It Was Like Black Friday…

  • currencies are getting taken to the woodshed daily
  • The metals are picking up the pieces…

Good Day… And a Tom Terrific Tuesday to you! Oh me, oh my… What the hell happened last Friday to Gold & Silver? At 10:05 CT Gold was up $55, and had gone over $2,400…  and Silver was up $1.00, and then the bottom fell out of the two, and Gold ended the day down $29, and Silver down 44-cents… I would have to say that that was the largest one-day engineered takedown of Gold that I remember seeing… I know that I usually don’t start the letter with bad news like that, but it was too large of a takedown to ignore… Radiohead greets me this morning with their song: Karma Police… 

I think that the short paper traders just shot their wads, so to speak, on taking down Gold & Silver, last Friday… I’ve got something on that later in the letter today… And the PPT was also in the markets buying dollars, with the BBDXY up 8 points… And you know what I found on Bloomberg about this selloff of Gold?  That the rally was seen as overstretched… That’s it, that’s their only excuse for this selloff… 

What the hell has happened to investigative journalism?  Oh, well, yesterday, Gold tried to pick up the pieces of Friday’s takedown Yesterday, and Gold rallied strongly along with Silver at the overnight opening Sunday night for us. But… the short paper traders made another attempt to take Gold down again, but this time they must have run out of ammo, because then Gold came back again in the Monday trading session and gained $39.10, to close at $2,382.10… Silver closed up 97-cents and a price of $28.80

So, yesterday, while I was getting stuck my two different needles, the dollar continued to rally gaining 2 index points in the BBDXY moving it to 1,261… Crazy, I know what you’re thinking, but once the PPT came in last week, there’s not a currency trader out there that’s going to go against their treasure chest of funds to defend the dollar… Gold was up $9 yesterday, and Silver was up 7-cents to $28.98…   I’ve got an interest take on Gold’s surge in price in the FWIW section today, and from the Financial Times no least! 

The price of Oil has weakened a bit, and traded just below the $86 handle at  closing yesterday, The 10-year has climbed to 4.61% yield… I said last week that I truly believed that it would breach 5% once again, and hoped that I hadn’t jinxed the rise in yield, but so far so good… 

Someone asked me why I concentrated on the 10-year Treasury… Well, the 10-year is what they call the bellwether bond of Treasuries, everything from Mortgages to refi’ loans are price off the 10-year, so there, now you know ! 

In the overnight markets last night…  Well, overnight Gold got sold again, this time by $12, and Silver is seeing some selling overnight too to the tune of 60-cents… Now those are normal figures to be seen in trading don’t you think? The dollar was bought some more overnight, and is up 2 index points this morning, while Oil is getting sold, and has fallen further in the $85 handle… and the 10-year added some more yield overnight, and trades this morning with 4.65% yield. 

Well, have you heard the latest on Russia’s $300 Billion that was frozen by the U.S. when Russia invaded Ukraine? Well, sit down because this is going to be a long story… (not really, just making it sound like you really need to read this!)   The European Commission is calling on the U.S. to take the $300 Billion and pay Ukraine, or not pay the principal but to pay the interest… Unfortunately, there’s been no interest earned on the money, so if the U.S. and Europe want to pay interest to Ukraine, it will be with newly minted dollars, more debt in other words…

E.J. Antoni and Ed St. Onge were the writers that broke this story at the Heritage.com this past weekend… The full article can be found here: Is the Biden Administration Trying To Destroy the Dollar? | The Heritage Foundation

But I can tell you without it being a spoiler alert, because the link above does that… That these deep thinkers think that this would be a death knell for the dollar and the euro, because all countries that hold reserves with these countries would be removing them quickly, and converting those funds to Gold…  And I agree!

You may recall the goal of freezing these funds was to instigate panic in Russian markets, culminating in bank runs and general unrest, perhaps even leading to the ouster of President Vladimir Putin himself. 

I guess the propeller heads that thought of that, need to go back the drawing board, because Russia’s economy outdid the U.S. percentage wise last year! 

This seems as though its a metals only letter today, but that’s not true, it’s just that metals are the hot topic right now, and so they garner all the press!  I received this from the good folks at GATA” commenting to Eric King at King World News, GoldMoney founder James Turk says silver’s sharp fall on Friday began when the London physical market closed and the New York paper market took over. But Turk thinks it unlikely that there will be too many more paper slams of silver because some metal is needed to support such slams and the shorts just don’t have enough.”

Chuck again… now wouldn’t that special, in my best church lady voice, made popular by Dana Carvey… 

Well… April has not been a good month for the currencies… The euro has fallen to trade in the 1.06 handle, Aussie $’s are trading with a 64-fent handle… and the rest of the currencies are looking any better… They really got taken to the woodshed late last week, and there’s been on sign of recovery since… Time to batten down the hatches, and I’ll ask the good witch Glinda to let us know when it’s sage to come out again… 

The U.S. Data Cupboard last week saw PPI (wholesale inflation) and it had increased in March from Feb from 1.9 to 2.8%, so another nail in the rate cut folk’s coffin… And get this! Consumer Confidence fell 2 points from 79 to 77! Holy Cow, how did that happen, it’s obvious that someone added the points wrong! 

The Data Cupboard start this week today, with March Retail Sales… The BHI indicates to me that this will be better than the average bear, and that is because March was Easter month, and the buying for Easter will be included in the March numbers… 

To recap… Gold & Silver got the snot knocked out of them on Friday last week… It was ugly, because the short paper traders waitied until Gold reached a gain of $55 on the day and traded over $2400 before the short paper traders took it down. Silver was also soaring before being taken down…  The PPT was in to support the dollar and the dollar is the strongest it’s been in a month of Sundays now… And there’s no currency traders out there that are willing to step in front of this speeding bus… and take on the PPT!

For What It’s Worth… This article came to me via the good folks at GATA, who were quite surprised by the Financial Times admittance that Gold is surging… This article can be found here: Gold is back — and it has a message for us (ft.com)

Or, here’s your snippet: It’s easy to mock gold bugs, but their moment may finally have come. The precious metal has been breaking out recently amid higher than expected inflation in the US, and general anxiety over everything from geopolitics to the November presidential elections to where monetary policy and markets go from here.

All these things are predictable reasons for gold to surge. But there are deeper, longer-term messages in this rise that investors should pay very close attention to.

Let’s start with inflation. Whatever happens over the next few quarters, I’ve long thought that we were in for a period of “higher for longer” inflation. Aside from the possibility of a technology-driven productivity miracle, it’s hard to think of a macro-trend at the moment that isn’t inflationary.

The economy is running hot — from fiscal stimulus in the US to more supply chain redundancy as countries de-risk, to all the capital investment required for the clean energy transition and re-industrialisation in rich countries. Even ageing US baby boomers are likely to be an inflationary force, since they have health, time and plenty of money to spend.

Gold is historically an inflation hedge. But it’s also something investors turn to when they are worried about the stability of the status quo. It will languish for decades, then break out when the world is at a major pivot point, as it is now.

It’s no secret that the Washington consensus — which expected emerging nations to fall in line with free-market rules written by the west — and the postwar Pax Americana are over. Trade tensions between the west and China are growing. Meanwhile, the weaponisation of the dollar following the outbreak of war in Ukraine has quickened moves in many countries, most importantly China, to sell Treasury bills and buy gold as a hedge against America’s financial might. It is easy to imagine this weekend’s escalation in Middle East tension boosting gold further.”

Chuck again… The writer goes on to say that she believes there will be a devaluation of the dollar in the new Presidential term, and any rumors of that happening would certainly help Gold soar more… 

Market Prices 4/16/2024: American Style: A$/6428, kiwi .5892, C$ .7235, euro 1.0639, sterling 1.2451, Swiss $1.0954, European Style: rand 18.9734, krone 10.9692, SEK 10.9205, forint 370.80, zloty 4.2775, koruna 23.3167, RUB 94.10, yen 144.02, sing 1.3538, HKD 7.8316, INR 83.53, China 7.2386, peso 16.80, BRL 5.1555, BBDXY 1,263.67, Dollar Index 106.25, Oil $85.03, 10-year 4.65%, Silver $28.42, Platinum $977.00, Palladium $1,042.00, Copper $4.31, and Gold…. $2,376.88

That’s it for today… Bah Humbug… My beloved Cardinals just aren’t hitting the ball in clutch times, like when runners are on base! They’ve stumbled out of the gate, and the rest of the pack (other teams) haven’t… UGH! Well, I saw my oncologist yesterday, and my bloodwork was fine, no change in the size of the tumor in my jaw, and so we’re going in a different direction, more to come when that happens… Well, spring was over last weekend… As summer temps were here! I don’t like opening out pool in April, too much cr$%$ to pull out of the water, but if these temps remain, we may as well open it!  Went to City Park for the City Soccer Game with good friend, Rick, on Sunday, it was a beautiful day and the City team won! YAHOO!  Junior Walker and the All-Stars take us to the finish line today with their song: Shotgun… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler

The Dollar Soars On The Stupid CPI Report!

  • currencies and metals get taken to the woodshed…
  • Chuck can’t answer the bell today…

Good Day,,, and a Tub Thumpin’ Thursday to one and all! Well my beloved Cardinals couldn’t get past two errors that cost them the rubber game of the series with the Phillies… ugh! Our Blues ambushed the Blackhawks last night  and are hanging onto their playoff hopes by the skin of their false teeth!  When I said yesterday that I was going back to sleep… I had no idea that I would sleep until noon! Man this cold has really taken me to the woodshed!

Melvin and the Bluenotes greet me this morning with their song: If You Don’t Know Me By Now…

Well didn’t I tell you that the markets were wrong about their thoughts on inflation? And didn’t I warn you about the sheet paper traders?

Well hedonically adjusted or not, the STUPID CPI showed yesterday that inflation is NOT GOING AWAY! Even in an election year the STUPID CPI showed a .4% rise in March and a annual number of 3.5%!!!

And finally popping the balloon that the rate hike folks were floating saw the dollar take out all of its frustrations of recent days, and rally like there was no tomorrow!  The BBDXY index gained 11 points on the day!  And the currencies went right back to their respective sick beds…

Gold & Silver’s recent rises were brought to a halt… I had mentioned last week that Gold was showing overbought on the charts… so the short paper traders used that info and the fact that the rate cuts were put to bed. And engineered a takedown on both Gold & Silver… Gold lost $19 on the day, and silver lost 22-cents, but retained the $28 handle. I read another chartists’ word where he said that Gold could see a correction down to 2,280, but that would be it, and it would then lead to upward moves in Gold…  Longtime readers know that I don’t put too much stock in the charts, but every now and them they make sense to me… 

The price of Oil bumped higher to an $86 handle yesterday…  Oil has a couple of thins going in its favor right now… 1. the U.S. has decided not to replenish the Special Oil Reserves… I don’t know about you, but when I hear that I said balderdash! The U.S. Gov’t can’t be THAT STUPID CAN THEY?  So, in my mind their reserves will have to be replenished, and that will be good for the price of Oil… In addition, there were reports that good friend, Dennis Miller sent me yesterday, that say that U.S. intelligence believe that Iran is going to shoot missiles at Israel and that would broaden the scope of the Conflict in the Middle East… Any time Oil shipments can have the potential of being disrupted, the price of Oil benefits… 

And the rate cut talks being stifled got the bond boys ratcheting up the yields on bonds across the yield curve, with the 10-year Treasury seeing its yield rise to 4.53%!  

In the overnight markets last night… the dollar was bought some more adding 2 more index points on the BBDXY… The currencies and even the Mexican peso, got walloped yesterday, But there’s one thing to think about here… What IF, the Fed Heads go ahead and cut rates? I mean they were willing to cut rates when inflation wasn’t near their 2% target in the first place, what makes the markets so sure the Fed Heads have done a Puff the Magic Dragon, and gone back into their cavern not to be seen again?  I’m just throwing that out there for you to think about, because trust me on this one, the currency traders are not into looking under the hood, to see how the engine is running…  So, they won’t react until, the deed is done, and they are left holding the bag… 

Gold is up $7 to start the day today, and Silver is up 6-cents… The price of Oil slid back below $86 overnight, and trades this morning with an $85 handle… And the 10-year got sold some more, and trades this morning with a 4.58% yield… 

Now it’s the dollar’s turn to sit at overbought… I’m just saying… 

Well, let’s get this party started! Longtime reader, Bob, sent me this that he pulled off of Twitter: “The World Bank published a new ranking of GDP by purchasing power parity (PPP); Russia has closely approached Japan, while Indonesia has overtaken Germany.

China has pulled further ahead of the USA. France, Italy, and the UK have dropped down a few places, while Mexico and Turkey have moved up.

Countries that have introduced sanctions against Russia are falling, while others are growing, a trend that has continued for the second year in a row.

Russia was fifth place last year, overtaking Germany, and this year, it is due to become the fourth largest economy in the world (PPP basis), overtaking Japan.

Except for the USA, you have to go down to the seventh place to find another white Christian country – Germany. And Germany’s economy is screwed and slowing. All G7 economies are growing way slower than G20 stars.

World’s a-changin'”

Chuck Again…. I’m so old that I recall when currency traders would actually use the Purchasing Power Parity numbers to base their trading theories… I bring that up because, even though PPP should be used along with other things to determine a currency’s worth, it no longer is even considered, because currency traders are all newbies, and only go on sentiment…  I’m just saying…

Well, the dollar is the king of the hill now… But for how much longer? Bill Bonner in his letter that can be found at: www.bonnerprivateresearch@substack.com had this warning for us.. take it away Bill… “Hirschmann Capital showed that since 1800, in 51 out of 52 countries where the debt-to-GDP ratio was greater than 130%, the result was either an outright default, a devaluation of the currency, or a de-facto default in the form of chronic inflation to deal with the high debt levels. The one exception in that study was Japan. Its debt-to-GDP ratio has been sky-high for decades as it experimented with monetary policy. “

Bill believes that the U.S. will reach 130% debt to GDP ratio by the end of the next President’s term, so 2028… Will we even get to that mark before the whole financial system collapses? I doubt it… But then, the one country that didn’t go under is Japan… And why that didn’t happen there is beyond by pay grade… The thing you need to take from this is that it’s possible here, and probably will take place… 

All the world, except Singapore and Russia are up to their eyeballs in debt… So, for us, as a country to look to foreign countries to supply us financial aid isn’t going to work… The have their own debt problems to worry about…  

The U.S. Data Cupboard yesterday had the STUPID CPI, and to show you just how STUPID the report is, John Williams at Shadowstats.com has the annual inflation rate at 14%… or around that number… The BLS shows the annual inflation rate at 3.5%… So, which one do you think you experience most the 14% increases in prices or the 3.5% increases in prices? 

there’s really nothing else in the Data Cupboard this week, other than the weekly Initial Jobless Claims that print every Thursday… 

To recap… The STUPID CPI was taken as the gospel and the dollar rallied like there was no tomorrow. Bonds, stocks, currencies and metals all got sold… the BBDXY gained 11 index points! And as Chuck said above the dollar bugs took out all of their pent up frustrations of recent trading days that saw the dollar getting sold… The latest PPP Purchasing Power Parity ratings are out, and Chuck has that for you today, along with a warning from Bill Bonner… Better take heed… 

For What It’s Worth… Well the good folks at GATA sent me this link from Wall Street On Parade, and that alone makes this article FWIW worthy! Seriously, Russ & Pam Martens have once again unearthed information that should send the markets reeling, but as we all know, that won’t happen because… fill in the blank…  This article can be found here: Evidence Suggests U.S. Financial Crisis Started on August 14, 2019 (wallstreetonparade.com)

Or, here’s your snippet: ” I have no  snippet for you today.. technical difficulties prohibited that from happening

Chuck again… You may recall me harping about the lending the Fed Heads were doing for the Casino Banks in September 2019? Well, I was harping about the repos that were going on at that time, and wondering if there was something awry… Well, 6 months later it was all for naught, and our focus was on the lying doctor Fauci… 

Market Prices 4/11/2024: American Style: A$.6526, kiwi .5987, C$ .7297, euro 1.0735, sterling 1.2540, Swiss $1.0974, European Stye: rand 18.7496, krone 10.7553, SEK 10.8353, forint 353.22, zloty 3.9725, koruna 23.6447, RUB 93.26, yen 153.38, sing 1.3537, HKD 7.8335, INR 83.19, China 7.2369, peso 16.44, BRL 5.0814, BBDXY 1,252.09, Dollar Index 105.31, Oil $85.53, 10-year 4.58%, Silver $28.06, Platinum $978.00, Palladium $1,047.00, Copper $4.27, and Gold… $2,341.90

That’s it for today, and this week until next Tuesday…Sorry for the tardiness of the letter today, I just couldn’t answer the bell this morning… UGH!  No Pfennig of Monday next week, as I will be heading to the hosopital early for an oncologist appointment…  I’ll tell my oncologist that I’m not tolerating the Chemo, I’m sick all the time, and other things not worth talking about… She’ll probably tell me, tough beans buddy, this is the last Chemo available for your cancer… Just baseball all weekend now, that basketball (College that is) is over… I really don’t care about the NBA much… My TV outside is broken, and I need to get a new one, before the weather turns consistently good…. Oh, and I’m having problems with Outlook and can’t get your replies right now… I guess I should be happy that I got this letter out today!  Jet takes us to the finish line today with their song: Are You Gonna Be My Girl? I hope you have a Tub Thumpin’ Thursday today, and a kick rear weekend! And please Be Good to Yourself!

Chuck Butler

Gold & Sliver Are On Bull Runs!

  • currencies rally a bit VS the dollar on Monday & Tuesday!
  • Why does the media poo-poo Gold?

Good Day… And a Wonderful Wednesday! Well, I could have actually written to you yesterday, as my appt got moved to a later date, but by the time I learned of this move, it was already too late to write, so I went back to sleep! And Sleep is all I seem to do with this cold… In fact, I plan to go back to sleep after hitting send this morning!  Humble Pie greets me this morning with their song: I Don’t Need No Doctor! 

Actually, I think I do, but we’ll have to see about that!  Well, Monday was interesting, in that the dollar got sold, by 2 index points in the BBDXY, and Gold gained $10, while Silver gained 38-cents… There doesn’t seem to be a limit to the appetites of Central Banks’ for Gold these days…  And remember when I featured a story about the Gold Beads that the Chinese citizens were buying? Well, they continue to gobble them up! 

And as I reported previously, it’s not just the Chinese and Central Banks buying physical Gold these days. Reuters reported that “Costco selling as much as $200M in gold bars per month, Wells Fargo estimates; Costco began selling gold bars in August, reporting $100M in sales in its first quarter. ” 

The dollar got sold by 2 index points yesterday, and Gold gained $10, while Silver shot past $28 on the day!  Gold closed yesterday $2,353, and Silver $28.21… I have something for you in the FWIW section today regarding Gold, so keep your remote at hand, and stay tuned same bat time, same bat channel! 

On Tuesday, the price of Oil remained trading with an $86 handle… And the 10-year has seen some buying from someone/ some institution, and the yield dropped to 4.37%.. 

In the overnight markets last night… The dollar got sold some more, this time losing just 1 index point overnight in the BBDXY… The Reserve Bank of New Zealand met and decided to keep their Official Cash Rate (OCR) at 5.50%, and that gave kiwi a small boost. Gold is down in the early trading today by $6, and Silver is down 10-cents, looks a lot like profit taking… Most times when the short paper traders begin their engineered takedowns, the selling starts slow, like profit taking, but then it doesn’t end, and the takedown takes place. From the way Silver has been trending upward lately, it kind of gives you the feeling that the short Silver Paper traders have thrown in the towel…  Boy wouldn’t that be a treat? 

The price of Oil slipped a buck overnight, and trades this morning with an $85 handle, and bonds saw a smidgen of buying bringing the yield on the 10-year to 4.36%

Futures traders have reduced bets on how much the Federal Reserve will cut rates this year to the lowest level since October. Investors are growing increasingly doubtful that policymakers will be able to lower borrowing costs without sparking an inflationary rebound in a strong economy.  You know, if they had just read the Pfennig, they would have already known that, and wouldn’t have made losing bets on bonds, and interest cuts!  My dad used to say, Chuck, you can lead a horse to water, but you can’t make the horse drink it… That’s how I feel most of the time, when I say something that should be repeated world wide, and it falls on deaf ears… Oh, well… I’ll just keep shouting, and maybe someone will hear me eventually! 

The Bank of Canada meets this morning, and well I’ll let Bloomberg.com tell you what’s on traders’ minds going into the meeting: “Traders are the most bearish on the Canadian dollar in a year on expectations that Bank of Canada policymakers will telegraph interest-rate cuts when they announce their decision on Wednesday, or possibly even deliver a surprise easing.”

I can’t help but think “oh no, here we go again”…  What if the Bank of Canada (BOC) decides to leave rates unchanged? These guys didn’t make the right call with the Fed Heads, and now they’ve gone to the BOC and, I can’t help but to think that they will get their rears handed to them again…  I’m just saying…

The European Central Bank (ECB ) have been quiet lately, and not spouting off about how they defeated inflation, and that rate cuts were coming… If they just watch what’s going on in the U.S. with inflation not going away, not being defeated, and now rate cuts are a just a fading memory… 

And the Bank of England is in the same boat as the ECB.. so the same goes for them! Can’t they see that rate cuts are not what the inflation doctor has ordered?  I’m just saying

Speaking of inflation… not that we get any hints from the STUPID CPI, with all of its hedonic adjustments, but the markets think there’s something there… So, the U.S. Data Cupboard has the March STUPID CPI this morning, and knowing that this IS an election year, and data will be adjusted, coooked, massaged to the Administrations’ desires, I’m not putting out any good thoughts that the STUPID CPI will show that inflation is still a problem.. But I guess we’ll have to wait-n-see!

The U.S. Data Cupboard didn’t have anything worth a hill of beans to look at on Monday and Tuesday, so this is the first report that the markets look at today… Too bad it’s the STUPID CPI 

To recap… The dollar has been seeing small moves downward, so far this week… I told you Monday that the dollar lost 5 index points last week in the BBDXY… So far this week it’s 3 index points… Gold climbed above $2,300 on Monday and Silver climbed above $28 yesterday… Chuck is worried about the short paper traders… he hopes he doesn’t have to explain another engineered takedown! RBNZ left rates unchanged last night, the BOC meets today… Chuck has warning for both the BOC and BOE..

For What It’s Worth… OK, this is a long read, so I can only give you a snippet of it, but it’s about why the media poo-poos Gold, and you can read it in its entirety here: Why Is the Mainstream Always Poo-Pooing Gold? (moneymetals.com)

Or, here’s your snippet: “According to the mainstream, it’s always time to sell gold.

Maybe listening to mainstream talking heads isn’t the best strategy.

On March 8, CNBC Fast Money featured TD Securities senior commodity strategist Daniel Ghali arguing that it was time to take profits on gold.

That didn’t age well.

Gold closed around $2,162 that day. Since then, the yellow metal has gone up over 8 percent.

It’s not so much that Ghali made the wrong call. Anybody trying to predict market movements is going to make the wrong call from time to time. The issue is the mainstream constantly poo-poos gold, whether it’s going up, down, or sideways.

A few years ago, CNBC commentator Jim Lebenthal went as far as to say he has no interest in gold because it has “no uses as a metal.”

This is a ridiculous take. Gold has all kinds of uses from jewelry to electronics. The tech sector used nearly 300 tons of gold in 2023.

Meanwhile, the mainstream financial media constantly fawn over Bitcoin. Talk about something with no use in the real world.

A Bloomberg article recently noted that when gold hit a record high a few weeks ago, “no one besides a few gold bugs seemed to care.” But when Bitcoin set records, “everybody cared.”

These ‘investment professionals’ prefer to turn over account holdings every year or two because they make commissions every time they do.  But when people buy physical precious metals, they tend to hold them very long term, often passing them on to heirs. Few transactions mean few commissions.”

A second reason the mainstream tends to poo-poo precious metals is more fundamental.

Most mainstream financial planners and pundits simply don’t understand macroeconomics. They are steeped in Keynesian nonsense including the notion that a little inflation is a good thing, money printing and government stimulus can “rescue” a shaky economy with no consequences down the road, and a strong economy creates inflation.”

Chuck again… a little longer snippet today, because I tried to get the main points in… But what this guy has to say is bang on folks…  and leads me to this once again… Got Gold?

Market Prices 4/10/2024: American Style: A$ .6620, kiwi .6077, C$ .7374, euro 1.0864, sterling 1.2598, Swiss $ 1.1068, European Style: rand 18.5085, krone 10.6623, SEK 10.5378, forint 358.29, zloty 3.0167, RUB 93.26, yen 151.35, sing 1.3446, HKD 7.8327, INR 83.19, China 7.2327, peso 16.31, BRL 5.0091, BBDXY 1,239.56, Dollar Index 104.04, Oil $85.72, 10-year 4.36%, Silver $28.11, Platinum $990.00, Palladium $1,118.00, Copper $4.32, and Gold… $2,3047.70

That’s it for today… Well, did you get to experience the Great American Eclipse? I sat out back with Kathy, with our eclipse glasses on, and watched it… It didn’t turn completely dark like it did in 2017, but it was eerie, for sure! Well, the Cardinals number 1 addition to their team, who was hurt to start the season, finally pitched last night, and looked great! The Cardinals beat the Phillies 3-0… I read this morning that the Womens Championship Basketball game had more viewers than the Men’s game! Even I was caught up in the Caitlin Clark phenomenon! I think that starting today, we’re scheduled to have 19 of the next 24 hours with rain… The creek behind my house will most certainly be flooding, if that forecast holds true… Stevie Wonder takes us to the finish line today with his great song: Superstition…  I hope you have a Wonderful Wednesday to day, and will Be Good To Yourself!  now back to sleep for me! 

Chuck Butler

Will There Be Any Gold Left When Everyone Wants To Buy?

  • Currencies & metals rally VS the dollar on Friday
  • The 10-year Treasury gains bad momentum…

Good Day… And a Marvelous Monday to you! I hope everyone had a wonderful weekend.. For me, it was blah… as I was still dealing with this awful cold, and weather outside was chilly at best… The Semifinals of the NCAA Basketball Tournaments (men and women) were this past weekend, and the finals are set..  It’ll be UConn VS Purdue in the men’s final. I had those two picked in my bracket, but… so does probably 50,000 others! Congrats to: S. Carolina for winning the women’s side of the tournament. George Harrison greets me this morning with his song: My Sweet Lord

Well, what a day for Gold & Silver on Friday last week! Gold gained $38 on the day to close the week at $2,329.75, and Silver gained 48-cents to close the week at $27.48…  The yield on the 10-year reached 4.40%, and usually a higher yield is a death knell for Gold, but not this time, as Chinese buying, both Gov’t and personal buying is just going crazy these days… There’s no hesitation on the rising price as a hinderance to buying, they just keep the buys coming… And good for them! 

On a sidebar here… Longtime acquaintance, Brien Lundin, of the New Orleans Gold Conference, wrote something the other day that had me rethinking what I had thought moved the price of Gold… Brien said that geopolitical problems do NOT move the price of Gold… “Gold doesn’t care what’s going on in Gaza”…  Well, maybe he’s correct here… But, I’m still convinced that Gold is sought in times of troubles… 

And then there was this on Bloomberg.com: “For gold demand, look to emerging markets savers and central banks. Both have been “mega-buyers of bullion” since the start of the war in Ukraine, says Duncan MacInnes of Ruffer Investment Co. They don’t buy ETFs. They buy physical gold. In China, for example, there is a new trend among the young to buy tiny 24 carat beads or “beans” every month as a form of long-term saving, something gathering pace as faith in the investing potential of the property market fades.

Central banks aren’t in it for the short term either: they don’t buy gold to trade. They are buying it for the long term to hedge political risk; to underpin their own currencies; to offset any decline in the value of the dollar; and in place of US government bonds, which given the rate at which the US is accumulating debt ($1 trillion every 100 days, says Bank of America Corp.) are no longer deemed to be free of risk.”

Chuck again… See? It’s not just me that’s been saying that the U.S. Debt is a real problem! 

Ok, well, the dollar last Friday, failed to gain on the Whopper of a Jobs Jamboree number that was 303,000 jobs gained in March!  OMG are you kidding me? Why then are all the restaurants looking for help? Why are businesses begging for people to come in and apply?  This is nothing more than another attempt to pull the wool over your eyes, folks… Trust me on this one, this number will be revised much lower in the coming months, under the cover of darkness, and the markets will not notice it at all! 

So the dollar ended the week with the BBDXY at 1,242, the same level is was two days earlier, last week… The dollar began the week, last at 1,247… So, during the week it lost 5 index points… Not enough to turn the tide in the currencies favor, but enough for them out of the sick bed. 

The shining light in the currencies is the, and I can’t believe I’m saying this, the Mexican peso… the peso reached an 8-year high VS the dollar, on Friday… The peso is enjoying the rise in the price of Oil, and the fact that the Mexican Central Bank hasn’t dropped its interest rate of  11.25%! I have always maintained that Mexico had to raise interest rates to above a risk premium rate, and in March 2023, when it hit 11.25%, I said here, in this letter that they had finally reached that risk premium rate… The wink and nod was there then, but I’m sure most of you all missed that…

The price of Oil remained in the $86 handle on Friday, but it’s within spittin’ distance of $87, so hold on because I feel $90 coming soon… And I already told you that the 10-year’s yield hit 4.40% on Friday… 

In the overnight markets last night… there was sporadic dollar buying, and the BBDXY is up about ½ of an index point this morning. No biggie… Gold is seeing some profit taking from investors that should know better, and is down $3 to start the day/ week. Silver is up 12-cents to start the day/ week. The price of Oil remains in the $86 handle, and bonds got sold some more overnight, with the 10-year’s yield rising to 4.45%… 

Are we going to revisit 5% in the 10-year’s yield? It sure looks like it to me, and momentum to sell right now is pretty strong. The bond boys sure look like they have egg all over their collective faces, don’t they? Just weeks ago, they were spouting off about how the Fed was going to cut rates 3 times, and that it was time to buy bonds! Well, we all know now, how that turned out for them, eh? 

Well, did you feel the earthquake on Saturday out on the East Coast?  That reminded me of a time many years ago, when the St. Louis area was shaking in their boots because of a guy name Iben Browning, had predicted a major earthquake here… I was on the committee for Mark Twain Bank to develop an earthquake contingency plan… I had to cross a bridge of a major river in the area, to get to work, and that morning that the earthquake was predicted, I was scared to death to cross that bridge, I don’t think I’ve ever sped across a bridge any faster than I did! 

Stories from my past, I’m sure you didn’t sign up for those, did you? Oh, well, think of it as icing on the cake! HA! 

Getting back to the markets… For years the laughing stock of currencies was the Zimbabwe dollar… Well, maybe that will change now, that Zimbabwe has decided to issue a Gold backed dollar…   I’ll have to keep an eye (that’s all I have!) on this currency to see if this change does any good for them… 

The good folks at GATA sent me this note: “It’s getting a little less expensive across the country to buy investment metals like gold bars and silvercoins, as more states take up measures granting them exemptions from sales tax.

At least 44 states have either fully or partially repealed the sales tax on purchases of gold and silver, according to the Sound Money Defense League, a group funded by online dealer Money Metals Exchange.”

Chuck again… I wonder who the other 6 state are that haven’t dropped the sales tax on metals? I guess I can find out if I really needed to know, but this isn’t one of those need to know things… 

The U.S. Data Cupboard has the Jobs Jamboree for March that I talked about above, on Friday, and it knocked the ball out of the park! But Chuck thinks that it will be revised much lower in the coming months, under the cover of darkness… Hourly wages increased .3% in March, and 4.1% annually, which is a good thing considering inflation is still about 14% in real terms… But is still lagging quite a bit, eh? 

 To recap…. The Mexican peso reached an 8 year high VS the dollar, and Chuck tells why this is happening, and Gold kicked some tail on Friday and took names later…  Chuck remembers the past, and 44 states have nixed the sales tax on metals… The dollar ended the week down 5 index points in the BBDXY…

For What It’s Worth… Well, today, I have an article that I hope you all read in its entirety, by clicking the link that I will provide… It’s an excellent explanation as to why Gold & Bond yields are rising at the same time, and it can be found here: Gold and silver surge higher – MacleodFinance Substack

Or, here’s your snippet: “The answer can only be that the big, mainly Asian wealth funds look at the US Government’s finances and see deep trouble. The only way the US Government can satisfy its voracious appetite for debt is at higher interest rates and bond yields. And if interest rates go higher, they will crash financial markets, bring about commercial property and corporate insolvencies, and threaten the entire banking system. In short, foreigners are desperate to reduce their exposure to dollar credit as much as possible and the only way to do that is to buy real money without counterparty risk, which is gold.

To confuse traders, there is liquidity in smaller gold transactions. You can still buy kilo bars and coins. But if, for example, on the London market you are committed to deliver 400-ounce bars in quantity by next Tuesday, they are simply not available. I guess that’s where the problem lies.

If this squeeze on one or more bullion banks eases, then the price should too. But the problem will not be resolved: the evidence is that foreigners are increasingly turning their backs on the fiat dollar and the entire credit system.”

Chuck again… Yes, as I’ve been telling you all for some time now, that the only way the U.S. is going to be able to continue to spend money they don’t have, is to ratchet up the yield on Treasuries, because the foreign countries just don’t trust the U.S. any longer to be able to finance their debts…  This is going to come to a head sooner or later, folks… Got Gold?

Market Prices 4/8/2024: American Style: A$ .6586, kiwi .6017, C$ .7358, euro 1.0828, sterling 1.2616, Swiss $1.1033, European Stye: rand 18.6196, krone 10.7038, SEK 10.5899, forint 360.85, zloty 3.9486, koruna 23.4326, RUB 92.67, yen 151.91, sing 1.3494, HKD 7.8317, INR 83.31, China 7.2330, peso 16.43, BRL 5.0678, BBDXY 1,243.38, Dollar Index 104.38, Oil $86.27, 10-year 4.45%, Silver $27.60, Platinum $947.00, Palladium $1,044.00, Copper $4.26, and Gold… $2,326.60

That’s it for today…  Well, it’s eclipse day here in Missouri! We had just experienced a solar eclipse about 5 / 6 years ago, and it was pretty cool… I don’t think we’re in the total eclipse area, but we’ll experience the eclipse about 95%…  My beloved Cardinals won 2 of 3 from the Marlins, and now face the vaunted Phillies… No Pfennig tomorrow… I have a heart doctor appt early tomorrow morning… My heart doctor is a Cubs fan, so he always talks baseball with me, in between telling me to lose more weight! 

Jackson Browne takes us to the finish line today with his song: These Days…  I hope you have a Marvelous Monday today, and please remember to Be Good To Yourself! 

Chuck Butler

Gold Reaches $2,300!

  • the dollar gets sold on Wednesday and overnight
  • More on Debt in the U.S. today… sorry…

Good Day… And a Tub Thumpin’ Thursday to one and all! Well, my beloved Cardinals come home to finally open their season at home, after losing the last game on the West Coast 3-2… They had multiple chances to score a lot of runs, but that old “pitcher’s best friend”, the double play, put the kyboshes on those chances… It’s Opening Day in St. Louis today! And the schools should be closed, banks closed, and the post office closed!  Sorry, restaurants and bars… You’ll be needed today!  John Fogerty greets me this morning with his song:  Centerfield… you know, put me in Coach, I’m ready to play, today… yeah that song…

How apropos was that song on the Opening Day! You never know what’s coming next when the iPod is on shuffle!  

Well, as we started the day yesterday, the dollar had seen some overnight selling, and the BBDXY was down 1-index point… From there it was more selling of the dollar and the BBDXY closed the day, down 4 index points total. The euro traded through the 1.07 handle and ended the day well into the 1.08 handle.., with the rest of the currencies all looking a bit healthier, except that Japanese yen, where yen traders can’t find a bid on the currency these days, and that, my friends, really shocks me… But, like I said previously in retrospect, maybe investors are looking at Japan’s other problems like debt and demographics, and deciding that the Bank of Japan will have to hike rates more to get them interested in yen… 

Gold had another good day yesterday, and closed the U.S. session at $2,300.70! WOWZA! Silver also chimed in with another strong day and closed the U.S. session at $27.12…   I had said yesterday morning that it appeared that Gold was just seeing some profit taking, and that negative could be turned around very easily… And it was turned around very easily! 

Yesterday’s rally in the metals came after the chief Fed Head, Jerome Powell said that the markets should look for lower borrowing costs this year…  That’s Fed speck for “Rates are going to get cut”… 

The price of Oil remained in the $85 handle yesterday, and the 10-year remained trading with a 4.37% yield… So, no Big changes there… 

In the overnight markets last night… The overbought positions in Gold & Silver were taken to the woodshed, so, profit taking, tech selling etc. has Gold down $13, and Silver down 9-cents to start the day today… The dollar got sold a bit more overnight and the BBDXY is down 1 index point this morning.  The Euro wannabes, the forint, zloty and koruna are starting to really get some steam behind them, and longtime readers know what I think when that happens…  

The thing we have to worry about is the PPT and their ESF… Will they step out in front of a speeding bus? They have before, and came out without a scratch… C’Mon boys and girls in the PPT, let the markets go on without interference for once in a blue moon! You can do it, I know you can! 

I’m plum worn out, folks… not sleeping well, and coughing my fool head off when I’m awake… So, this is going to be short-n-sweet today, please excuse my weakness… 

Yesterday, I spent a bit of time talking about the debt in the U.S. (ahem, Chuck, do you call all that you wrote about debt yesterday “a bit”? )  Ok, I get it, I got carried away with it… But not to worry, I’ve got more on the debt today!  I found this on semafor.com “U.S. government borrowing has hit “unprecedented” levels that could trigger a damaging market reaction if left unchecked, the head of Congress’ independent fiscal watchdog warned in an interview with the Financial Times.

Federal debt relative to gross domestic product is likely to rise above World War II levels — when it stood at 116% of GDP — by 2029, Phillip Swagel, director of the Congressional Budget Office cautioned.

Ignoring the debt issue runs the risk of a market shock similar to the 2022 selloff in the U.K., when plans for sweeping tax cuts led to a run on the pound and forced then-Prime Minister Liz Truss to resign, he said.”

Chuck again… Yes, but if you’ve read anything I written about the debt for the last 32 years, you already know all that… But for new readers… here you go! 

And then we even have Yahoo Finance chiming in: “With uncertainty about so many of the variables, Bloomberg Economics has run a million simulations to assess the fragility of the debt outlook. In 88% of the simulations, the results show the debt-to-GDP ratio is on an unsustainable path — defined as an increase over the next decade.”

Aye, aye, aye… me-oh-my… I can’t believe that for all these years, of me talking about the U.S. debt problem, that now, suddenly it’s on everyone’s mind? Welcome to show, I’m so glad you could attend! (ELP) Now, if only we could get the lawmakers to sit up and take notice, and say “no mas”!

The U.S. Data Cupboard yesterday had the ADP Employment Report and they showed that job gains in the month of March were stronger than expected. That data also played a bit part in the selling of dollars yesterday…  In addition to that, we also had ATL Fed President, Bostic, say that he preferred that any rate cut come in the 4th QTR…  

If I were still a trader, I would take the point of view that , by the time the 4th QTR gets here we may be taking on different problems and a rate cut might not ever materialize! 

Today’s Data Cupboard has the Weekly Initial Job Claims that has recently held pretty steady around 220,000… 

To recap… The dollar selling yesterday, brought about a HUGE rally in Gold, Silver, the euro… We’ll have to see if there’s any follow through today , here in the U.S. Because last night there was                     .  The CBO gave some dire forecasts for Debt in the U.S. and Chuck wants to know… Got Gold?

For What It’s Worth… This is an article about what the BRICS have planned, and it won’t be good for the dollar when they do implement their plan, and it can be found here: BRICS’ new step to end US dollar dominance (presstv.ir)

Or, here’s your snippet: “The BRICS bloc of emerging economies is considering developing an independent payment system based on digital currencies and blockchain to reduce reliance on western financial systems.

Announcing the plan last month, Russian presidential aide Yury Ushakov said creating an independent BRICS payment system is an important goal for the future, which would be based on state-of-the-art tools such as digital technologies and blockchain.

“The main thing is to make sure it is convenient for governments, common people, and businesses, as well as cost-effective and free of politics,” Ushakov told state news outlet TASS.

A coalition initially made up of Brazil, Russia, India, China, and South Africa, BRICS expanded for the first time since 2010 to include Egypt, Iran, Ethiopia, and the UAE at the start of the year, with 44 other nations having reportedly expressed interest in joining the bloc.

Last year, BRICS nations stepped up trade in local currencies to strengthen their economies and counter the greenback.

Iran’s Deputy Foreign Minister Mahdi Safari has said creating a unified currency in the BRICS group could be very effective.”

Chuck again… Long ago, and far away, in a galaxy in another time dimension… I wrote a piece for the folks at Agora titled: Is It Time For the Pan?… I was given the task of coming up with a new currency union,  since the euro had been such a success… And I came up with the Asian currencies joining up to form what I called the “pan”…  But now it appears the BRICS will have the next currency union instead… 

Market Prices 4/4/2024: American Style: A$ .6598, kiwi .6029, C$ .7406, euro 1.0852, sterling 1.2652, Swiss $1.1022, European Style: rand 18.6825, krone 10.6981, SEK 10.6063, forint 360.90, zloty 3.9566, koruna 23.3268, RUB 92.15, yen 151.76, sing 1.3477, HKD 7.8287, INR 83.44, China 7.2332, peso 16.55, BRL 5.0349, BBDXY 1,241.62, Dollar Index 104.14, Oil $85.26, 10-year 4.37%, Silver $27.03, Platinum $944.00, Palladium $1,038.00, Copper $4.23, and Gold… $2,287.90

That’s it for today… You can’t beat the St. Louis Cardinals Home Opener for all the glitz, glamor, pomp, stars, and the majestic Clydesdales! It all begins at 2:30 PM CST today, so don’t call me, or send me an email that you expect an answer from until the game is over! Seriously, folks! I’ll be glued to the TV!  Well, lent is over, and I can eat meat again on Fridays… YAHOO! While being in S. Florida finding good fish to eat is not a problem…  OK… time to go back to sleep…  Aliottta Haynes, and Jeremiah take us to the finish line today with their song: Lakeshore Drive…  I hope you have a Tub Thumpin’ Thursday today without me participating, and please oh please Be Good To Yourself!

Chuck Butler

The Dollar’s Assault On The Currencies Continues!

  • Currencies get sold to start the month…
  • Gold & Silver ignore the dollar strength and rally…

Good Day… And a Tom Terrific Tuesday to you! Well… I guess having flown back last week on a plane, or being around family this past weekend, didn’t do me any favors, as I’ve come down with a head cold… Geez, I dislike these things, or really just getting sick! I have enough health problems without having to deal with a cold! I’m not whining either, just stating a fact! I think I’m not in a good mood this morning, so if you’re part of the Gov’t, or Treasury, or Fed, you might want to hide! HA! The O’Jays greet me this morning with their song: Back Stabbers…

I’ve been stuck in the back in business once in my life… So, I identify with that song! 

Well, the dollar bugs are still dancing in the street and the BBDXTY rose 3 index points yesterday, and the euro dropped further in the 1.07 handle. And the rest of the currencies not named Mexican pesos, look like they’re heading to the sick bay again…  The one currency that I’ve noticed that has fallen out of bed, is the Chinese renminbi… I’ll talk about that more in a bit… 

First though, Gold continued its climb higher to new all-time levels yesterday, in the first day of the new Quarter. Gold traded as high as $2,286 yesterday, and then it didn’t hold that all-time high… But did hold on to $20 of its gain to end the day at $2,258.10… Silver also saw higher levels than what it closed at, which was $25.15, up 21-cents on the day. 

I think that the gold bugs have stopped thinking that the Fed Heads have rate cuts in their future, and instead are now looking at several things that will affect the dollar going forward, and investors, Central Banks, etc. are buying now, instead of in the future when all things go haywire!  So, how about you? Got Gold?  

The price of Oil bumped back over the $83 handle yesterday, and bonds continue to get sold, with the 10-year’s yield climbing to 4.30%, which is also helping the dollar to new heights… 

In the overnight markets last night… The dollar continued its assault on the currencies, with the BBDXY gaining 3 index points overnight… The currencies, led by the euro, keep weakening in the face of this dollar strength, but not Gold (& Silver)… Gold was pushing the envelope toward $2,300 yesterday, as it climbed to $2,286 during the day… But remember what I told you yesterday that the wolf (short paper traders) is always at the door?  Silver is up 49-cents in the early trading today, in its attempt to catch up with all the ground it has not gained lately, while Gold kicks some tail… 

The price of Oil has bumped higher and trades with an $84 handle this morning… It wasn’t that long ago that the price of Oil was range trading and couldn’t find a bid that would break the range, and then it wasn’t range trading any longer and the price of Oil is marching higher!  

Do you know how many products use Oil in their manufacturing process? I’ll just Tons!, and know that, you get the feeling that prices for tons of things in the U.S. are going to go higher again…  I’m just saying… 

Well, I gave you lots to think about yesterday… Bank bail ins, Banks balking at counting treasuries in their risk calcs, and other things… So, that’s a difficult task to follow… I’m just saying… 

You know me, and how I don’t like to talk about economic data so early in the letter, but yesterday’s surprise (well, not really when you consider IT IS an election year) was how the ISM finally got to a 50 number, by the skin of its teeth, but at 50 nonetheless.. And that got the dollar bugs all lathered up, because that reading of the ISM (manufacturing index).

So… We start the 2nd QTR with the dollar in complete control…  And kicking rear and taking names later, as they say in the dumpster business in NYC…  Even the Mexican peso gave back a small amount to the dollar yesterday… I’m taking a list of all those calling for the dollar to rule supreme throughout the year… I’ll be calling them out when the dollar succumbs to all the pressures it is now building up… 

Well, come to think of it, Chuck, you don’t want to be calling out people like that, unless, you want them to call you out on your wrong calls… Hmmm, seem fair to me… So, no list for me… 

The Chinese renminbi has really fallen out of bed lately… And to me it appears that the Chinese have decided to play this currency war game with the dollar… The Chinese economy has faltered, and they need their exports to bring them out of this economic funk… And the best way to increase exports is to weaken your currency… So, that’s the Chinese renminbi’s outlook in a nutshell… 

Now, one would think that if the exports are coming to the U.S. cheaper, then prices on those goods would be cheaper here in the U.S., right? Ahhh, grasshopper, it’s not that simple, or easy and it will take a long period of time before we see prices drop on Chinese imports… I’m just saying… 

Ok… late last week’s data had the PCE inflation calc. and it showed an increase of .3% from Jan, in Feb, and 2.5% year on year…  I’m wondering just how true those numbers are, aren’t you? I mean, C’Mon, I go to the grocery store, I buy clothes, etc.  Food alone has seen increases of limited service meals (takeout only) rose 5.2% year-over-year, while full-service (sit-down restaurant) meals rose 3.8% year-over-year.  And those are numbers from the Gov’t, who wouldn’t be fudging them any in an election year, now would they?  

Bill Bonner had some thoughts on the funny numbers in inflation that the Gov’t keeps spewing out… Let’s let Bill have his say: “Former Secretary of the Treasury for President Clinton, Lawrence H. Summers, recently published a figure which showed that inflation had been and still was far higher than what the BLS had calculated…. Using the CPI as calculated before 1983, Summers estimated last year’s peak inflation at 18%. According to his methodology, interest rates would still be far too low. In other words, Bidenomics, with large fiscal deficits and negative real interest rates, would still be inflationary.

Are you thinking what we’re thinking?

If the inflation reading is false, so is the GDP rate. And so is the whole financial picture. ” Bill Bonner from his newsletter at bonnerprivateresearch@substack.com 

Chuck again…  here, here! Everybody rise, cause, here comes the judge! I’ve been pointing out the problems with the calcs in inflation, jobs and GDP for decades now, but when Bill Bonner calls them out, then millions of his readers get the message, as opposed to the small number of readers that I have… 

And that got me thinking about how when David Galland was our marketing guru at EverBank, he promoted the Pfennig, and my readership numbers grew by leaps and bounds… But then he left, and the letter had no one to promote it any longer, and the numbers dropped, and then when I was shown the door by TIAA, and retired and ended up with the Aden Sisters, I still didn’t receive any marketing, and apparently word-of-mouth doesn’t quite do it any longer!  So… I said all that to say, thank you Bill Bonner for spreading the word!

OK… still with me? great! Well, this seems to be a data dependent day so let’s keep with that thought and talk about how the US Interest is to Hit $1.6 Trillion By Year End, Making It The Largest US Government Outlay…  And to think, that in the coming years it will be even larger! Oh my! What’s an investor to do? throw more money in the juggernaut of the stock market that’s nearing the cliff of being overbought?  Buy bonds in a world of nothing but debt all around us, and the chances of default out there and nearing us? or… buy Gold (or Silver)?  

The U.S. Data Cupboard yesterday had the aforementioned ISM and Construction Spending, which was negative for the month of Feb. Today’s Data Cupboard will have the Feb prints of: Factory Orders, and Auto Sales… with the Factory Orders the piece of real economic data… 

To recap… Who’s counting the beans? Chuck shows that it’s not just him that questions the Gov’t reports, as Bill Bonner joins us this morning. Chuck also gets into what should people be looking to buy?  And how the dollar is kicking rear and taking names later. And Chuck gives us his Pfennig or two on what’s going on with the Chinese renminbi… 

For What It’s Worth… Well, this is James Rickards writing for the Daily Reckoning and talking about how Gold is the perfect hedge and it can be found here: “Goldilocks” Is Gonna Get It – The Daily Reckoning

Or, here’s your snippet: “In this analysis, gold is constant (by weight) and the dollar gets stronger or weaker relative to gold. All of the recent market action points to a weaker dollar/

This mode of analysis also solves another market riddle. Given huge U.S. budget deficits, unprecedented levels of U.S. national debt, slow growth, rising unemployment and persistent inflation, how is it possible that the dollar has been so “strong” lately?

The answer is that it’s only been strong relative to the euro, yen, sterling and some other reserve currencies and as measured by certain dollar indexes (DXY, Bloomberg, etc.) composed of baskets of currencies (but not gold).

But that’s often because those other currencies are issued by countries with debt and growth problems even worse than the U.S.’ Those currencies dropping against the dollar have the look and feel of a good old-fashioned currency war.

It’s only when you use gold as your metric that the real weakness in the dollar becomes apparent, as it should. In effect, certain currencies are weakening against each other but all currencies are weakening against gold.

Returning to the “higher gold price” frame, there are a number of reasons for this trend.

The first factor is simple supply and demand. Mining output and recycled gold have been about flat for the past eight years running between 1,100 metric tonnes and 1,250 metric tonnes per year.

At the same time, central bank demand for gold has surged from less than 100 metric tonnes in 2010 to 1,100 metric tonnes in 2022, a 1,000% increase in 12 years. Central bank gold demand remained strong in 2023 with 800 metric tonnes acquired through Sept. 30, 2023. That puts central bank gold demand on track for a new record in 2023. There’s no sign of that demand slowing in 2024.”

Chuck again… The article goes on for a further explanation of why Gold is the perfect hedge, and it you have the time, you should click the link above…

Market Prices 4/2/2024: American Style: A$.6503, kiwi .5957, C$ .7372, euro 1.0746, sterling 1.2565, Swiss $1.1005, European Style: rand 18.8371, krone 10.8949, SEK 10.7259, forint 368.22, zloty 3.9954, koruna 23.5990, RUB 92.57, yen 151.64, sing 1.3524, HKD 7.8284, INR 83.38, China 7.2359, peso 16.61, BRL 5.0383, BBDXY 1,248.58, Dollar Index 104.87, Oil $84.91, 10-year 4.37%, Silver $25.64, Platinum $936.00, Palladium $1,044.00, Copper $4.08, and Gold… $2,257.50

That’s it for today… I was able to sleep a lot yesterday, so I’m getting my resting in, while sick… I tried to stay up to watch my beloved Cardinals play in San Diego last night, but had to call it a night around the 7th inning… But when I checked this morning I saw that they had won.  YAHOO! One of the Cardinals promo videos shows the Wizard, Ozzie Smith, making a signature play at shortstop… I loved watching him play shortstop, and I doubt there will ever be another Wizard! Bill Withers and Grover Washington, Jr, take us to the finish line today, with theirs song: Just The Two of Us…  I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler

It’s April Fool’s Day!

  • Gold climbs to a new all-time record high!
  • Is your bank coming for your deposit?

Good Day… And a Marvelous Monday to you… it’s Easter Monday all over the world today… And I promise that I’ll not revert to attempt an April Fool’s Day trick on you today… Well, we’ll talk more about this later but on Friday last week, the Fed heads’ preferred inflation calculation the PCE was stronger in Feb, than expected, so once again, Chuck is on top of the inflation thing, right? I love starting a week pointing out something I said was bang on! The Final Four for the NCAA is in place… My bracket was busted long ago, so now I have no dog in this hunt! 10CC greets me this morning with their song: The Things We Do For Love…

Well, I don’t know what I was thinking or when things changed, but… I had said on Thursday last week that the metals and bond markets would be open on Good Friday… But… They weren’t!  Well, things change, and I’m out of the loop these days, so I miss them!  So… Gold went into the weekend, and closed out the month of March with a $38 gain! Silver gained 50-cents on Thursday, and ended the week / month at $24.94… I have to tell you that the short paper traders made sure that Silver didn’t top $25 to end the month… Gold ended the week / month at $2,234.90…

the dollar continued to get bought to end the week last… The BBDXY ended the week at 1,245… I guess the dollar bugs, are thinking that the latest data reports that show that inflation isn’t going away, mean there will be no rate cuts, at least for a while, and so they lined up to buy dollars… The euro took the brunt of the dollar buying, and fell below the 1.08 figure…  You know me, gang, I just don’t see how there could be dollar buying when inflation is still hanging around, and there’s still a question of whether we, as a country, are in a “silent depression”, or if we could still be heading to a recession… 

The price of Oil bumped higher to an $83 handle to end the week/ month of March… And I would have thought that if the markets are coming to an idea that the Fed Head rate cuts are not a given any longer, that bonds would get sold… But instead, the 10-year Treasury saw its yield drop to 4.20%, on Thursday, and with everything closed on Friday, that’s were it remained going into last night’s trading… 

In the overnight markets last night…  Before retiring last night, I checked the overnight markets, and the dollar was seeing some selling, but that ended, and the dollar recovered its lost ground, to open this morning in its same clothes from Thursday with the BBDXY at 1.245.  Gold is following up on Thursday’s $38 gain, with a gain of $16 to start the day/ week today… Gold appears to be on a run again… But remember, the wolf (short paper traders) is always at the door…   Silver has finally climbed above $25 in the early trading… 

I, like many Silver holders, am still waiting for Silver to take off on the simple fact that there is a shortage of Silver… 

The price of Oil slipped a bit overnight, and trades this morning with an $82 handle, and the bond boys must have had a V-8 moment since Thursday, and decided that bonds needed to get sold, the 10-year’s yield overnight slid to 4.24%… Back and forth, are they (the Fed Heads) or aren’t they, is what’s on the minds of the bond boys… 

The Data Cupboard piece later in the letter today, will have all the economic reports that matter that printed late last week, so stay tuned, do not touch that dial! 

Well, what do we have here? My former colleague, and good friend, Chris Gaffney was quoted by Kitco.com the other day… Way to go Chris!  And here’s a quick snippet of what he had to say: ” The Federal Reserve’s decision to hold interest rates at 5.25-5.50% signalled a cautious approach in a persistent inflationary environment. Chris Gaffney, President of World Markets at EverBank, suggested the Fed is prepared to allow inflation to exceed its traditional 2% target, risking an overheated economy. “The Federal Reserve is very willing to let inflation run hotter,” Gaffney commented. This stance, he suggests, could delay necessary rate adjustments, potentially leading to an overheated economy. Gaffney warns that while this may boost short-term growth, it risks long-term economic stability by postponing the tightening of monetary policy in response to rising inflation.

Historically, periods of sustained high interest rates have led to economic slowdowns, such as the early 1980s recession triggered by the Fed’s aggressive rate hikes to curb inflation. Comparatively, today’s strategy seems aimed at fostering growth while carefully managing inflationary pressures.

With economic uncertainty, gold prices have reached record highs, reflecting a trend towards safer investments while navigating global economic tensions. The current gold price surge mirrors past trends where gold became a favored asset during economic uncertainties. “Gold as an uncertainty hedge, as a hedge against geopolitical tensions and so forth, continues to be a major draw for investors,” notes Gaffney.

 “The amount of debt out there and debt services is really going to start having a negative impact on both corporations and consumers.”

Chuck again… That’s what I’ve been talking about lately, regarding the debt growing, and how it will weigh on the economy, and commercial real estate… Shoot Rudy! I read over the weekend a guy saying that the debt was going parabolic!  And I agree with him… It only took 3 months for that last $1 Trillion to be added to the debt, and it will only take that long for the next Trillion to be added! 

Our lawmakers are spending like a drunken Sailor… Well, that’s a term that my dad used to say about things that got our of hand… And when the financial system comes to you looking for a bail-in, what will you do? Well, you won’t do anything, because, thanks to the POTUS that was before Trump, signed an executive order saying that banks can use your deposits in that bank to pay off their liabilities…. Uh-Oh!   

And you probably still think that the U.S. will never get rid of folding cash, and that digital currency isn’t for real? Well, if you think about this… just last week along 64 bank branches in the U.S. closed… What does that have to do with a digital currency I hear you asking? What do the Casino Bands need with branches when no one will be using them when we’re all on digital currency? 

Ok, onto something else here… The good folks at GATA also sent me this… “A recent letter from the International Swaps and Derivatives Association Inc. (ISDA) to the Board of Governors of the Federal Reserve System highlights a larger risk in the United States and international banking sector than what is commonly perceived by the market.

The letter, dated March 5, emphasizes the urgent need for reform in the supplementary leverage ratio (SLR) and enhanced supplementary leverage ratio (eSLR) framework. “

Chuck again… now why would banks want to remove their Treasury holdings from their risk computations? Well, remember what was the writing on the wall last spring, when banks collapsed? They had to report their unrealized losses, and include them in their leverage ratios… That news caused a run on the bank, and the next thing you know, the bank collapses…   So, if banks want Treasuries to be removed from their calculations, then they must feel that Treasuries are risky?   That’s the only thing I can think of why they would go to these measures! Got Gold?

The U.S. Data Cupboard late last week had some interesting data prints, and we’ll go through them here: First up, the Stupid Consumer Confidence report for March showed an increase from a 76 to 79… Again, they didn’t poll me, that’s for sure!

In addition on Friday, We saw Feb prints of Personal Income, which was up .03%, and Personal Spending, which was also up .08%… So, we’re still spending more than we make, still crazy after all these years! (Paul Simon) The print that got the dollar bugs all lathered up was the PCE (personal consumption expenditures) for Feb, and it was up .3% on the month, and for the year it was up 2.5%… Again, that’s a far cry from the 2% target rate of inflation that the Fed Heads say they are working toward… So, again I ask the question… Why are the Fed Heads even discussing a rate cut or 3 rate cuts, when inflation isn’t beaten yet?

But the dollar keeps on gaining… And that’s what we’ll talk about in today’s FWIW, coming up soon!

This weeks’ Data Cupboard will be kept busy all week, starting with today’s ISM report, and ending the week with the Jobs Jamboree!  The ISM (manufacturing index) has been below the line in the sand, number of 50 for a number of months now, and I expect it to remain there this morning…

To recap… Gold ended the week/ month last week with a $38 gain, in the face of a huge dollar rally… Silver’s rally was cut short by the short paper traders, and Silver ended the week/ month at $24.94… The dollar is on a run, after last week’s PCE showed inflation is still a problem and that just might keep the Fed Heads from cutting rates … My former colleague, and good friend, Chris Gaffney was in the news last week! Way to go Chris! And Chuck points out an executive order that gives banks the right to seize your deposits… YIKES… Got Gold?

For What It’s Worth…  Well, the good folks at GATA sent me this article to read, and immediately I thought it worthy to be the FWIW article of the day, because… It’s about how the dollar remains strong, even in the face of potential rate cuts, and it can be found here: The Dollar Is More Armored Division Than Currency | Mint (livemint.com)

Or, here’s your snippet: “There’s just no getting past the supremacy of the dollar, much as skeptics of American influence wish for it or lonely yen bulls cry for relief. The greenback has been frequently tipped to retreat, only for it to blow away everything in front of it. This resilience might not last, but as long as it does, it reminds a world once in thrall to China’s ascent that the US is the essential economic force. Just ask all the central bankers quizzed as much, if not more, about the Federal Reserve’s intentions as their own. Sovereignty can be relative.

Events billed as heralding a pullback have barely made a dent: Japan’s decision to end eight years of negative interest rates fizzled in markets; the country’s finance minister has resorted to jawboning the yen stronger, and traders are handicapping the prospects of intervention by Tokyo. Even projections of rate cuts by the Fed aren’t doing it: Reductions are likely to be synchronous among the biggest authorities, preventing any major currency from outshining the dollar. This year was meant to be one in which the dollar fell, but a key index of its support is off to a strong start.

That’s the short term. Markets fluctuate and currencies, like stock and bond markets, have good years and times when things don’t turn out so stellar. But the buoyancy of the past quarter — and last couple of years — is built on something more than rate differences. The longer story of dollar firepower is one of a currency beating back challenge after challenge every few years. In the late 1990s, the coming euro was supposed to rival the dollar. A couple of years later, the current-account deficit became the totem of all that was wrong. (When I ran Bloomberg’s foreign-exchange news in the early 2000s, the most commonly-cited reason for any tough trading day for the dollar was the trade shortfall. A close second was the belief that the US had quietly dropped the strong-dollar policy developed during the Clinton administration.) “

Chuck again… Yes, but this time is different, in that, this time there’s an Exchange Stabilization Fund (ESF) that the Plunge Protection Team, have at their disposal…  The question would be where did the funds come from that fund the ESF? Well, the answer to that is long one… so stay with me here… First of all the ESF has been around for 90 years, but until it was given a treasury trove of funds during the COVID  plandemic,  The lawmakers gave the Treasury Dept. oodles of funds to use , and the Treasury Sec. Then, Steve Mnuchin, decided that the ESF needed to get the bulk of those funds from the Treasury… 

So, where did the funds come from that the Treasury ended up dispersing? Ahhhhhh, grasshopper, good question, and the answer lies in two ways, either the Treasury printed (actually hit a computer button that gave them the money) new currency, or and in combination with YOUR TAX DOLLARS!

Now, I don’t know about you, but I was not polled or asked by anyone if I approved my tax dollars going to defend the dollar! 

Market Prices 4/1/2024: American Style: A$.6510, kiwi .5967, C$ .7370, euro 1.0778, sterling 1.2605, Swiss $1.1077, European Style: rand 18.8979, krone 10.9055, SEK 10.7290, forint 365.26, zloty 3.9763, koruna 23.4577, RUB 92.44, yen 151.46, sing 1.3498, HKD 7.8249, INR 83.40, China 7.2349, peso $16.54, BRL 5.0344, BBDXY 1,245.74, Dollar Index 104.64, Oil $82.85, 10-year 4.24%, Silver $25.08, Platinum $913.00, Palladium $1,030.00, Copper $4.04, and Gold… $2,249.30

That’s it for today… Well, it’s April Fools Day, so be careful out there, you never know who will try and fool you today! Well, yesterday sure was a fun day for yours truly, as all my kids, and my grandkids were here for Easter! My beloved Cardinals only won 1 of the 4 games to start the season our West in L.A. UGH! The team blew leads late in the last two games… double UGH, UGH! Our Blues played on home ice as if they had already been eliminated from the playoffs on Saturday, losing 4-0, on home ice nonetheless! I along with thousands of entrants have Purdue playing UConn, in the Final with UConn winning… One of these days, I’ll be able to talk about my beloved Mizzou Tigers in the Final Four… Well, maybe… The McCoys take us to the finish line today with their 60’s song: Hang On Sloopy… I hope you have a Marvelous Monday today, and will continue to Be Good To Yourself! 

Chuck Butler

Waller Contras Powell’s Words…

  • currencies get sold on Wednesday and overnight
  • Who’s going to pay for that?

Good Day… And A Tub Thumpin’ Thursday to one and all!  Well, today is Opening day in Baseball… I’ve always said that Opening Day should be a National holiday… What say you?  As I’ve said before, my beloved Cardinals start out the season in L.A. against the mighty Dodgers… I call them that because they seem to have all the money it takes to buy a great team… Small market teams like my Cardinals have to scrape old pitchers off the bottom of the barrel and bring them back with the hopes of one more year! But I don’t see the Cardinals crying about this, so Play Ball! Christopher Cross greets me this morning with his song; Never Be The Same… 

I sing those word a lot when I look at the world these days… When I was growing up in the 60’s I never thought of the problems of the world, kids are supposed to be kids, right? When I was in H.S. I thought the world evolved around me, and then when I set out to play my guitar in places all over this country, I thought that I would make Big one day…  And that leads me to my career in stocks, bonds, banking, currencies, etc. And there’s nothing here that’ll ever be the same again! 

On my day of travel yesterday the dollar didn’t do much, the BBDXY showed a 1 point gain, to 1243… I know, I know, the other day, I should have kept my trap shut and not talked about how the then 2-days of losses for the dollar could be the onset of a new trend… Because since then the dollar has gained back the 2 index points it had lost… UGH!  And Gold has had a difficult time shaking free of the short Gold paper trades… Gold did end up $17.00 yesterday, and ended the day at $2,195.20, while Silver has had the same gauntlet to run through as Gold, but did end up $ 24.73  yesterday to close at $24.82…  The sad thing about Silver’s gain yesterday, was the previous day Silver was down and 45-cents off its intra day high!  That’s how much the short paper traders brought Silver down! 

The price of Oil is inching toward $82, with the $81 handle being taken out inch by inch each day… And bond just haven’t gotten on board with the talk of 3 rate cuts this year. The 10-year’s yield ended yesterday with a 4.23% yield… 

In the overnight markets last night… Well, the dollar buying started yesterday afternoon, and carried over into the overnight markets.. The reason? Well…in a speech titled, “There’s Still No Rush,” Fed Head,  Waller said the “Fed still needs to see lower inflation before easing monetary policy…”  And that got the dollar bugs all riled up and ready to buy more dollars… In the overnight markets the BBDXY gained 3 index points, to start today at 1,246…  And the euro has dropped below 1.08 again… 

The price of Gold is up $16 in the early trading this morning, to start the day at $2,211… Silver though is seeing some selling and is down 8-cents to start today… That can be easily turned around, so come Silver bugs, get on the stick!  The price of Oil finally went back over $82 overnight, and bonds didn’t like the Waller words much either… (neither did stocks but I don’t talk about stocks) 

I wonder what the room will be like when Fed Head Waller returns to the Eccles Bld… I can see this all playing out… Waller walks into the conference room where chief Fed Head Jerome Powell, is sitting there waiting for him… Waller begins to sweat for he just said something that was contra to what Powell had said (the markets should expect 3 rate cuts this year)… Powell, looks up and then gets the biggest grin on his face, and says, “Way to go, my boy! Now we’ve really confused the markets, in one of the best good cop, bad cop routines, ever!” 

My originating flight out of West Palm Beach yesterday was over an hour delayed, and we only had 45 minutes to our connecting flight with our original departure time to begin with… So, needless to say, we did not think we would make our connecting flight in ATL to STL… But we did, barely, as I stepped on the plane and the Airplane door shut behind me! Now, that was close! And miracles never cease, our luggage arrived in STL! Whatever happened to flights leaving on time? I don’t think I can remember one that I’ve been on in over a year now, that wasn’t delayed… 

I know, I know, those are not third world problems, Chuck! Sorry… Just had to get that off my chest this morning! Speaking of third world problems, the U.S. POTUS said that the U.S. Gov. will pay to replace the collapsed bridge in Baltimore… Psst! Do you think he really believes that Gov’t will pay for it, when they don’t have money to spend, without printing new currency, and then in the long run, we, as tax payers, will pay  for it, either through inflation or taxes… Or just taxes, because to me, inflation is just a tax anyway… 

In a tale of two currencies going in opposite directions… The Mexican peso has just hit a new high level, while the Japanese yen hit a low for the yen that it hasn’t seen since 1990… That’s 34 years ago for you new math newbies… The Japanese yen traders are going bonkers that no one wants to buy yen… I didn’t foresee this as the result of the BOJ brining interest rates out of negative territory earlier this month… 

The yen is fallen so much that its bringing the jawboning out from the Bank of Japan, in an attempt to scare traders from shorting yen… Well, here’s memo to the BOJ…  Back up the talk with real coordinated intervention… Otherwise, one day when you’re laying in the hospital bed and gasping for air, you’ll wish you hadn’t wasted your breath on jawboning… 

One thing that has hurt the yen is the fact that the dollar is doing its best suspended animation act… So, until the dollar begins to get sold because of the aforementioned 3 rate cuts from the Fed Heads on the docket for 2024… 

I recently did an interview with good friend Dennis Miller for his newsletter: www.milleronthemoney.com  After doing the interview I told Dennis that I had felt very jaded that day, and if he needed for me to dial it back I would… In it accuse the Fed of being political…  

Look the latest inflation PCE (the Fed Heads’ favorite inflation calculation) was 2.6%, which is a far cry from the 2% target the Fed Heads said when they began fighting inflation was their target rate…  So, now, suddenly, the Fed Heads are talking about 3 rate cuts, when their target rate of 2% hasn’t even been reached yet! Why would they do that? Can you say, it’s an election year?  And as I said in the interview that you’ll be able to see in a couple of weeks, that the rate cuts would send the stock jockeys to the moon, and that,   would push stocks even higher!  And that, to people that don’t know any better, is that the stock market = the economy…  

And in their minds if the economy is going great guns the current administration is the reason, and that, my friend is why I say the Fed Heads have become Political!  I know I ticked a few of you off this morning with that statement, but someone has to point this out… Don’t shoot the messenger! 

And rate cuts would bring about a weaker dollar, and a weaker dollar invites inflation into the country via trade… 

But what are you complaining about Chuck? the rate cuts will be good for the price of Gold, right? Well, they should, but I would much rather for my own pocketbook have inflation under control, and let Gold fend for itself! 

The U.S. Data Cupboard today has the 2nd revision of 2nd QTR GDP, and the stupid Consumer Confidence for March… So, not much here to move the markets… 

To recap… The dollar gained another index point yesterday, marking 2 index points in the last two days, thus erasing the 2 index points it lost earlier this week. Gold was up big yesterday, along with stocks… But i don’t talk about stocks, so Gold & Silver were up yesterday! Chuck spends a lot of time talking about the Japanese yen this morning.. 

For What It’s Worth… This article is about how the commodity Cocoa just hit an all-time high, and should be a reason commodities should be being looked at now and it can be found here: Cocoa prices hit $10,000 per metric ton for the first time ever (cnbc.com)

Or, here’s your snippet: “Cocoa prices hit a record Tuesday as supply constraints fuel prices higher.

Futures for May delivery were up 3.9% at $10,030 per metric ton, marking the first time the commodity breaks above the $10,000 mark. Cocoa has been on a tear this year, soaring nearly 138%

Difficult weather conditions and disease have affected production in West Africa, which produces about 70% of the world’s cocoa. The two largest producers, Ivory Coast and Ghana, have been hit by a combination of heavy rain, dry heat and disease recently.

Late last year, heavy rain and the spread of black pod disease in the two countries affected farming, according to a November report from the International Cocoa Organization. Poor road conditions also made it difficult to bring the available beans to port, according to the report.

“As these two leading producing countries supply about two-thirds of global cocoa beans, any change in their production tends to have a significant impact on the cocoa market,” the ICCO said.

Arrivals at ports in Ivory Coast and Ghana have declined 28% and 35%, respectively, since the start of the season compared to the same period last year, according to a February ICCO report.

Cocoa trades in the COMEX futures market, but it’s a non-critical item, so ‘da boyz’ have no interest in it — and let supply/demand fundamentals do their thing. Not so in silver, as when the run into it gets underway…it will be of Biblical proportions.”

Chuck again.. That last paragraph was by Ed Steer who added his two cents to the article… 

Market Prices 3/28/2024: American Style: A$ .6492, kiwi .5964, C$ .7356, euro 1.0784, sterling 1.2615, Swiss $1.1040, European Style: rand 19.0490, krone 10.8495, SEK 10.6934, forint 356.94, zloty 4.0009, koruna 23.4734, RUB 92.47, yen 151.33, sing 1.3511, HKD 7.8243, INR 83.40, China 7.2288, peso 16.57, BRL 4.9852, BBDXY 1,246.40, Dollar Index 104.58, Oil $82.41, 10-year 4.22%, Silver $24.77, Platinum $900.00, Palladium $1.001.00, Copper $4.00, and Gold… $2,211.10

That’s it for today… Tomorrow is Good Friday, and that’s a holiday in the stock market, but not for bonds, currencies and metals.. And Sunday is Easter! I always get a kick out of how my two granddaughters dress on Easter!  Family will be here in force on Sunday, which means that this is one of those years, that all of the kids will be with us on Easter… YAHOO! My beloved Cardinals get started today at 3 o’clock our time, I’ll be glued to the TV for sure! I had to wear long pants and a long sleeved shirt to come back home yesterday, as the temps here were not as pleasant as in S. Florida…I was happy to see the house all in one piece and not under water when we arrived home last night… the great Al Stewart takes us to the finish line today with his song: On The Border… I hope you have a Tub Thumpin’ Thursday today, and a very Happy Easter on Sunday, if that’s your thing… And don’t forget to Be Good To Yourself!

Chuck Butler

The Fed Has An Itchy Trigger Finger…

  • Dollar stops gaining ground on Monday
  • Gold takes off for higher ground this morning!

Good Day… And a Tom Terrific Tuesday to you! Well, it’s been a nice time, but it’s time to go, was the statement yesterday… I leave for home tomorrow, it’s been 3-months since I was last at home, so it’ll be a reunion of sorts… I will get a couple of days of quiet when I get home, and then it’ll be Easter, and family will gather… The Babys greet me this morning with their song: Back On My Feet Again…

When that song began to play, this morning, I thought, well, that’s what the dollar bugs must be singing these days… As the dollar has rebounded and brought with it a lot of pain and suffering in the currencies.  Yesterday, there was a chink in the dollar’s armor, albeit a little one… The BBDXY lost 1 index point on the day. Gold gained $3 on the day, to close at $2,171, and Silver was basically flat on the day, and closed at $24.73. 

Gold hasn’t really benefitted, yet, that is, from all the talk of rate cuts… I do believe the benefit will come, sometimes it takes a bit for the ship to change course, and that describes Gold to a T! And the other thing that should be weighing on the dollar, and benefitting Gold, is all this debt in the world, especially in the U.S.!  You know, I head it said once by a trader, that knew the score, he said:” The markets can ignore things (read debt in this case) far longer than anyone can suspect, util one day they don’t ignore them any longer”  

His gist was, “don’t fight the markets”… You see, I’ve not followed that advice very often in my days in the markets… 

In the overnight markets last night… The dollar saw 2 more index points fall off of its value… Could this be the beginning of an extended trend in selling dollars? I mean the absolute onset of this trend, if it exists, is where we are now!   Gold is up BIG this morning, so maybe the Gold bugs finally saw the light? Gold is up $29 this morning!   The tide is turning, folks… People all over the world, join in, get on the Love Train, Love Train…  Silver is up 8-cents to start the day today… 

The price of Oil remained in the $81 handle overnight, and bonds didn’t move an inch! The 10-year’s yield this morning is 4.23%… 

Well, have I got a doozy for you in the FWIW this morning… It’s former Treasury Sec. Larry Summers, taking a verbal shot at Jerome Powell’s Fed Heads…  You won’t want to have missed that one! 

But don’t go there yet… I’ve got other things to talk about first… Like once again the markets got hype up over a Bank of Japan rate hike, and forgot about the other problems in Japan… Like Debt and demographics… The yen has actually lost ground since the BOJ hiked rates!  YIKES!

And on the other end of the spectrum we find the Swiss franc, floundering and losing ground to the dollar and euro ever since the Bank of Switzerland (BOS) decided to be the first Central Bank to dip its toe in rate cuts… After cutting their official rate the franc has dropped from lofty levels VS the dollar and euro… And with all these geopolitical problems in the world! 

Ahem, Fed Heads… I sure hope you’re watching this goings on in Switzerland, since you seem to be ready and willing to go down the road of rate cuts too… 

And dat Ole digital currency is rounding the corner and heading for home! I found this on theconservativetreehouse.com regarding the digital currency, “”The same way the Patriot Act was not designed to stop terrorism but rather to create a domestic surveillance system. So too were the “Russian Sanctions” not designed to sanction Russia, but rather to create the financial control system that will lead to a USA digital currency. The Western sanctions created a financial wall around the USA (dollar-based west), not to keep Russia out, but to keep us in.  The Western sanction regime, the financial mechanisms they created and authorized, created the control gate that leads to a U.S. digital currency.” 

Well, you can’t say that I didn’t warn you that this was coming… But did you do anything about it? I sure hope so… 

The U.S. Data Cupboard has the Feb Durable Goods Orders for our review… You may recall that the Jan Durable Goods Orders were a negative 4.2%… So, you would expect in this election year, that the data was massaged and cooked to show a positive number in Feb… I’m just saying…

To recap… The dollar has seen it’s run up halted, but only in small amounts so far, which Chuck asks if this is a the onset of an extended weaker dollar?  Gold was up a bit yesterday, but is soaring this morning in the early trading… Chuck talks about the yen, and francs this morning, and the coming digital currency… 

For What It’s Worth… well, I prebilled this article, and now I hope it lives up to the hype! This is Larry Summers, former Treasury Sec. taking verbal shot at Jerome Powell’s Fed Heads, and it ca be found here: Ex-Treasury Chief Larry Summers Questions Fed’s ‘Hurry’ to Cut Interest Rates – Bloomberg

Or, here’s your snippet: “Former Treasury Secretary Lawrence Summers criticized the Federal Reserve for continuing to signal that it’s prepared to lower interest rates in coming months, despite a strong economy that’s giving off projections of still-too-high inflation.

“My sense is still that the Fed is itchy fingers to start cutting rates and I don’t fully get it,” Summers said on Bloomberg Television’s Wall Street Week with David Westin. Given how the economy and financial markets are performing, “I don’t know why we’re in such a hurry to be talking about moving towards the accelerator,” he said.

Summers: Fed Still Has ‘Itchy Fingers’ to Start Cutting Rates

Summers spoke a day after policymakers updated their forecasts for the central bank’s benchmark interest rate, with the median estimate continuing to show three reductions for this year. Fed Chair Jerome Powell said while “we don’t want to be dismissive” of the faster-than-expected inflation readings for January and February, they “haven’t really changed the overall story” of price pressures gradually diminishing.

A key issue remains that the Fed’s estimate of the neutral policy rate — the setting where it’s neither stoking or slowing the economy — is too low, said Summers, a Harvard University professor and paid contributor to Bloomberg TV. That distortion means that policymakers believe their current setting is more restrictive than it really is, he said.

“If you don’t know what’s neutral, you don’t know how expansionary or restrictive you’re being,” Summers said.”

Chuck again… That’s right Larry! You tell ’em! But like I said wen Jerome Powell mentioned 3 rate cuts… The Gold Bugs love him for that! 

Market Prices 3/26/2024: American Style: A$ .6551, kiwi .6028, C$ .7372, euro 1.0858, sterling 1.2659, Swiss $1.1102, European Style: rand 18.9236, krone 10.7146, SEK 10.5429, forint 365.08, zloty 3.9716, koruna 23.7450, RUB 92.65, yen 151.27, sing 1.3438, HKD 7.8233, INR 83.29, China 7.2183, peso 16.67, BRL 4.9754, BBDXY 1,241.92, Dollar Index 104.01, Oil $81.64, 10-year 4.23%, Silver $24.81, Platinum $909.00, Palladium $1,021.00, Copper $4.02, and Gold… $2,200.20

That’s it for today, and tomorrow… no Pfennig tomorrow… just a friendly spiderman reminder… Our Blues had a chance to get closer to a playoff position last night, and fell on their face.. They did get 1 point for a tie, but lost in overtime. My beloved Cardinals went Arizona to play the Cubs, and actually played a good game in beating their rivals to the North… It’s still spring training, so it really doesn’t mean much… Sniff “n” the Tears take us to the finish line today with their song: Driver’s Seat… if you want I’ll take you on a sidebar here and tell you about the band…  Quite a few years ago, I wrote about Driver’s Seat being the song of the day, and I received an email from the bass player of the band! Pretty cool I must say!  Ok, I hope you have a Tom Terrific Tuesday today, and will Be Good To Yourself!

Chuck Butler

Lola Wants… Lola Gets?

  • currencies & metals get sold late last week
  • What’s going on in China with the renminbi?

Good Day… And a Marvelous Monday to you! Well, week one of the NCAA Basketball Tournament in the books and 64 teams is now the Sweet 16… How’d you do? I can tell you that Kentucky caused major problems for my bracket! Tsk! My beloved Cardinals left Florida over the weekend and headed west to play in Arizona ahead of the start of the season in L.A. Daughter Dawn and her family left on Saturday, and to replace them Kathy’s sister, and mom replaced them… Stevie Wonder greets me this morning with his song: My Cherie Amour… 

Well, the dollar is kicking tail and taking names later these days… Shoot Rudy, it was up 9 index points last Thursday! The currencies are hanging by the thread of their teeth, to any values… And Gold is taking it on the chin too… After reaching $2,258.00 earlier last week, its’ been called a “correction” in Gold… I say, it’s been the short paper traders taking their liberties with Gold & Silver…  On Thursday, last week, Gold gained $16, and then the trap door was sprung. Gold ended the week at $2,164.00… Silver ended the week at $24.63… 

The price of Oil ended the week trading with an $80 handle… After rising up to $82 earlier last week, the price of Oil saw some profit taking in Oil contracts. And Bonds kept getting bought, again… The 10-year’s yield ended the week at 4.20%

In the overnight markets last night… There was a little slippage in the dollar’s momentum as the BBDXY lost 2 index points, and sits at 1,244 to start the day and week today. Gold is up $4 in the early trading today, and Silver is up 12-cents to start the day/ week. Must be plain profit taking in dollar contracts overnight to stop the dollar’s run. Those don’t last, usually, and we go back to what the underlying trend was without delay. 

The price of Oil bumped up 50-cents overnight, but that brought the price of Oil’s handle to over $81 to start the day/ week today. And bonds saw some slippage overnight, with the 10-year’s yield rising to 4.23% to start the day/ week. See below for a comment from Lola regarding commodities, to get a picture of where the price of Oil is going this year… 

Oh, my goodness, dear Lord, please help us… Congressional lawmakers have avoided a partial government shutdown after passing a $1.2T package of six spending bills to fund a group of federal agencies through the end of the fiscal year on Sept. 30.  And guess who got the majority of the funding? That’s right, defense got 70% of the $1.2 Trillion… So, the leaders of the  defense companies, called their wives and told them to get the red dress out, and high heeled sneakers, for they were going out on the town! I shake my head in disbelief that we continue to go down the path of a failed Empire… 

My good friend Rick B. sent me an email on Saturday, and said, “this might  get you fuming”, and he was right! The article was some uneducated person on the subject… This fellow said that Gold was NOT a “Store of Value”… Wait, What? I couldn’t believe my eye, of what I was reading…  And I responded to Rick that “What a bunch of crap! Gold has always been a store f wealth and will always be!”  So, Rick was right, I was fuming after reading it! 

Central Banks around the world, sans the Federal Reserve, are building their reserves with physical Gold, they aren’t just doing that for the fun of it… They are doing it, because they need stores of value, and they are ridding themselves of dollars, because 1. they see the writing on the wall for the dollar, and 2. they saw how the U.S. froze Russia’s assets in the U.S., and they keep telling themselves that the U.S. could do that to them too, so why not exchange their dollar reserves for Gold, and store it themselves so that the U.S. never can get their hands in the cookie jar! 

And furthermore with regards to Gold… Sponsored by Rep. Ken Ivory, House Bill 348 permits the Treasurer to hold up to 10% of certain state reserve accounts in precious metals to help secure state assets against the risks of inflation and financial turmoil and/or to achieve capital gains as measured in Federal Reserve Notes.

So, states are changing their respective state laws to include Gold & Silver, and also to remove taxation of the metals in sales… 

I’ve seen some reports calling for Gold to reach $2,300 this year, especially easily gained if the Fed Heads do cut interest rates 3 times in 2024…. 

Leaving metals for now… The Aussie dollar (A$) has run into a lot of short selling lately, after reaching .66-cents early last week. The short sales are building because of China’s problems, being that if China slows down, then vis-a-vi Aussie raw material  shipments to China would slow down, thus slowing the Aussie economy… And most likely pushing the Reserve Bank of Australia (RBA) to cut rates before they really wanted to… 

The European Central Bank (ECB ) left rates unchanged at their last meeting, and that helped the euro keep its head above the 1.08 level, ending last week at 1.0808… With all this dollar strength going on now, it is interesting to see the euro hold on to its level of 1.08… this after hitting 1.09 early last week… Like I always point out is that the euro is the offset currency to the dollar… So, dollar strength equals euro weakness, and vice versa…  the investopedia.com description of dollar strength is when interest rates are rising…   

Hmmm… well, interest rates are no longer rising, and the thoughts in the markets right now is that interest rates will be reduced this year… So, if investopedia.com is correct, then the dollar doesn’t have a leg to stand on, and all this dollar strength is fabricated… I’m just saying… 

And I guess I had better talk about the weakness in the Chinese renminbi… You see, the Chinese have been doing this currency thing for longer than any other country, and they have figured out that when the economy weakens, they need to do something to simulate the economy, and in an export driven economy, the way to do that is to weaken the currency, thus making its exports cheaper, and easier to sell…  So, for now, the renminbi is weaker… it remains to be seen whether or not it remains that way for very long… 

And before we go to the Big Finish today, I have this little ditty from Bloomberg.com regarding what Lola wants… here it is: “Commodities will advance this year as central banks in the US and Europe move to reduce interest rates, helping to support industrial and consumer demand, according to Goldman Sachs Group Inc.

Raw materials may return 15% over 2024 as borrowing costs come down, manufacturing recovers, and geopolitical risks persist.”

Chuck again… I’ve explained this Lola thing many times, but I haven’t for awhile now, so here goes: I call Goldman Sachs, Lola… You know what Lola wants, Lola gets? So, when Lola says that “commodities will advance this year”, that means that commodities WILL advance this year!  No two ways about it, folks… So, back up the truck… 

The U.S. Data Cupboard late last week saw the first positive (.1%) print in the Leading Indicators (for Feb) in over a year and a half… Last week’s Data Cupboard was lacking quite a bit, and this week’s Data Cupboard isn’t that much of an improvement but it does had more on the docket than last week… 

To recap… It was all dollar buying to end the week last week… On Thursday the BBDXY gained 9 index points! Why is this going on now, after the chief Fed Head said last week he’s looking to cut rates 3 times this year, so what gives? Chuck does a lot of talk about Gold today, so hopefully you didn’t skip over that… 

For What It’s Worth… Jan Nieuwenhuijs is someone that I trust when it comes to what he says about Gold… And so this is an article he wrote for his new firm about Gold pricing and it can be found here: China Has Taken Over Gold Price Control from the West (gainesvillecoins.com)

Or, here’s your snippet: “Exceptional strong gold demand from both the Chinese central bank and private sector has been driving up the gold price over the past two years, by which they have taken over control over the gold price from the West. The People’s Bank of China (PBoC) bought a record 735 tonnes of gold in 2023, of which about two thirds were purchased covertly. In addition, the private sector net imported 1,411 tonnes in 2023, and a whopping 228 tonnes just in January of 2024. If the West joins the Chinese gold buying craze, in fear of rate cuts and currency debasement, it will be a perfect storm for gold.

As most readers will be aware of by now, since the war in Ukraine, which led Western authorities to freeze dollar assets of the Russian central bank, estimated gold purchases by central banks as disclosed by the World Gold Council (WGC) have exploded. Covert PBoC gold purchases can be computed by comparing the WGC’s data with what is officially reported by central banks.

The difference between WGC’s estimated buying and reported buying, arising from the fact that the WGC’s numbers are based on field research, is “largely” created by the PBoC, two industry insiders shared with me.

To compute what the PBoC secretly acquires every quarter I take eighty percent of total unreported purchases. Then, I add what the Chinese central bank reports to have bought. In total, over 2023, the PBoC bought a record 735 tonnes, up 23% from the previous record in 2022 at 597 tonnes.

My estimate is that the PBoC now holds 5,358 tonnes, which is 3,108 tonnes north of what’s officially disclosed at 2,250 tonnes.”

Chinese massive gold buying over the past two years have fundamentally changed the gold market. Whereas before 2022 Western institutional supply and demand was driving the price of gold and the price was more or less stuck to the “real yield” (10-year US TIPS interest rate), ever since the war gold has been less sensitive to real yields and follows its own path. This divergence, according to my analysis, has been created by China that has become one of the main driving forces of the gold price.”

Chuck again… I thank the good folks at GATA for sending me this article… 

Market Prices 3/25/2024: American Style: A$ .6530, kiwi .6005, C$ .7356, euro 1.0816, sterling 1.2621, Swiss $1.1155, European Style: rand 18.9557, krone 10.7380, SEK 10.5855, forint 366.92, zloty 3.9836, koruna 23.3788, RUB 92.81, yen 151.30, sing 1.3459, HKD 7.8215, INR 83.42, China 7.2135, peso 16.75, BRL 5.0012, BBDXY 1,244.44, Dollar Index 104.34, Oil $81.13, 10-year 4.23%, Silver $24.75, Platinum $917.00, Palladium $1,031.00, Copper $4.01, and Gold… $2,168.90

That’s it for today… Well, on Wednesday this week, there will be no Pfennig, as it will be a travel day for me, closing up the place here, and getting it ready for our next visit. I’ll be back from my writing desk at home on Thursday… It was a good winter being down here… Not a great one like it usually is, but good… I’m really not ready to go home yet, but with Easter coming this next weekend, it’s time to go… The Jefferson Starship takes us to the finish line today with their song: With Your Love…  I hope you have a Marvelous Monday today, and I hope you’ll Be Good To Yourself!

Chuck Butler