is falling prices, as in take it back to pre-Biden prices.
Will that happen?
In short, no. Prices will never durably fall until we get rid of the Federal Reserve.
Because deflation — falling prices — is the #1 thing the Fed fears. Not unemployment. Not recession. Not nuclear war.
This comes from that core propaganda that created central banks: The false claim that deflation itself is bad.”
Chuck again… yes, like my spring training tickets that used to be $5 are now $40… And the list can be very long of items that we use every day have seen prices rise and never go back down! And the bad part is… I think that inflation is going to reestablish itself once the rate cuts begin… So, another round of price increases is on the way…
Markets 6/24/2025: American Style: A$ .6510, kiwi .6053, C$.7392, euro 1.1609, sterling 1.3619, Swiss $1.2357, European Style: rand 17.7218, krone 10.0866, SEK 9.5375, forint 346.33, zloty 3.6683, koruna 21.3643, RUB 78.53, yen 145.00, sing 1.2802, HKD 7.8500, INR 85.97, China 7.1734, peso 19.03, BRL 5.4869, BBDXY 1,202, Dollar Index 97.99, Oil $66.53, 10-year 4.33%, Silver $36.18, Platinum $1,320.00, Palladium $1.095.00, Copper $4.96, and Gold… $3,328
That’s it for today… I didn’t get outside to read yesterday, and I don’t know why? The day just got away from me somehow… I’ll make up for yesterday, today for sure! Did you click on the link yesterday to that YouTube video that I gave you? Well? Did you like it as much as I did? Not that I get a dime for this, but I think if you go to one conference this year it should be The Rule Symposium which will be July 7-11 in Boca Raton… Simply Google this and you’ll get the whole shootin’ match! Last year, I attended the symposium for a day, mainly to meet up with Frank Trotter and Jason Coots who were there at the Battle Bank booth… This year I won’t be in Florida until July 27, so I’ll miss it, but you don’t have to! Robert Palmer takes us to the finish line today with his song: Sneaking Sally Through The Alley… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!
Chuck Butler