Author: admin

March 15, 2021

* Currencies saw some slippage on Friday… 

* Gold stages a Big Comeback on Friday… 

Good day… And a Marvelous Monday to you!  Well… My beloved Cardinals won 2 of 3 over the weekend, the Blues lost 2 games, and Mizzou found itself in a real tournament bind. For if they find a way to beat Oklahoma, they then would play #1 and undefeated, Gonzaga… That’s really a bad draw for my Tigers, but they brought it on themselves… My St. Louis U. Billikens didn’t make the tournament, as their covid shutdown for 3 weeks really hurt their chances… It was chamber of Commerce weather here this past weekend, and I spent most of my time outside, in the sun! The Great Ray Charles greets me this morning with his song: You Don’t Know Me…

OK… Well, Friday was interesting for the metals… Gold which at one point in the day was down $17, found a way to rally at the end of the day to gain $4.80, while Silver fought back to close down just 16-cents on the day…  Gold’s closing price was $1,728.90, and Silver’s was $26.03…  

The currencies which had seen a couple of days of rally notched in their belts, pretty much ended the week flat on Friday… The Dollar Index rose from 91.56 on Thursday morning, to end the week at 91.67…  There wasn’t much to move the dollar to be bought on Friday, it just seemed to be the thing to do to end the week… Again, let me repeat… I just don’t get it that traders are buying dollars, right now… The $1.9 Trillion in new deficit spending was passed at the end of the week, and before the President’s signature in ink, dried, there was talk of a $3 Trillion infrastructure Bill that’s coming…

Oh, sure, why just $3 Trillion? Why not make it $5 Trillion or $10 Trillion?  It’s just money, and contrary to what my mother always preached to me… Money does grow on a tree… The Magic Money Tree…  And don’t worry about how it will be financed, because the Fed is the buyer of last resort… I can’t begin to tell you just how wrong  this type of thinking is… But I’ve already told you before and I’m not gong to be accused of having dementia and forgetting that I had already told you!

In the overnight markets last night… There has been some additional dollar buying, as the Dollar Index has moved higher to 91.77…  The moves in the currencies aren’t really noticeable, with the euro, taking on most of the damage of the dollar buying.  This surprises me because of what the ECB said last Thursday… Oh, shoot, we may as well get into that now… but first, Gold is up a buck or two in the early trading and Silver is up 18-cents, so a good day so far for Silver… 

Did you happen to read or hear what European Central Bank (ECB) President, LaGarde, had to say last week about how the ECB would react to the rising yields in Bonds?  In her best, Fed Chairman Powell, voice, she said that the ECB would step of their buying of bonds to keep yields in check…  So, what’s good for the goose is good for the gander, right?  The ECB is simply aping what the fed is doing… Hey, if one’s going to go down, we may as well all go down together!  Well, you may as well get used to the idea now of them all going down together, because in my opinion, this is exactly what’s going to happen eventually…

So, as I was saying above, the slippage in the euro has surprised me, because if the dollar gets kudos for having a bunch of knuckleheads in their Central Bank, then it only goes to reason that the euro would get kudos for showing that their Central Bank also has a bunch of knuckleheads! But Nooooooooo!   Now there’s no rule or regulation that requires currency traders to buy a currency whenever their Central Bank shows no monetary intelligence, but it just goes to reason that if the dollar gets love for this, then the euro should too… 

And if you’re one of those people that truly believe that the economy will soar once everyone has a vaccine, then you might as well move along, for what’s coming is not the droids you’re looking for…

I will concede that the initial jolt to the economy of starting up again will be impressive, but it won’t have lasting or follow up power, and then what will we as a country do?  Do you know that the U.S. has spent $5 Trillion in deficit spending since a year ago when the pandemic was first announced? And what has it produced so far? I’m just saying…

I’m sitting here, watching the sun rise out of the ocean this morning, with no clouds to block the view… One huge orange ball that lights up the day… I think to myself when I’m alone here in the morning, writing this letter, and watching the sun rise that I sure am a lucky person… 

The U.S. Data Cupboard last week  was interesting in that the Weekly Initial Jobless Claims slipped to 712,000 from 754,000 the previous week, and the pundits were all slapping each other on the back and congratulating themselves for writing that the economy was turning around… But, as usual, I would like to take a different look at this number…. Yes, it was lower, but….  at 712,000 its still a number that’s greater than any during the Great Recession of 13 years ago… Think about that for a minute… the number of jobless claims is falling but… it’s still greater than any number of jobless claims during the Great Recession… I believe that to be quite telling about how tentative this economy is… 

We also saw the PPI (wholesale inflation) surprise the heck of me, as you may recall that January’s PPI had shot higher to a 1.3% gain, and I was fully expecting February to follow up January’s gain, and it did, but not by much only gaining .5% in February…  For those of you new to class, the wholesale inflation feeds into Consumer inflation… But these indexes are so cooked, massaged, and manipulated to tell us what the Gov’t wants us to know…  I’m just saying… 

Tomorrow’s Data Cupboard will have the Big economic reports of Retail Sales and Industrial Production and Capacity Utilization… So, I really don’t think we’ll see much movement in the currencies and metals today, as traders want to see the color of these reports before making may definitive moves… 

To recap… The dollar ended the week being bought, not by the truck loads, but being bought…  Gold was down BIG on Friday, but then came back to end the week up $4.80… Silver was also down Big, but couldn’t get back to even and ended up down 16-cents…  In the overnight markets last night, there’s been more dollar buying, but again, not by great numbers, just some general buying, as if the currency traders are saying, “give us a reason to sell”… 

For What It’s Worth…. I just knew that longtime friend, and publishing guru, Bill Bonner, would give me the low-down on the Stimulus Bill… And so, I thought that it would be great to give you his thoughts as well, and so… I couldn’t find the article on Bill’s site, but found another site that carried the letter and you can find it here; Biden Delivers a Sucker Punch – Money Spending For All (rumrebellion.club)

Or, here’s your snippet: “Oh, don’t be silly, Dear Reader. Most likely, not a single life will be saved as a result of this boondoggle. Nor does it really redress the harm done by government busybodies, when they created a panic and shut down the economy.

GDP fell about 2.3% last year. That’s about $498 billion. Last year’s “relief” measures have already offset that with $3.1 trillion. This latest “relief” package brings the total “stimulus” handed out by the feds in response to the coronavirus pandemic to $5 trillion – more than 10 times the actual economic loss.

And according to the Committee for a Responsible Federal Budget (CRFB), many of these provisions in the latest “stimulus” package have sunset clauses… meaning they are scheduled to expire sometime in the future. That is how the total cost – as grand as it is – stays under $2 trillion.

But what will most likely happen is that as the sun begins to set, the politicians will agree to extend the programs. In the end, says the CRFB, the cost will probably end up closer to $4 trillion than to $2 trillion.”

Chuck Again…  I keep saying over and over again that a bad precedence had been set by showing the citizens of the U.S. that their Gov’t could just print up some dollars and send them checks for not doing a single thing, and soon they would be crying for more… Well, the ink isn’t dry on this set of checks being sent out, and already the crying has begun…

Market Prices 3/15/21: American Style: A$ .7746,  kiwi .7195,  C$ .8026, euro 1.1933, sterling 1.3926, Swiss $1.0776, European Style: rand 14.8323, krone 8.4408, SEK 8.5375,  forint 307.75,  zloty 3.8425,   koruna 21.9201, RUB 73.23, yen 109.05, sing 1.3444, HKD 7.7645, INR 72.53, China 6.5068, peso 20.63, BRL 5.5501,  Dollar Index 91.77,  Oil $65.80,  10-year 1.61%, Silver $26.21, Platinum $1,222.00, Palladium $2,427.00, Copper $4.11, and Gold… $1,730.70

That’s it for today… A little shorter than usual… I’m still on that rotation of shorter Pfennigs, for no particular reason, it’s just how they come out! Well, this will be the last week for me as I head to my annual Spring Vacation on Thursday, the day after St. Patrick’s Day!  No parades, no festivals this is going to be a real bummer of a St. Patty’s Day… I’ll still celebrate my Irish heritage, with some corned beef and cabbage, and green beer, but not like I used to celebrate it!  I’ll be going to Roger Dean Stadium for the ball game today… It’s going to be a hot one… like seven inches from the midday sun! But I love it!  Daughter Dawn and her family will be down here at the end of the week, and my darling granddaughter Delaney Grace will sing the national anthem at Roger Dean Stadium. I can’t wait to hear that, I know now that there will be misty eyes…  Ok…  The great Stevie Wonder takes us to the finish line today with his song: My Cherie Amour…  (love that song!)  I hope you have a Marvelous Monday, and will Be Good To Yourself…  

Chuck Butler

March 11, 2021

* Currencies and metals rally on Wednesday & overnight!

* Who’s going to buy our Treasuries? 

Good Day… And a Tub Thumpin’ Thursday to you! Ahhh, the end of another week… Next week at this time I’ll be signing off for about 10 days as I start my traditional summer vacation… Another day of sunshine yesterday, and I almost finished the book I began reading on Monday!  My beloved Cardinals lost another spring training game yesterday, good thing these are just exhibition games and they don’t count on your regular season record…  In days passed, I would attend more spring training games, than I do now, traveling up and down the coast to see my Cardinals play… Port St. Lucie, to Ft. Lauderdale, and West Pam Beach… But I don’t feel the need to do that any longer… I’ll see 13 games at Roger Dean this spring, and that’s good with me! Here’s one for the old-timers like me… The Drifters greet me this morning with their song: Under The Boardwalk…

Well… The Currencies did push back the dollar bugs yesterday, but the pushing was more like nudging…  The euro rose back above 1.19, The Aussie dollar (A$) rose back above 77-cents, and the Dollar Index fell to 91.85 on the day…  Gold was bid up by $10.50, to close at $1,727.90, and Silver also was bid up 27-cents to close at $26.30… 

Regarding Gold… I get so tired of listening and reading pundits talk about how Bitcoin has surpassed Gold as a safe haven… They point to Bitcoin’s ability to be used to buy things, and Gold is just a shiny rock…  For 5,000 years, Kings and Pharaohs have hoarded Gold… For less than that time, investors have hoarded Gold as a store of wealth…  There have been dozens of investment fads through the years that people say will overtake Gold as the store of wealth, and none of them even exist today… I reckon it’s akin to bands like The Bay City Rollers, The Knack, Oasis, who were all touted to be better than the Beatles… And where are they now?

So… Yesterday, the stupid CPI (Consumer Inflation) printed and it gained .4% in February, and the pundits out there were saying things like: “Inflation is till tame”….  Really?  If you annualize CPI the annual inflation rate jumped in February to 1.7% from 1.4%…  But as long as these so-called experts are using CPI to determine if inflation is growing or not, they’re going to be led down the wrong path…  John Williams at Shadowstats.com says consumer inflation is more like 9.4%.. Which I would think would be nearer to your own experience… Remember I’ve always said that inflation is a personal thing, what one person experiences with inflation won’t be the same as the next person’s experience with inflation..

Maybe the story I told you about yesterday regarding the guy that bought a truck load of Copper (10,000 tons of Copper) and when it was received it was a shipment of copper painted landscaping bricks, that caused Copper to lose a couple shekels yesterday… Or maybe the pundits claiming that inflation is tame, caused some copper owners to back off the inflation fears meter…  Me? I’m thinking that the slippage in Copper had more to do with the former…

In the overnight markets…. there’s been more dollar selling, and we start this morning with the Dollar Index having fallen to 91.55, from 92.11, where we started with it yesterday. Gold is up $7 in the early trading today, and Silver is up only 3-cents…  The euro continues to climb back toward 1.20, and the Aussie dollar (A$) is looking quite perky once again. The aforementioned Copper, is up to 4.10 this morning, as all is forgiven, and the focus returns to rising inflation… 

OK.. I know this has nothing to do with currencies, economies, and dolts… But it does have something to do with… Something that’s new!  Do, do you know what an NFT is?  Well, if you do you’re ahead of me, because I just found out last night! And NFT is a “non-fungible token”… And the reason I looked it up is I saw this headline: Rob Gronkowski will sell NFTs of his best Super Bowl moments….   OK, here’s the skinny on an NFT from Bloomberg.com: “Think of them as digital certificates of authenticity. A non-fungible token, or NFT, is a unique, irreplaceable identifier created by an algorithm: A distinct barcode for a digital piece of art or collectible. It’s a solution of sorts to a problem that’s long faced digital artists: how to create scarcity for an item that can be infinitely reproduced.”

So, when Gronk wants to sell his memorabilia he wants people to know it’s authentic… one of a kind, etc. and so it will have an NFT….    Makes sense?   See? You learn something new nearly every day with me!

Now, back to regular programming…  So, the dirty deed done dirt cheap was finally voted on and sent to the President for his signature… I’m talking about the Stimulus Bill…  Sending money to people that we don’t have money to send, but will have to be printed up by the Fed, and we’ll all go our merry way…  Longtime readers will recall me telling you back when the first stimmy checks went out, that it was setting a bad precedence, and that once people began to see that Gov’t could just print money and send them checks, they would demand more, and more… And now we’re on the second, “and more”…. Jeffrey Gundlach of Doubleline Fund had this to say about all this: “People Are Starting to Believe That Stimulus is Permanent”

Oh, the unintended consequences of what we as a country do… So, when do you think the masses of people will begin to demand another stimmy check?  I would put my money on 6 months from now… 

The U.S. Data Cupboard today just has the Weekly Initial Jobless Claims, which last week was a full week of claims…  We already talked about the stupid CPI earlier today, and tomorrow’s Data Cupboard will have PPI (wholesale inflation), which last month jumped higher and should have been reflected in this month’s CPI, but, as I always say, CPI has all those hedonic adjustments that keep it from telling us what inflation is really doing…

To recap… The currencies & metals both rallied yesterday… Their moves were muted a bit, but they were gains nonetheless…  In the overnight markets, there’s been more dollar selling, and all the currencies, sans yen, are rallying VS the dollar. Gold is up $7 in the early trading, and Copper has returned to the scene of the crime, (inflation)…  Chuck talks about NFT’s, and inflation and other things this morning. 

Before he head to the Big Finish today, I want to talk about something that really bothers me… And it’s neighbors snitching on neighbors…  This whole “if you see something, say something” has gone way too far…  Neighbors are supposed to support each other, when times are bad, and regale with each other when times are good….  Not call the police because you see several members of the family next door entering their house for a dinner!  I find this behavior to be reprehensible…  As Doug Casey recently said, “1984 was supposed to be a warning, not a manual on how to do things”….

Quick Question… have you read the book 1984?  If you did and you remember the gist of the book, you’ll see the similarities of the great George Orwell book and now…. I’m just saying… 

For What It’s Worth….  The good folks at GATA sent me this note, and the link to the story, so I thank them. The article is about how the Commercial Banks are now using their funds to buy Treasuries instead of making loans, and it can be found here: Fed Policy Is Smothering Private Lending – WSJ

Or, here’s your snippet: “he Federal Reserve’s seeming willingness to provide inexhaustible financing of U.S. government debt is raising concerns about future inflation. Record-breaking growth in the money supply from the Fed’s quantitative-easing bond purchases threatens price stability. But an even greater risk—one that goes to the heart of economic opportunity under democratic capitalism—is the effect of Fed decisions on private bank lending.

Banking institutions have traditionally provided the pipeline that routes loanable capital to businesses and households. Yet commercial banks are increasingly opting to reduce the share of total assets devoted to loans while expanding their holdings of Treasury debt and government-backed mortgage securities.

The 25 largest U.S. banks currently hold 45.7% of their assets in loans and leases, according to Fed data released Friday, down from 54.1% this time last year. Meantime, their year-over-year holdings of Treasury and agency securities increased 33.5%. This reflects more-stringent borrowing standards and diminished loan demand. But it also reveals a subtle yet persistent change in how banks operate.

Banks have pulled back from making risky loans in favor of engaging more directly with the Fed—avoiding the type of lending that spawned stricter regulatory standards after 2008 while readily accommodating the Fed’s expressed satisfaction with an “ample reserves” regime. Bank lending to small businesses has remained low throughout the postcrisis years, with the largest declines in small-business lending at large banks, as shown in a 2018 report commissioned by the Small Business Administration.”

Chuck again… Shame, shame, Shame, as I use my best Gomer Pyle voice! Previously it was banks using their funds to buy back their own stock… And now it’s funding the deficit spending lollapalooza that’s going on in this country… Shame, Shame, Shame…

But who else is going to buy the Treasuries that are issued to finance the ever rising debt?  With yields so low, individuals are staying clear of owning Treasuries, and the pensions that have to have so much in Treasuries are probably maxed out…   This is becoming a major problem for this country, folks… We keep racking up debt, because it doesn’t matter to the magic money tree folks, and it has to be financed, and no one is at the auction window to buy up Treasuries… Uh-oh….  So, banks will buy them until they are up to their eyeballs with Treasuries, and then it will be the Fed buying them to monetize them…  (error admission here, the other day I used the word demonetize and I meant monetize)   And when the rest of the world sees what the Fed is doing….  All hell will break loose, and the dollar will be sent permanently to the wood shed… 

Market Prices 3/11.2021: American Style: A$ .7774,  kiwi .7229, C$ .7952, euro 1.1965, sterling 1.3959, Swiss $1.0813, European Style: rand 14.9385, krone 8.4227, SEK 8.4485,  forint 306.01,  zloty 3.8282,   koruna 21.9084, RUB 73.84, yen 108.50, sing 1.3396, HKD 7.7588, INR 72.58, China 6.5071, peso 20.73, BRL 5.7523,  Dollar Index 91.56,  Oil $65.21,   10-year 1.49%, Silver $26.33, Platinum $1,225.00, Palladium $2,400.00, Copper 4.10, and Gold… $1,734.90

That’s it for today… and this week of course since I no longer write on Fridays… Well, I heard from good friend Rick Baur, as he thanked me for calling out his birthday yesterday… I also received a note from the Great Mogambo Guru yesterday! He wished me a happy birthday… I told him I truly appreciated the birthday wishes, but my birthday isn’t until 3/22… He replied, “You’re welcome, but just hold onto it; it will get better with time!  Hahaha!   Ahhh, wise words from the Mogambo Guru! Who by the way is doing well, but very sad that he no longer gets to play his beloved banjo at gigs… I keep reminding him that I need for him to stay with us for a long time to come!  I just wish he would write every now and then again…  My Missouri Tigers play in the first round of the SEC tournament tonight, and it’s not on late, so I’ll be able to watch it! YAHOO!  Tomorrow night will be the first night game at Roger Dean for the Cardinals in probably 10 years!  It will different not having the sun beating down on you all game…. Which I love by the way!)  Ok… Weezer takes us to the finish line today with their song: Island In The Sun…  “On an island in the sun, We’ll be playin’ and havin’ fun, And it makes me feel so fine, I can’t control my brain”  I hope you have a Tub Thumpin Thursday, and a mighty grand weekend, and I’ll talk to you on Monday morning, God willing… And please don’t forget to Be Good To Yourself!

Chuck Butler

March 10, 2021

* There was no follow up in the currencies yesterday… 

* Gold & Silver gain throughout the day on Tuesday… 

Good day…. And a Wonderful Wednesday to you!  Well, things were back to normal yesterday, after my morning routine, I went out to the deck with a book and started reading, in the sun… 2 hours later it was time to come in from the sun and take a nap… And then it was a get together around the pool with condo friends…  I kept a watch on Gold all day yesterday, to see if the price manipulators came on the scene… But they didn’t and so it was a good day for me!  The Cardinals regulars were leading 3-0, when it was time for the minor leaguers to come in the game, and as I always say, The other team’s scrubs beat our scrubs… That’s spring training games for you in a nutshell…  Yes, greets me this morning with their song: It Can Happen…  “it can happen to you, it can happen to me, it can happen to everyone eventually.”

Well, after the overnight selling of the dollar, there was no carry forward to the European or U.S. sessions yesterday, and we ended the day with the Dollar Index at 91.99, the same level it was early in the morning…  Gold gained a whopping $33.50 to close the day at $1,717.40, and Silver gained 83-cents on the day to close at $26.03…  I think it’s nice of the price manipulators to give us these days, don’t you?

I received an email from a dear reader yesterday, telling me that he took what I said about buying physical Gold at cheaper prices to heart and called his coin dealer, who said that he didn’t have any Gold for sale at $1,700… But he did have some at $2,100…   A total waste of his time I would say, and I hope that everyone didn’t run into the same bait-n-switch that this guy did…  You see, the drop in the price of Gold came so quickly and so harsh, that everyone got caught owning Gold in their inventory at much higher prices…  Sort of kin to last spring when the price of Oil dropped like a rock, and even went negative one day, but the price at the gas pumps didn’t change that quickly… Because the gas they had pumped into their gas tanks cost them “X”…. 

I always think that when Gold drops in price that a buyer should be able to find Gold at the cheaper price… But coin dealers don’t work like that…  That is unless you are my metals guru, Tim Smith at 1-800-926-4922…   he’s always on the lookout for the cheapest price available! 

In the overnight markets… Well, there has been some slippage from the levels in the currencies and metals that we saw yesterday afternoon. The Dollar Index is back above 92, at 92.11. So, as you can see not much of a move higher but a move higher nonetheless.  Gold is down $5 in the early trading today, and Silver has given back 29-cents…  Let’s see if these two can drum up enough interest to turn those negative numbers into positive ones today..  Unfortunately, what usually happens is you get a little slippage in price and the price manipulators act like sharks with blood in the water, and send there guys to the COMEX with arms full of short Gold paper trades…  UGH! 

Ok, on Monday this week I had to bite my tongue to keep from dissing the markets’ reaction to the Jobs Jamboree number from Friday that set off the onslaught of dollar buying…  The report just didn’t make sense to me, so you had to look under the hood to see what it was made of… And instead of me telling you what was under the hood, let’s listen to what economist David Rosenberg had to say about the Jobs report last week…

I just happened to be perusing Twitter yesterday to find stories on my beloved Cardinals, when I came across this tweet from David Rosenberg.. “First time in my 35 years in the business that I have ever heard so much bullish narrative over a jobs report that saw a 0.9% contraction in the workweek, a 3.1% slide in factory overtime, a 0.6% slide in labor income and 122k plunge in full-time employment.” – David Rosenberg on Twitter

Now, I doubt seriously that the currency & metals traders looked under the hood, and if they had they wouldn’t have the faintest idea of what it was they were looking for… So, I doubt that it was the fact that they had found some chinks in the jobs report’s armor, that brought about the dollar selling…  Instead, I think it was a case of being overbought for the dollar, and oversold in the currencies and metals… 

So… it will be interesting to see what today has in store for us…  I was talking to a condo friend last night and she was telling me that she had watched a documentary about blockchain and Bitcoin… I asked her what she thought of it, and she said that she was amazed at the changes that are coming…  I then explained to her that Bitcoin probably won’t be the digital currency that is used when all countries have converted to blockchain for Trade…   Just something to think about on this Wonderful Wednesday!

OK… So, China has made great strides in the development of their own digital currency…  The digital yuan as it’s known, has been tested in several different markets around China and the Chinese believe that it is ready for prime time… The digital yuan, domestically branded as the Digital Currency/Electronic Payment (DCEP) project, is not only set to disrupt the country’s well-developed mobile payment industry and create new efficiencies in the Chinese economy, but could also challenge the supremacy of the  dollar.  

In 2010, I went out on a limb and said that by the end of the decade that the renminbi would be the next reserve currency… And although, technically I was correct, when the renminbi was added to the IMF’s Special Drawing Rights (SDR’s) as a reserve currency a few years ago, the actual replacing of the dollar as the reserve currency hasn’t happened…  And now I think China has switched horses in the middle of the stream, and decided that their digital currency has a better chance of disrupting the dollar as the reserve currency…  I have an additional article on this for you in the FWIW section today.

The U.S. Data Cupboard will have the Feb. CPI (consumer inflation) for us to view today… Personally, I don’t care what the stupid CPI says… I know that food prices are up probably 6%, and gas prices are significantly higher than they were 3 months ago… Insurance costs, drug costs, home prices, everything is higher in price, and it’s because of inflation, that’s already creeping into our economy, and the stupid CPI isn’t going to show us true inflation because it can’t!  There’s been too many hedonic adjustments done to this data set, to even give the index a chance of reporting true inflation…

The Commodities know what real inflation is, and they are creeping higher each day in price… I’ve been telling you about Copper’s price increase, and it’s not just Copper that is seeing its price increase…. 

Speaking of Copper did you see where a buyer bought a truck load of Copper and when it was received he got copper painted landscaping bricks?  You know when an asset is getting up there in price when it is being stolen and refabricated….  I’m just saying…

To recap… Our Turnaround Tuesday didn’t have any follow up from the previous overnight session, and only Gold & Silver carried on and added to their early morning gains throughout the day. The Dollar Index started the day at 91.99 and ended the day at 91.99… There’s been some slippage in the overnight markets last night, and the Dollar Index is up to 92.11… Not much of a gain, but a gain nonetheless…  China’s digital currency is ready for prime time, and they are signing up trade partners to use the digital yuan in trade…   

For What It’s Worth…  Well I told you I had a follow up article on China’s digital yuan for you today, and so without any further ADO, you can find that article here: Beijing is exploring digital yuan cross-border payments by joining with Hong Kong, Thailand, UAE and the Bank of International Settlements | South China Morning Post (scmp.com)

Or, here’s your snippet: “Beijing has joined Hong Kong, Thailand and the United Arab Emirates (UAE), along with the Bank of International Settlements (BIS), to explore cross-border payments for digital currencies, a move that could potentially create a new path for China to promote the use of yuan in global payments and weaken the US dollar’s position as the world’s dominant reserve currency.

The People’s Bank of China’s (PBOC) Digital Currency Institute, the arm of the Chinese central bank in charge of minting the country’s sovereign digital currency, announced on Tuesday that it was joining the Multiple Central Bank Digital Currency Bridge, a cross-border payments project initiated by the Hong Kong Monetary Authority and Bank of Thailand in 2019, according to a press release. The UAE’s central bank joined the project at the same time.

The expansion of the project has received support from the Bank for International Settlements (BIS) Innovation Hub center in Hong Kong, a unit created by the Basel, Switzerland-based organization to study key financial technologies for central banks. The project was originally named Inthanon-LionRock, referencing the highest peak in Thailand and the iconic hill in Hong Kong. The new name hints at a more inclusive project that is open for others to join.

It is too early to know where the project might lead, but it aligns with Beijing’s long-term ambition to use its sovereign digital currency to boost the use of the yuan in international payments. While the proof-of-concept project is currently an alliance between just Beijing, Hong Kong, Bangkok and Abu Dhabi, backing from the BIS means it is supported by an organization owned by 63 central banks.

The deal also comes weeks after the PBOC’s Digital Currency Institute set up a joint venture with SWIFT, the dominant network facilitating international payments between banks.”

Chuck again… This has got to be a real pain in the side of the U.S. having China, a communist country, beat them out of the starting gates with a digital currency…. I’m just saying…  But you know the hype that will come with the U.S’s digital currency that it has to be the best there is, and all that comes with that… 

Market  prices 3/10/2021: American Style: A$ .7698,  kiwi .7158, C$ .7905, euro 1.1890, sterling 1.3870, Swiss $1.0736, European Style: rand 15.3123, krone 8.4766, SEK 8.5210,  forint 308.83,  zloty 3.8474,  koruna 22.0566, RUB 74.10, yen 108.80, sing 1.3471, HKD 7.7625, INR 72.93, China 6.5139, peso 21.18, BRL 5.8431,  Dollar Index 92.11,  Oil $64.29,  10-year 1.55%, Silver $25.74, Platinum $1,169.00, Palladium $2,360.00, Copper $4.04, and Gold… $1,712.10

That’s it for today… Except to sent a great BIG Happy Birthday to my good friend Rick Baur… it’s also the birthday of friend Chris Landers…  In the old days before I began to spend my winters in S. Florida, I would have Rick out to my office and we would share a veggie pizza to celebrate his birthday…  My spring training buddies  aren’t coming to Florida this year…  So, I won’t see Rick, Duane, and Kevin, aka webbie, until I get back home in April…  If they thought my Roger Dean Stadium seats were great before, they would love the ones I’m sitting in this year! But so bad, so sad…  Traditions… And that’s all I have to say about that!  Seals & Crofts take us to the finish line today with their song: We May Never Pass This Way Again…  That was a song that was big when I was a senior in high school, I remember nominating it for our Class Song, but some other stupid song won instead… Oh, well water under the bridge… I hope you have a Wonderful Wednesday today, and will continue to Be Good To Yourself!

Chuck Butler

 

March 9, 2021

*Currencies & metals rally overnight… 

* Asian retail Gold buyers return! 

Good Day… And a Tom Terrific Tuesday to you! Another tie for my beloved Cardinals yesterday. I believe that I’ve seen more ties (3) so far this year, than I’ve seen total through the years! During the game, that I attended with youngest son Alex, there were probably at least 4 weather fronts that moved through… I had a light pull over that I kept putting on and taking off! No more games for me this week until Friday. And Friday’s game will be a night game… Something rare for the Cardinals at Roger Dean Stadium.  Maybe I’ll be able to get back to my regular morning routine this week… We’ll have to see, eh?  Oh, my oncologist sent me a message yesterday telling me that my bloodwork looked normal and that everything is good… The late great, Leon Russell greets me this morning with his song: Delta Lady… 

Well… after the onslaught of dollar buying that began last Friday and carried through to the overnight session of Sun/ Mon. Things calmed down a bit on Monday… And while the dollar buying continued it was more muted buying than what we saw in the previous two sessions.  The Dollar Index on Monday closed the day at 92.31. Gold got whacked again, losing $17.20 on the day to close at $1,683.90, and Silver lost 11-cents to close at $25.20… 

The GATA folks sent me a link to an article by Jan Nieuwenhuijs, formerly known as Koos Jensen…  Koos was his writing name, and now he’s just going with his given name of Jan Nieuwenhuijs…  In the article, Jan attempts to explain why Gold keeps getting whacked…  Let me see if I’ve got this straight…  The 10-year Treasury TIPS (Treasury inflation protection) is seeing a rise in the yield, and a rise in the inflation fears,  So… what you do with a TIPs bond is you take the given or bought yield, and add in the the current inflation rate to the stated yield…  So, if a TIPS buyer gets his bond at 1% yield, he then can add what ever inflation is running to that stated yield…  For example… if you own a TIPS at 1% yield, and inflation is running at 3%, the TIPS owner gets 4% total…

Now, yesterday, I went out on a big fat limb, and said that I thought that the Fed would soon implement a new round of Operation Twist, where they sell the 2&3 and maybe the 5 -year Treasuries and buy the 10-year Treasury bond…  This would bring about a flood of buying which would drive the price of the bond up, and the yield down…  So, if this plays out the way I see it playing out, then the yield on the 10-year Treasury will be brought down, and thus remove the buying of the bond, and bring back a bid for Gold…

Just about 10 days ago, the Treasury held an auction on the 7-year Treasury note… And the interest in the bond was very, very weak…  Normally, the primary dealers are left with about 30% of an issue to buy… But the foreign interest was so weak for this bond, that the primary dealers were left with over 65% of the issue to buy… Uh-oh…  For you may remember me telling you a couple of weeks ago that the primary dealers had already told the Fed and Treasury, no mas on buying more Treasuries…

This means that the Fed is buying the bonds… Demonetizing them…. SHHHHHH, don’t say that out loud, for if the markets get wind of the Fed demonetizing the debt, there will be hell to pay…

OK, in the overnight markets last night… There was no dollar buying overnight, and the currencies rallied, along with Gold, which is up $25 in the early trading today…   I wanted also to point out something that I think is relevant…  A couple of years ago, the Swedish krona passed the Norwegian krone and has remained the stronger of the two currencies since… Until now… The krone has passed the krona once again, and things are back to normal…  I just never got the idea that the krona was more valuable than the krone… 

Of course, the krone has the double dose of support, from the euro and the price of Oil… And with Oil rising, this all makes sense once again for the krone. 

The price of Oil, which late last week, soared higher, has seen that lofty price of $67 at the close of business on Friday, get eaten away and this morning it is trading with a $65 handle… The 10-year Treasury yield also saw some slippage and came back from a 1.6% high, to 1.53%… Has the new Operation Twist began without any public notice?  Ahhh grasshopper, one never knows for sure, and we may not know for sure until the Fed is finished and they then want you to know that they saved mankind and the life of wine and roses…

I have to tell you this because it’s important to know…  I had a dear reader ask me if yields continue to rise will they be the death knell for Gold…  And I replied, “Well, if rates are rising because the economy is running on all 8 cylinders, then Gold could suffer… But if rates are rising in reaction to rising inflation, ala the 70’s, then Gold should bask in the sun with a plethora of buying…  Whenever someone tells me that Gold can’t survive in a high interest rate environment, I point out the 1970’s… Treasury yields were north of 15%, and inflation was running very high, and Gold… it had one of its best decades in its history… So, don’t even begin to tell me that interest rates along can hurt the price of Gold…

I recall the days of high interest rates fondly, for I was brought along to the Mark Twain Bond Dept., to trade short term instruments, CD’s BA’s, T-Bills, etc. I recall making clients very happy with T-Bill yields above 12%…  I also ran a repo book… and the rates on those short term repos were something to write home about!  Sure inflation was eating away at my earnings, but I was young then, and figured that things would all balance out… They didn’t of course…

I remember years later, talking with a former colleague, Neil, about how Germany could use some inflation, and he vehemently opposed me saying that… But it was true, a country needs to have a small dose of inflation to keep things moving along… Deflation shuts everything down, so to speak… It’s a fine line between a small dose of inflation and large does of inflation… Our Fed, and all their genius economists they employ, are shooting for a large does of inflation… And once it begins, I don’t think the Fed has the arrows in the quiver to stop inflation from running away…

Our friends (NOT!) at OPEC seem to be confused as to what it is they are attempting to achieve with the price of Oil… So, whenever it is that these guys get their acts together, then we will see a real direction of the price of Oil…

With the price of Oil higher these days, it does bring back some of the fracking / shale Oil producers as they can book a nice profit from this rise of the price of Oil. Oh wait! The new administration is against fracking! So, the administration is telling all you shale Oil Producers, take your rigs and go home… don’t go away mad, just go away! 

As I told you yesterday, the U.S. Data Cupboard  was lacking at best for economic data yesterday, and today’s docket also… Today’s Data Cupboard has the Small Business Index, something we’ve never followed, and probably won’t begin to either!

To recap… The onslaught of dollar buying the previous two sessions, finally backed off some. The dollar was still getting bought, but not by the truck load as before… Gold got whacked again, and one of Chuck’s fave writers attempts to explain why this is happening to Gold right now… The overnight markets have turned the tables on the dollar and it began to get sold again. Gold is up $25 this morning, and the Dollar Index has fallen back to 91.99… So, it’s a Turnaround Tuesday! 

For What It’s Worth… With the price of Gold much lower than it was a couple of months ago, the word on the street is that the Indian and Chinese retail buyers have flocked to coin dealers to buy Gold at these suppressed prices… And this morning this article talks about the Indian Gold buying and it can be found here: Indian Gold Buyers Pile in as Prices Dip to One-year Low (news18.com)

Or, here’s your snippet: “Retail consumers in India continued to buy up physical gold this week as prices retreated to a near one-year low, while lower rates also injected fresh activity in other hubs, especially Singapore.

Dealers charged up to $5 an ounce over official domestic prices, inclusive of 12.5% import and 3% sales levies, compared with last week’s premium of $4.

“Demand has significantly improved in the past few days. Retail buyers are making purchases, especially for weddings,” said Mangesh Devi, a jeweller based in Satara in the western state of Maharashtra.

On Friday, local gold futures fell to 44,217 rupees per 10 grams, a trough since April 7.

Jewelers were also making healthy purchases in the first half of the week, but now a few of them have paused expecting further fall in prices, said a Mumbai-based dealer with a bullion importing bank.

“Jewelers don’t want to get stuck with high cost inventory,” the dealer said.

In Singapore, premiums of $1.60-$2 an ounce were charged, with strong demand arising from low local prices.

“We’ve seen an increase in demand, in particular from retail clients, for both gold and silver, as prices have come down a bit,” said Brian Lan, managing director at dealer GoldSilver Central, adding that wholesalers are also covering their short positions.”

Chuck again… Well it sure is nice to see the Asian retail buyers stepping back to the Gold window to buy Gold once again!  U.S. investors should take this Asian buying as a clue, and get out and buy their own stash of Physical Gold ASAP! 

Market  Prices 3/9/2021: American Style: A$ .7702,  kiwi .7166, C$ .7936, euro 1.1900, sterling 1.3877, Swiss $1.0740, European Style: rand 15.3609, krone 8.4796, SEK 8.5255,  forint 308.37,  zloty 3.8553,   koruna 22.0726, RUB 74.37, yen 108.81, sing 1.3457, HKD 7.7630, INR 72.91, China 6.5166, peso 21.23,  BRL 5.7323,  Dollar Index 91.99,  Oil $65.73,  10-year 1.53%, Silver $25.82, Platinum $1,174.00, Palladium $2,390.00, Copper $4.05, and Gold… $1,709.20

That’s it for today… Well, I tried to stay awake for the Blues game again last night, but fell asleep in my recliner, and then woke up at 3 am… UGH!  The Blues  lost for a second consecutive game in overtime…. double UGH!      The Blues finished a long road trip last night, a very successful road trip I must say!  Alex and Grace left for the airport this morning, and now we will not have any guests until the 20^th, when daughter Dawn and her family will arrive for a week…  I was walking into the condo yesterday, and I heard, and felt a pop in my right knee… about 10 days ago, it did the same thing and hurt like hell for a couple of days… Then it was better, until… it wasn’t! UGH!  9 days until my annual spring vacation begins… It’s getting close.. ” I have to say that going to the baseball games this year is very strange, in that there’s only 1,400 people in the stands that seats 6,700, and another 1,000 in standing room…  But there are no lines at the concession stands… no lines in the bathrooms….  No lines to get into the stadium…  But… I would much rather have it like this than to not be in the stadium at all! Nazareth takes us to the finish line today with their song: Holiday… “ Mamma, mamma please, no my face lifts, I don’t know which one you is” I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!

Chuck Butler

March 8, 2021

* currencies & metals  both get sold by the tuck load

* What will the Fed do to limit the 10-year’s yield rise? 

Good Day… And a Marvelous Monday to you! What a weekend! Besides Saturday which had some rain, the weather was great, and youngest son, Alex, and girlfriend, Grace, enjoyed the warm sun and ballgames!  My teams did not have good weekends… Mizzou and SLU lost their respective basketball games… I think Mizzou will make the NCAA Tournament, but SLU, is going to just miss making it… The Blues split a pair of games, but the way they lost the one game was disheartening, as they gave up a 3-goal lead…  I should be hearing back today or tomorrow from my oncologist about my blood test last week…  No worries, for me…  The Rolling Stones greet me this morning with their song: I Can Hear You Knocking…  Great guitar work in this song by Keith Richards…

Well, Friday is a day that most currencies not named the dollar, would like to forget… The dollar bugs came out of the wall boards and soon were dancing in the streets, as the dollar climbed higher and higher, with the Dollar Index climbing to 91.94, from the last reading on Wednesday last week of 90.93…  So, it appears to me that what was once looking like a new weak dollar trend, has been thrown to the wayside, and we’re back to dollar strength… 

I’ve said this before, so forgive me if I sound like a broken record, but I just don’t get this dollar strength… Friday’s dollar rally started with the BLS Jobs Jamboree, which said that the U.S. created 379,000 new jobs in February… Wait! What?  Yes, 379.000 new jobs created..  Even if you back out the jobs created from thin air, 131,000, it was still a bang up job of job creation in February…  From what I could see in the numbers the largest gains were in hospitality and leisure…   You know… bartenders, etc.  Not that there’s anything wrong with a bartending job, it’s just that it’s not going to allow you to live a life of luxury… Or, contribute to the local economy…

So, the markets got al ga-ga over the jobs numbers, and didn’t stop to think that most of these jobs created in February, if they were created at all but that’s a story for a different day, are jobs that will not help the economy grow…   But it is what it is, right? And so today we pick up the currencies from the canvas…  

Gold ended the day on Friday with a $3.20 gain on the day… Although at one point in the day, it was must higher… Silver lost 11-cents on the day… Gold’s closing price was $1,701.10, and Silver’s was $25.32…

In The overnight markets… There’s been more dollar buying and the Dollar Index is 92.30!  The currency pendulum has really swung back in the dollar’s favor. Shoot Rudy, even with the price of Oil soaring, the Petrol Currencies can’t find a bid, and the Aussie dollar (A$) and kiwi, two of the stronger currencies recently have given back most of their gains… 

Last night before I went to bed, I checked Gold’s price and saw it up $12, but that didn’t last as overnight Gold got sold and in the early trading today the shiny metal is down $14.40… And Silver has given back another 14-cents…  Well… according to the Big Mac Index, the dollar was overvalued before this turn around… I would say it’s really overvalued now…

Last week, GDP for the 4^th QTR was revised to 4.1%…  What a bunch of bunk as far as I’m concerned… Remember when I told you that in the 4^th QTR Consumer Spending was down 10%? So, riddle me this Batman, how does an economy that depends greatly on consumer spending, grow at its fastest rate in over 10 years when Consumer Spending was down 10%?  And that got me thinking…

OK… do you remember 2013?  It was not only the 100 year anniversary of the ill-fated implementation of the Federal Reserve, by the all-time worst president, but it also was the year that the GDP calculations were changed to include the amount spent on intellectual property outlays such as pop song production and drug patents… I recall talking about this back then and how stupid it was, as who could calculate intellectual property? But the inclusion of these two items would increase GDP by 2-3% per year…  I got to thinking about this because a dear reader reminded me that I had talked about this back in 2013…

So… As I’ve documented here for many years that since the Great Recession, we as a country have only averaged 2.10% GDP every year…   So, let’s us use the previous way GDP was calculated before those hedonic adjustments were added in 2013, and we end up with 0% growth for the last 7 years! And the 4^th QTR real GDP was only 2%…   But let’s not get in the way of all the spin doctors’ singing about how great this economy is…

And that got me thinking about what could be done here in the U.S. to turn things around…  I thought long and well, I thought long… and came up with this…

I think it would behoove us as a country to elect a leader that would have the intestinal fortitude to bring back the “Heyday” of 20th Century capitalism, when workers’ wages were still on the rise, when college tuition and health care were still affordable, and when the American Dream was still within reach of the average guy. People were happier then because they felt that if they applied themselves, worked like hell, and stashed their savings in the bank; they’d eventually reach their goal. But that’s not true anymore. People are much more pessimistic now and no longer believe that America is the land of opportunity….  I’m just saying…

And don’t think for a moment that little old me came up with that thought on his own…  Russian President, Putin, is the one that came up with that thought… Let that sink in your head a bit… now we’ll move on… 

Yes, the American Dream…  It’s still alive, but barely has a pulse…  And that’s a shame, for what will the young people starting out in jobs use as their inspiration to do a good job?  Oh well, I’m an old retired guy and know that I have nothing to do or add to help young folks with their, whatever it is, American Dream…  And the folks that we elect should be  all over this like a cheap suit… 

The price of Oil soared higher at the end of last week, and this morning, the price of Oil is trading with a $66 handle!  That’s quite a jump from last midweek’s price of $60.83…   Whatever it is that pushed the price this higher in what seems like a blink of an eye, I know that I paid about 30-cents more for gallon of gas than I did the last time I filled up…  

The 10-year Treasury’s Yield rose to over 1.60%, but then fell back to 1.58% by the end of the day… This rise in the yield is really beginning to grab the attention of the Fed Heads, Treasury geniuses, and economists…  I truly believe that the Fed is not going to sit idly by and watch the Treasury market dictate rates to them…  I, of course have always said that the bond markets should set the interest rates, and not the Fed…  but since that’s not the case, I believe the Fed will introduce another round of Operation Twist… Selling short term Treasuries and buying the 10-year, thus brining yields back under control… Mark my word on that folks… The Fed is NOT going to allow the bond markets to dictate interest rates, or the Treasury yield curve!

The U.S. Data Cupboard this week will be lacking for data again…  And there’s really nothing today or tomorrow to speak of, and it won’t be before we get to Wednesday when the stupid CPI (consumer inflation) for February prints… I’m thinking that there’s got to be some give in the CPI print and that inflation will begin to show up… The so-called experts think that inflation will rise by .4% in February… I’m thinking that even with all the hedonic adjustments in the CPI, that it will show real inflationary pressure…  

There is one thing I want to point out from here on out…  Last March we began the shutdown of the economy… So, going forward, anytime some economist tries to make 2021”s prints look good, by comparing this year with last year, will be trying to pull the wool over your eyes!   So, keep that in mind, and I’m sure I will remind you of this…

To recap… The currencies would like to forget about what happened on Friday, as the dollar bugs came out of the wall boards and began dancing in the street… The Jobs Jamboree said we created 379,000 jobs in February, and Chuck calls them out on that number… Gold found a way to gain $3.20 and Silver lost 11-cents on the day…  Chuck talks about how we need to get back to what we were good at… working hard, and saving money…  And the Data Cupboard this week is lacking at best…

For What It’s Worth…  Well, for along time now I’ve expressed my liking of the Russian ruble… But on Friday, that liking was put to the test, due to the word traveling around that the U.S. and U.K. could be adding additional sanctions on the Russians… And that threw some cold water on the ruble’s recent attempt to rally alongside the rally in the price of Oil.  So, now the ruble has to go back to the drawing board and start over… This article talks about those sanctions and can be found here: Ruble Rocked by Rumors of Tough New Sanctions – The Moscow Times

Or, here’s your snippet: “ The Russian ruble and government bonds sank Friday morning on reports that the U.S. and U.K. are considering a second round of tough sanctions against Russia over the poisoning and jailing of Kremlin critic Alexei Navalny.

Washington and London could be prepared to slap asset freezes and travel bans on Russian oligarchs deemed supporters of the Kremlin and put new restrictions on trading Russia’s government debt, Bloomberg reported, citing anonymous sources familiar with the deliberations.

That would be the most dramatic escalation of sanctions against Russia since 2018, when the U.S. shook global markets by placing Russian metals giant Rusal — controlled by oligarch Oleg Deripaska — on its sanctioned list, triggering a surge in worldwide commodities prices.

Placing more restrictions on Russia’s sovereign debt has been dubbed the “nuclear option,” as it could trigger a multibillion dollar sell-off of Russian bonds and hike borrowing costs for the Kremlin.”

Chuck Again…  One of these days, we’re going to kick the dog while it’s down and it is going to jump up and bite us…  I’m just saying…

Market  prices 3/7/2021: American Style: A$ .7657,  kiwi .7114,  C$ .7878, euro 1.1865, sterling 1.3836, Swiss $1.0708, European Style: rand 15.5090, krone 8.5813, SEK 8.5830,  forint 309.71,  zloty 3.8743,  koruna 22.2598, RUB 74.31, yen 108.60, sing 1.3485, HKD 7.7687, INR 73.28, China 6.4912, pesos 21.51, BRL 5.6892,  Dollar Index 92.30,  Oil $66.23,  10-year 1.59%, Silver $25.18, Platinum $1,138.00, Palladium $2,388.00, Copper $4.00, and Gold… $1,686.70

That’s it for today… Well, we’re coming into birthday season… This week will have a few and then the following week more, and then there’s my birthday later in the month! You know, I never really got into celebrating a birthday, but, ever since I was faced with the idea that I may not get to celebrate any future birthdays, I have not taken them for granted any longer! Each year, that I grow older, I thank the Good Lord for allowing me to live this long and watch my kids become adults, and have kids of their own… NCAA Tournament Selection Sunday will come at the end of this upcoming weekend… And yesterday I sat in the seat I’ll be sitting in for the remaining games at Roger Dean Stadium… Right behind home plate! In the wheelchair section of course, but I’m not going to complain one iota about my view of the game! The Electric Light Orchestra (ELO) takes us to the finish line today with their song: Telephone Line…  Oh, Oh, telephone line, give me some time, I’m living in Twilight…  I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler

 

March 3, 2021

* Currencies & metals rally on Tuesday, but get sold overnight!

* Aussies do something they haven’t done in 60-years! 

Good Day… And a Wonderful Wednesday to you! Well, at the last minute yesterday we decided to go to the baseball game, where the Cardinals were the visiting team, but still at Roger Dean… There weren’t 1,000 people there, and we had some great, hot,  seats out by the Marlins’ bullpen… But a nice breeze was blowing in and we watching another tied game… My good friend, and spring training buddy, Gus, said “well if they tied every game it’ll be easy to remember their record this year”…  I laughed, and my adult beverage almost, oh well, I don’t need to go further…  My former boss, and good friend, Frank Trotter will like this one… Jethro Tull greets me this morning with their song: Locomotive Breath… “And old Charlie stole the handle, and the train it won’t stop going, no it won’t slow down”

Well… the obsessive dollar buying stopped on Tuesday… The Dollar Index, which began the day, yesterday at 91.15, ended the day at 90.78…  And Gold found a way to hold on to its early morning gain and add to it for the first time in what seems to be a month of Sundays! Gold began the day at $1,730.40 and ended the day at $1,739.30, up $13.50 on the day, and Silver gained 23-cents to close at $26.50…   So, all-in-all, it was a good day for the currencies and metals on Tuesday…

It’s nice to see when the price manipulators decide to back off for a while and allow the currencies and metals to run higher isn’t it? I wonder, whenever the price manipulators decide to stick their noses into the markets, just what it is they are trying to achieve? I mean I know that they are under the guidelines of the Gov’t to keep a lid on things that might persuade investors from selling dollars, but besides that, what else are they attempting to achieve?  Because I get so fed up with them that it makes me want to yell at the kids… Well, I don’t have kids at home any longer, so that wouldn’t do me any good… Maybe yell at the walls, because no matter where I am when I’m writing, there are always Wall around to yell at! Unlike kids who seem to come around when their hungry, or want something!  OK… I’m just kidding there… I thought I would do my best impression of the Great Mogambo Guru!

In the overnight markets, Gold has seen the price manipulators return and is down $15.20 in the early trading today… Silver isn’t doing any better and has given back 23-cents this morning. The Dollar Index starts the day at 90.93, up a few shekels from the close of 90.78 yesterday.. 

There was good news to support the recent rise of the Aussie dollar (A$), yesterday…  For the first time in 60-years, The Aussie economic growth was above 3% for two consecutive quarters!  I would say that’s a trend, but my wife says I don’t see very well, so I’ll leave that discussion for someone else… HA!  This report really stunned the economists that follow Australia, but that’s nothing new… Two handed economists… “On one hand we could see this, and on the other hand we could see this”…  Worthless! 

Yesterday, I talked briefly about how Copper was rising in price and reflecting inflation fears… And then I saw this on Twitter, “Framing lumber prices are soaring as are foodstuff prices. This headline: “Soaring lumber prices add $24,000 to new house price since April”. And my favorite headline: “U.S. Homebuilders Urge Biden to Help Ease Sky-High Lumber Costs.”

Inflation is all around us folks, and sooner or later it will be reflected in the CPI (consumer price index) but… the CPI Index, as I’ve explained before was changed under the Clinton administration to allow hedonic adjustments and changes to allow inflation to remain low, and keep interest rates low, to allow everyone to buy a house…  The problem is….  Even house prices are going through the roof right now! It’s everywhere, It’s everywhere, it’s everywhere!  Inflation that is… and you had better get your inflation hedges in place, which in my opinion is Gold & Silver…  I’m just saying…

The Fed has said that they will allow inflation to rise past their 2% target… And I’ve said that once inflation is rising it will be difficult for the Fed to stop it…  Think about that… OK, now that you’ve thought about it, let me see if you’re thinking like me (heaven help you!)   To combat inflation a country increases their interest rates…  if interest rates were increased to a normal level and not even one associated with fighting inflation, which would be 6%, The bond servicing level on our outstanding debt would become a major problem for the U.S. and probably cause it’s financial system to collapse! I’m dead serious about that folks… those kind of interest rates would put the kyboshes on this economy… and financial system. 

Jerome Powell claims that the Federal Reserve is not blowing up bubbles, there is no inflation threat, and that its easy money policy will continue for years…  Yeah, right to all of that! The Fed has blowing the stock markets bubble since Big Al Greenspan, and they will not idly sit by too long as inflation rises…  I’m just saying…

And before I leave this discussion about inflation… This was on Reuters.com… “The world’s biggest central banks will happily live with higher inflation and investors now aggressively betting on a quicker end to monetary stimulus are all but certain to be proved wrong.

After a decade of underestimating inflation, central bankers in the United States, Europe and Japan have every reason keep money taps open and policymakers are even rewriting their own rules so they can let price growth overshoot their targets.

If anything, central banks are more likely to nudge up stimulus, particularly in the euro zone, keeping borrowing costs depressed and ignoring the inflation hawks at least until growth is back to pre-pandemic levels — and not just fleetingly.”   Chuck again.. OMG!

OK… let’s talk about something else, for that discussion was giving me a rash! Ok… I guess I don’t have anything else on my mind this morning, except inflation and how Central Banks around the world, including the Fed will ignore the rising inflation until it’s too late… It’s too late baby, now, it’s too late, thought we really did try to stop inflation…

How about some “news from the weird”…  I read on Bloomberg.com this morning that Air Jordon sneakers are now an Asset Class…  Wait, What? That can’t be, but this was the headline, “Sneakerheads Have Turned Jordans and Yeezys Into a Bona Fide Asset Class”…   Go figure, pretty soon this so-called asset class will be more valuable than Bitcoin!  HA! 

The U.S. Data Cupboard this morning is still lacking… What gives with this schedule for the data releases? I don’t get it… makes no logical sense to me, but… it is what it is, right?  So, the Data Cupboard today has the ADP Employment Report for February… This report is supposed to be a harbinger for the BLS Jobs Jamboree that will come this Friday… Last month the ADP reported 174,000 jobs created for January, and the BLS reported just 49,000 jobs created…  I’ve always said that the ADP report should be the jobs report that the markets use, because ADP has the paycheck systems for just about every business, and they would know when employees have been let go, or hired before the BLS gets around to calling in their surveys… 

To recap… The currencies and metals both rallied on Tuesday, but are back on the chopping blocks this morning, and overnight.  Chuck points out how inflation is rising everywhere… And how this could be the end-all for the financial system that we’ve all come to love…  Australia did something they hadn’t done in 60-years!  And there’s a new asset class folks… and you’ll never guess what it is, so you’ll have to go back and read that part to find out! HA! 

For What It’s Worth…  Well, I’ve talked a lot about Russia’s plan to de-dollarize through these past couple of years, and how they’ve recruited China to join them… Well, this article was featured on Ed Steer’s letter this morning, and so it qualifies as worthy of being a FWIW article! This is about how Russia could achieve their de-dollarization easily, and it can be found here: Russia could ditch dollar by lifting tax on gold purchases – economist — RT Business News

Or, here’s your snippet: “The Russian government could achieve its goal of de-dollarizing the economy by taking one simple step: dropping the tax it currently charges its citizens for the purchase of physical gold, an economist has said.

Russian citizens would get rid of their dollar savings to buy up gold bullion if the 20-percent value added tax (VAT) were eliminated, according to economics professor Valentin Katasonov, as cited by Russia’s business news agency Prime. He noted that the potential selloff would inevitably drag the greenback down.

However, the economist said that the country’s Ministry of Finance is likely to reject moves to lift the VAT as it would probably cause revenue shortfalls in the federal budget. 

According to Katasonov, Russians could stop hording U.S. dollars if investment in gold was more profitable. This could trigger a domino effect in many other countries that would welcome an opportunity to challenge the exclusive status of the greenback, he added.

But the expert sees this reason as a weak excuse, since the number of investment transactions in gold is so small that the loss would be insignificant in the overall context of the Russian budget.”

Chuck again…  Well, I like Ed Steer, had thought that this tax had been reported as removed a long time ago, but then I guess it apparently wasn’t!  This is scary stuff when you consider that a major country wouldn’t use dollars at all…  That could be a virus that spreads across the world… I’m just saying… 

Market  Prices 3/3/2021: American Style: A$ .7810,  kiwi .7276,  C$ .7918, euro 1.2062, sterling 1.3951, Swiss $1.0900, European Style: rand 14.9134, krone 8.4846, SEK 8.3929,  forint 301.52,  zloty 3.7586,   koruna 21.6706, RUB 74.08, yen 107.01, sing 1.3313, HKD 7.7568, INR 72.88, China 6.4694, peso 20.67, BRL 5.6606,  Dollar Index 90.93,  Oil $60.83,  10-year 1.44%, Silver $26.63, Platinum $1,206.00, Palladium $2,416.00, Copper $4.20, and Gold… $1,724.10

That’s it for today…  And unfortunately, tomorrow and this week too… I received confirmation yesterday that I am to report to the hospital for a blood test early in the morning… So, that pretty much puts the kyboshes on writing tomorrow morning… they sent me a QR code to access the testing area, strange ways we do things these days, eh?  It’s a game day again today!  My beloved Cardinals have 12 hits in two games this spring, and only one of them was a ringing extra base hit! But hey! the other teams have the same problem, as pitching is dominating right now… That will change as spring goes along… Hopefully!  The Blues come on at 9:30 tonight, so once again I’ll only be able to watch one period, before feeling sleepy!  Ok…  Clarence Carter takes us to the finish line today with his 70’s song: Slip Away…  I hope you have a Wonderful Wednesday, and will continue to Be Good To Yourself! 

Chuck Butler

 

 

 

 

March 2, 2021

* Currencies & metals continued to get sold on Monday… 

* What’s the 10-year Treasury yield’s tipping point? 

Good Day… And a Tom Terrific Tuesday to you! What a day yesterday! Simply beautiful and we didn’t do much but relax in the sun! We ended the day with a trip to the Palm Beach Ice Cream Co. I didn’t partake since I’m supposed to be watching my sugar intake…  But a fun day, Monday, was had by all! My St. Louis U. Billikens won their game last night, improving to 13-5… And the Blues played late last night out in Anaheim, so I had to check the score this morning…  And I see that they won 5-4…   The Blues have really hit a bump in the road recently, with a lot of injuries, and losses… But two consecutive wins for them now, maybe has turned things around… We will have to wait-n-see…  Johnny Rivers greets me this morning with his song: Summer Rain…. “Summer rain taps at my window… “

Well, another day of dollar strength yesterday, has me wondering what the heck are currency traders doing?  But it is what it is, and so, I won’t harp on and on about how the U.S. is going to print $1.9 Trillion in new dollars, and knowing that alone should have currency traders lining up to sell dollars… But Nooooo!  And so life goes on… But eventually this will all come crashing down on those dollar holders… I’m of the full mind and thought that this will happen…

Gold also couldn’t find a bid after it had gained $7.80 in the early trading, and found itself down $10.80 on the day to close at $1,525.80. Silver lost 17-cents on the day to close at $26.63…  That’s a two day losing streak for Gold, folks… But again, I’m not going to harp on and on about price manipulation today… We all know it’s there right before our eyes, and there’s nothing we can do about it, except buy physical Gold by the truck load and make the short position holders of Gold feel the hurt…  That would make my day, week, month, year, decade… 

The price of Oil also took a shot to the midsection yesterday, and lost $2 or so…. The 10-year Treasury bond saw some buying yesterday, and the yield dropped 3 BPS on the day…  I don’t know if you read the FWIW article yesterday, but it was a very important article to make you aware of the funding problem the U.S. is experiencing…  Fed Chairman Powell, says that demand for Treasuries is strong… But I beg to differ with him on that… If that’s so, I would like to call him on that, and ask him why then are Treasury yields rising?  You see, as bonds are bought, the price rises, and that causes the yield to drop..  So, if the demand is so strong, why are yields rising, Mr. Chairman?

In the overnight markets, the dollar buying has continued, but not as damaging as the previous two days…  The Dollar Index yesterday morning was 91.06, and this morning it is 91.15, so, not much movement but some dollar buying nonetheless…  Gold is up $4.60 in the early morning trading today, but since it couldn’t hold yesterday’s early morning gain, this doesn’t look promising to me…  Silver is down 21-cents this morning, so the two kissin’ cousins are going in opposite directions today… 

OK… here’s something that scares the bejeebers our of me…  According to zerohedge.com “27% Of All Household Income In The US Now Comes From The Government.” Wait! What? Yes…  going further into the article on zerohedge.com, “Following today’s release of the latest Personal Income and Spending data, Wall Street was predictably focused on the changes in these two key series, which showed a surge in personal income (to be expected in the month when the $900BN December 2020 stimulus hit), coupled with a far more modest increase in personal spending.

But while the change in the headline data was notable, what was far more remarkable was data showing just how reliant on the US government the population has become.

We are referring, of course, to Personal Current Transfer payments which are essentially government sourced income such as unemployment benefits, welfare checks, and so on. In January, this number was $5.781 trillion annualized, which was not only up by nearly $2 trillion from the $3.8 trillion in December it was also $2 trillion above the pre-Covid trend where transfer receipts were approximately $3.2 trillion.”

Chuck again… Ok, simple question, tough answer… What happens when the Gov’t’s transfer payments dry up? So, spend those Gov’t dollars while you can, spend, spend, spend… not only will you help inflation rise, but also run you dry… And once you’ve been run dry, there’s no more rain / dollars falling from the sky… That is until they implement Universal Basic Income!   And that thought sends shudders down my spine!

So, let me take you back in time… not too far back, just to September 2019, months before anyone in the world had contracted the Covid-19 virus… Remember me ranting and stomping my feet that the Fed was bailing out the banks that participated in the Repo Market?  There was a total of $9 Trillion dollars that were applied to allow the repo market participants to continue to borrow funds at cheap rates.  I kept pointing out that this was not a good thing, and that someone needed to explain to the public why the repo markets needed these funds, and to whom was receiving them… 

Yesterday, Pam & Russ Martens of Wallstreetonparade.com brought September 2019 back to everyone’s,  that reads their letters, minds… Their point was that no one in Congress is of mind to investigate where the $9 Trillion went… And so it’s just gone… flittered off into the wind…  We have 20 Million people without jobs, collecting unemployment, we have a large number of businesses that have closed since September 2019, and people that have lost their wills to carry on, and somehow the members of Congress don’t feel it’s worth their time to investigate where the $9 Trillion went…  But they have time for other nonsense… I’m just saying… 

Doesn’t that kind of stuff just make your skin crawl? It does mine, and longtime readers will recall me stating over and over again back in 4th QTR of 2019 that there were problems with the banking industry then, otherwise they wouldn’t need the Fed to intervene in the repo market.  Yes, we are 18 months removed from that time, and the banks are still operating… So, maybe it doesn’t matter?  NOT!  This just means that they have papered over their problems, and moved on down the line, but when the paper begins to get pulled back… Uh-Oh….  

There was a surprise in the U.S. Data Cupboard yesterday, when the ISM Manufacturing Index rose higher than expected and went from 58.7% to 60.8%…  Well, that’s all good and such, but what it should do in my humble opinion, is really ramp up the inflation fears… 

Speaking of inflation fears… You know all the while, Gold & Silver are seeing the price manipulators showing up at the COMEX with arms full of short contracts in Gold & Sliver, that the base metal, Copper, keeps pushing the inflation meter higher… Copper is up to $4.18, and trades each day with a strong bid…  I’m telling you now, so maybe you’ll listen to me later, that Copper rising in price is telling us that inflation is on its way, if not already here… 

The U.S. Data Cupboard only has Motor Vehicle Sales for February today, and that’s not anything that’s going to move the markets, so we’ll just move along for these are not the droids we’re looking for!

To recap… More dollar buying yesterday and overnight, has the currencies & metals  down on the canvas and the Referee is beginning his 10-count! Chuck talks about a problem with 27% of U.S. Household Income comes from the Government… Yes, that’s a growing problem folks… One that needs to be addressed by Congress… Another thing that needs to be addressed by Congress is what happened to the $9 Trillion dollars that the Fed gave to the banks participating in the repo market in Sept, 2019? 

For What It’s Worth…  Yes, with the two snippets above I could have had 3 FWIW articles for today…  But this is the one that gets the flood lights shined on it… I’ve spent some time recently talking about the rising Treasury yields, and when I saw this on zerohedge.com I thought this is interesting, as it’s about the tipping point for Treasuries, and it can be found here: BofA: 1.75% Is The “Tipping Point” For Bonds | ZeroHedge

Or, here’s your snippet: “Almost two months ago, Nomura correctly predicted that once the 10Y breaches 1.50%, stocks would freak out and sure enough that’s precisely what happened (with Nomura’s forecast becoming self-fulfilling and sparking a stop loss cascade one the 10Y hit 1.50% last Thursday, sending the 10Y as high as 1.61% in a matter of seconds following last week’s dismal 7Y auction).

So now that 1.50% is yesterday’s news, Wall Street is scrambling to define the next critical level for 10Ys beyond which there will be blood. As a reminder, yesterday Goldman hinted that 2.10% is what traders should be looking at, but that seems a lot, especially with many far more accurate forecasters saying that the Fed will have to engage YCC around 2.0%, and for that to happen stocks would need to crash first. Therefore, the next critical level is likely one between 1.50% and 2.0%.

One such level was proposed by BofA’s chief equity strategist, Savita Subramanian who today writes that “history suggests that 1.75% on the 10-yr (the house forecast and ~25bp above current levels) is the tipping point at which asset allocators begin to shift back to bonds” and thus sell stocks in the next wave of aggressive liquidations.

Why 1.75%? Because that yield on the 10Y is decisively above the S&P’s dividend yield, and where according to BofA “there is an alternative to stocks”. 

So after last week’s fireworks, will bonds continue to rise from the current level of 1.43%, and how fast until they reach the new “tipping point”? 

Nomura estimated

“that the 10yr UST yield is currently about 30bp above the fair-value yield implied by trend-following strategies. Short-covering by CTAs and other speculators for the sake of locking in profits may serve the purpose of reeling the 10yr UST yield back in.”

Chuck again…  Lot’s of talk about how the yield of the 10-year Treasury has about topped out, I believe can be misleading…  But, we’ll have to wait-n-see, now won’t we? 

Market prices 3/2/21: American Style:  A$ .7801,  kiwi .7264,  C$ .7906, euro 1.2034, sterling 1.3912, Swiss $1.0905, European Style: rand 15.0352, krone 8.5030, SEK 8.4243,  forint 302.26,  zloty 3.7692,  koruna 21.7258, RUB 74.18, yen 106.93, sing 1.3307, HKD 7.7570, INR 73.43, China 6.4638, peso 20.64, BRL 5.5994,  Dollar Index 91.15,  Oil $60.65,  10-year 1.44%, Silver $26.42, Platinum $1,191.00, Palladium $2,416.00, Copper $4.18, and Gold…  1,730.40

That’s it for today…  Well, we’re supposed to see some rain today, but no biggie, that will bring another cold front through, and our highs for the next few days will be in the high 70’s…  Again, still warm, and sunny!  The weather should be great for youngest son Alex’s visit this weekend… Alex has not visited down here since we moved to the 3rd Floor 3 years ago… As I look out the glass I see the ocean, and it looks like a lake today, with no chop or strong waves…  That means the wind has died down…  Once the rain goes through, should be another fun day!  3 Dog Night takes us to the finish line today with their song: Easy To Be Hard…  This is the live version from an album I had as a teenager, that I played over and over again, until it wouldn’t play any longer!   UGH!   I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler

 

 

 

March 1, 2021

*Dollar buying is strong once again… 

* The markets say no-mas on Treasuries! 

Good Day, and a Marvelous Monday to you!  And Welcome to March! Well, I attended my first spring training game of 2021 yesterday, and my beloved Cardinals tied the game 4-4. In spring training they don’t play extra innings…  I don’t want to jinx my beloved Cardinals, and I know it was only the first game of the year, but… It’s the same old thing with this team.. They can’t hit with runners on base…  There! I said it out loud I sure hope they prove me wrong on that! It’s been a fun weekend with our guests here… Lots of good conversation and laughs to go all around!  Los Bravos greet me this morning with their song: Black and Black…  “I want my baby back… It’s grey it’s grey, since she went away,”

A great 60’s song no doubt!  OK… well Friday was a very nasty day for the currencies and metals…  Gold lost $34 and the Dollar Index rose to 90.76 from a low of 89.90 on Thursday.  What the heck happened?  Can you say, Manipulation? I thought you could…  Not that you wanted to , for you know that any manipulation is bad for your non-dollar investment portfolio holdings…

It all began with some stronger than expected data and that got the price manipulators thinking that this would be a great time to lay it on…  So, let’s get to the stronger than expected data…  First of all the Weekly Initial Jobless Claims for the previous week saw a drop from 841,000 to 730,000.. and you could hear the spin doctors screaming from the roof tops that this was a great number!  I even hear a dolt on the TV say, this drop represents a huge improvement in the jobs picture…  Really?  Ahem, let me point out that the previous week was short one day, due to the President’s Day holiday… And that, alone was probably responsible for the drop in the figure…  But the reporter that was telling us that it was a great number, failed to report the fact that the numbers were a day short! No, he decided that the numbers being one day short wasn’t important!   What a dolt!

Then on Friday, Personal Income soared in January soared higher by 10%… Really? Because if that’s really what happened, then there was reason to celebrate!  And Personal Spending also soared in the month by 2.4%…   What a bunch of B.S.!   December was negative Consumer Spending, and the gov’t is telling me that it rebounded in January?  I’m not buying this data on iota!

So, the data got the dollar Traders to get all lathered up and buy boat loads of dollars, when just last week they were willing and ready to sell dollars by the boat loads…  But it is what it is… and just because I don’t’ agree with it, doesn’t mean it didn’t happen!  So, as I said above, Gold last $34 dollars on Friday to close the week at $1,736.60… And Silver lost 73-cents to close at $26.80…  And the euro which last Thursday was pushing higher lost a ton of ground and closed the week at 1.2080… It was all about the data on Friday…  with no one looking ahead to the weekend…

For on this past weekend the long awaited $1.9 Trillion stimulus bill was passed by the House and therefore it is ready to go forward, which means you can expect your stimmy checks soon… And the Gov’t will soon be printing another Trillion dollars out of the blue! But nooooooooo, currency traders couldn’t be looking ahead to what was going on this past weekend, and not get all entangled with the data from Friday!

In the overnight markets the currencies continue to get whacked, but Gold is up $7.80 in the early trading this morning, so we have that going for us, eh?  Remember last week when I told you that currency traders wanted to sell dollars, but were fearful of the PPT and their ability to dump large sums of money in the markets and buy dollars to protect the dollar from a steep fall?   Well, that’s exactly what happened last week, and now the fear of the PPT is fresh on every currency trader’s collective minds…  

And so now the currencies have to pick them selves up by the boot straps, and try to build some momentum that would put the Dollar Index back to sub-90, where it stood on Thursday morning last week… The Dollar Index is stronger again this morning from the currency selling overnight, and the Index sits at 91.06…  Even the 3 currencies that had been kicking the dollar’s tail and taking names later, (sterling, kiwi, and A$’s) got whacked and will have to get up off the canvas and fight back… 

I get part of the idea behind the dollar buying… It’s due to the idea that the stimulus bill will invigorate the U.S. economy… But I’m not buying that idea one iota… The previous 2 stimmy checks didn’t do the job, what makes them think that this one will?  

The U.S. Data Cupboard is a non-event again this week, with only a few scattered about data prints that move markets, like today’s ISM (manufacturing index). We will end the week with the BLS’s Jobs Jamboree for January…  This will be an important data print, but it won’t be correct, as you can bet your sweet bippie that the BLS will add tens of thousands of jobs from thin air, because well, they think the stimulus money is going to get businesses to hire people…  As a reminder, December’s Jobs numbers were just 49,000 jobs created that month… And with the deep freeze, snow, and ice that presided over most of the country during January, I don’t see the 210,000 jobs created that the so-called experts are calling for…  

To recap…  The currencies and metals got whacked with a large switch to end last week, and in the overnight markets there’s more dollar buying pushing the currencies even lower… Gold is up $7 in the early trading, but after Friday’s $34 loss, $7 looks like a pittance of a recovery…   Chuck thinks that it was the PPT protecting the dollar from a steep fall… And the strong Personal Income and Spending data for January is really suspect in Chuck’s eye… 

Before I head to the Big Finish today, I wanted to talk about something and that is all these bubbles that exist today in the markets… And it includes residential real estate… The Fed has pushed the bubble machine to the edge of a cliff, if you ask me… This last Stimulus check and I don’t mean the “last one ever” I mean the latest one, I believe will be the straw that breaks the camel’s back, meaning the dollar… the stock market bubble, the real estate bubble, the bond bubble, I could come up with other bubbles but these are the major ones…  I find that these bubbles are inexcusable for a country like the U.S. with all the propeller heads we have you would think that someone would have stood up and questioned the Fed’s moves to blow more air in the bubbles… But NOOOOOOOOO!   I’m just saying… 

For What It’s Worth…  Well… I just mentioned that I thought the new stimulus bill would be the straw that breaks the camel’s back, and in bonds especially…  Here’s the deal.. you are the Fed and Treasury, and you flood the markets with your Treasury bonds, right? Well, there comes a time that the markets become unsaturated with these bonds, right?  Well, that time could be now, and that’s the article this morning that talks about this scenario, and it can be found here: Wall Street Sends a Message to the Fed: We Have Run Out of Places to Stuff Your Treasuries (wallstreetonparade.com)

Or, here’s your snippet: “The action in the U.S. Treasury market yesterday reminded us of the classic “I Love Lucy” episode at the chocolate factory. As the conveyor belt churns out chocolate balls faster than Lucy and Ethel can handle them, they resort to stuffing them in their mouths, their hats, and their shirts. Lucy remarks: “I think we’re fighting a losing game.”

That was the scene in the Treasury market yesterday – too much supply and no where to stuff it, causing a sharp spike in yields which set off a stock market selloff that left the Dow down 559.8 points or 1.75 percent on the day, while the tech-heavy NASDAQ fared far worse, losing 478.5 points or 3.52 percent.

That the Treasury market is now projectile vomiting T-notes should come as a surprise to no one. As the chart above indicates, yields on the 10-year note have been rising sharply since early August, with the yield more than tripling from 0.50 percent to an intraday spike yesterday of 1.61 percent. The 10-year note opened this morning at 1.52 percent.

The sharp and persistent rise in yields have left those who bought the T-notes at dramatically lower yields licking their wounds from heavy losses. (Prices of notes and bonds move inversely to their yields.) That has also dramatically lessened the appetite to buy more Treasuries at the current yields when the supply is expected to continue to increase as a result of rising government deficits and stimulus spending.

Another catalyst for yesterday’s selloff in Treasuries was a very sloppy Treasury auction where the government attempted to stuff $62 billion of a 7-year Treasury note into an already over-supplied market.”

Chuck again… you see… when the markets can’t take anymore of an asset, they demand a higher yield to stretch their holdings… And that’s what’s been going on in bonds, as the yield on the 10-year Treasury has gone from .50 to 1.43% Almost a tripling of the yield in a matter of months… Well, if bond yields keep rising, the end of the bond rally will be nigh… I’m just saying…

Market Prices March 1, 2021: American Style: A$ .7726, kiwi .7233,C$ .7876,euro 1.2044, sterling 13954, Swiss $1.0957, European Style: rand 15.0269, krone 8.6441, SEK 8.4885, forint 301.48, zloty 3.7571, koruna 21.6732, RUB 74.52, yen 106.70, sing 1.3316, HKD 7.7570,  INR 573.55, China 6.4760, peso 20.86, BRL 5.5974, Dollar Index 91.06, Oil $62.06, 10-year 1.43%, Silver $26.91, Platinum $1,216.00, Palladium $2,401.00, Copper $4.17, and Gold… $1,744.32

That’s it for today… shorter than usual, but I wasn’t on my laptop all weekend reading and making notes…  I’m of the belief that this week’s letters will all be of the shorter variety… I’m busy! HA! Well, my St. Louis U. Billikens won their game yesterday, which should put them in good standing with the NCAA selection committee… At least I would hope so! No baseball for me today, and none until Wednesday… Yesterday, was full sun and heat to start the game, but eventually there was some cloud cover and a pleasant breeze that made the day even more enjoyable…  Well, it’s Happy Birthday to Dianne Schuette, who’s here with us for a few days! March is my second fave month…  And don’t forget that I’ll be on my annual spring vacation in a two weeks…  Seals & Crofts take us to the finish line today with their song: Summer Breeze…    I hope you have a Marvelous Monday, and please Be Good To Yourself! 

Chuck Butler

February 25, 2021

* Currencies have another nothing day on Wednesday

* Gold stages a huge comeback on Wed. & will have to do another today… 

Good Day… And a Tub Thumpin’ Thursday to you! It’s been quite a week for yours truly, and I’ll finish it with a bang, as I’m grilling steak tonight for a dinner with friends, and then tomorrow friends from St. Louis will be arriving… An old drinking buddy, Gus and his beautiful bride will be with us for a few days, which includes going to the baseball games… I was going down some steps yesterday, and noticed a sharp pain in my right knee… when I got to the deck I looked down and my knee was swollen big time! I has surgery on that knee about 18 years ago…  I’m hoping that’s not required once again! One of my fave Steely Dan songs greets me this morning.. The song?   FM…   “Give her some funked up muzak, she treats you nice… Feed her some hungry reggae, she’ll love you twice”

Well, Wednesday was another nothing day for the currencies…  The Dollar Index was 90.10 yesterday morning, and at the end of the day it was 90.11…  That marked two consecutive days when currency traders couldn’t decide which way to go with the dollar… Like I’ve said before, I know that in their heart of hearts the currency traders want to sell dollars… But are fearful of the PPT ruining their positions…

Gold traded down immediately yesterday, and at one point in the day it was down $17…  But… at the end of the day it only down $1.70, to close at $1,805.80, completing a nice strong comeback for the day… Silver was in positive territory from the get-go yesterday, and ended up 30-cents to close at $28.05…  I have to say that there are so many pundits out there singing the praises of Silver, that their singing alone should be enough oomph Silver would need to move higher in price VS the dollar..

In the overnight markets… the dollar has gotten ambushed! The Dollar Index is 89.80, down form 90.11 at the close yesterday.  I want to point out that the two currencies that outperformed all other currencies in the last weak dollar trend, The Aussie dollar (A$) and New Zealand dollar (kiwi) are doing it again… These two currencies have been very stealthlike, but not to me! I see what you’re doing… for I see all! HAHAHAHA! 

Gold, on the other hand is not participating in the ambush on the dollar overnight. In the early trading this morning Gold is down $19… Why? Because that’s what the price manipulators deem Gold to be…  So, will Gold stage another comeback today? Now THAT would be something, wouldn’t it?  We can only hope…  Silver is basically flat this morning as it is down 2-cents, so basically flat in my book… 

The price of Oil has climbed another buck and this morning trades with a $63 handle…  And Treasuries got whacked good yesterday, with the yield on the 10-year Treasury rising to 1.44%… (remember in bonds, as the yield rises the price of the bond goes down)  The Bond Boys keep throwing us bones (hints) and the markets are ignoring them… 

Maybe it’s built up frustration by the currency traders overseas last night, as they’ve been wanting to sell dollars badly, and just decided to hell with it and go for it! 

OK… well, longtime readers will recall me going the full nine yards a few months ago, when I talked about what I saw coming for the U.S. citizens… Spoiler alert for those that don’t recall or are new to class… I talked about the folding currency/ dollar, being replaced by digits… And everything you buy, sell or steal, would be on record, and eventually someone in power would be dictating to you how to spend your money, and could get so bad that they deny the withdrawal of the digits to pay for something that you want…  I know, I know, I’ll take my tin foil hat off now…

Or… maybe I won’t…  Yesterday, Cartel, I mean Fed Chairman, Powell talked to Congress, and well, I’ll let the Business Insider tell you the rest. “Federal Reserve Chairman Jerome Powell told Congress on Tuesday that the Fed is “looking carefully” at whether it should issue a digital US dollar.”

“A digital currency developed by the fed is a “high priority project for us,” Powell told Congress, but he added that there are “significant technical and policy questions” related to a digital US dollar.”

“We are committed to solving the technology problems, and consulting very broadly with the public and very transparently with all interested constituencies as to whether we should do this,” Powell said.”

Chuck again…  Ok, remember earlier this week when I offered to be a writer for Janet Yellen and finished her statement? Well, here I am, ready, willing and able to do the same for Mr. Powell… So here goes… “ basically we don’t care what the constituencies say, we’re going ahead with this digital currency, so you all had better get ready for the digits to show up in your bank account one day in the near future… “

I don’t know about you, but I’m the kind of person that absolutely loves having a pocket full of folding currency / dollars… I started my first job while I was in 7^th grade… I went door to door selling subscriptions to the now defunct Globe Democrat newspaper… I was so good at it, I won a trip to Daytona Beach all expenses paid!  Any way… what I was getting at, was at an early age, I leaned about having money in my pocket, and I’ve held that thing of having money in my pocket in my mind ever since…  And I will be so lost when the day comes that we no longer can have folding currency/ dollars in my pocket…

And I don’t believe it will do you any good, to bury some folding currency / dollars, in your back yard, or stuff them in coffee cans… That is unless there’s a black market that deals in folding currency…

Did you know that China’s version of a digital currency has already been tested in 3 different Chinese markets/ cities?  Well, it has and I would think that the Chinese will be ready to issue it nationally soon…  Nearly every Central Bank in the World is working on or have already worked on the development of a digital currency… So for now, I’ll keep my tin foil hat on top of my bald head! 

OK, let’s talk about something else as that discussion was really depressing me…  Let’s talk about Going Big… There’s a new TV show called the Go Big Show and I’m wondering if Treasury Sec. Janet Yellen is auditioning for the show?  Let’s listen in to here latest thoughts…

“Janet Yellen, the economist picked by Joe Biden to run the US Treasury, has said America needs to “act big” to revive its flagging economy and protect itself against long-term scarring with a major stimulus package.”

Chuck again… Yeah, let’s just keep going bigger all the time, Janet…  That is until you cause hyperinflation that wrecks the remaining value of the dollar!

It’s all a mystery to me, how traders can hear this stuff, and that stuff about stimmy checks, and the daily reminders of the rot on the economy’s vine, and not sell dollars until the cows come home! What on earth are they waiting for?  Are they waiting for confirmation that hyperinflation is among us?  You know, we may not ever really reach the 50% inflation rate rise in one month, that would qualify as hyperinflation, but what difference would it make if we only got to 35%?   

Just for grins… In 1919 the German mark was 48 marks per dollar, and inflation was rising rapidly, six month later the mark traded at 320 marks per dollar…  And with inflation rapidly increasing, the mark fell to 7,400 marks per dollar by Dec. 1922…  And the cost-of-living index, for Germany was 41 in June 1922 and 685 in December, a nearly 17-fold increase.

The strategy that Germany had been using to pay war reparations was the mass printing of bank notes to buy foreign currency, which was then used to pay reparations, but this strategy greatly exacerbated the inflation of the paper mark.. Sound familiar?

And the key here is that there is no Ronald Reagan and Paul Volcker to fight the rising inflation this time… All we have are some knuckleheads who think that you just print your problems away…  Inflation will weaken a currency, strong inflation will hurt a currency, and hyperinflation will render the currency worthless… As it did in Germany 100 years ago…

The U.S. Data Cupboard will finally get its act together, and have some real economic data for us to view today, starting with, The Weekly Initial Jobless Claims for last week… The thing to keep in mind here is that last week was one day shorter due to the holiday on Monday, so the numbers might be lower, but you’ll know why…  In addition to the jobless claims, we’ll also see the color of  January Durable Goods and Capital Goods Orders…  And finally today, there will be a 1^st revision of 4^th QTR GDP….  Remember what I told you when the original GDP figure of 4% showed up… That if you took out Government spending, the number would be very low…

I used to have friendly arguments with an economics professor who would explain that when consumer spending weakens, the Gov’t’ spending needs to ramp up to fill the void…  And I would argue, why does the Gov’t spending need to be a part of GDP?   Even more so now it gets ridiculous with all gov’t’s printing presses working overtime, and their new Magic Money Tree, they could make GDP be whatever number they wished for!  Want 10% GDP?  Well, it will be gotten in the future, if those in power begin to use the Magic Money Tree like an ATM…  I’m just saying…

To recap… it was another nothing day for the currencies, and Chuck still believes that traders want to sell dollars, but are afraid of the PPT…  Gold had a nice comeback on Wednesday, after falling by $17 it ended the day only down $1.70… Silver climbed back above the $28 handle…  In the overnight markets the dollar has gotten ambushed, and the Dollar Index is trading this morning at 89.80…  And there was no data to speak of Wednesday, with Jerome Powell telling Congress about the digital currency the Cartel, I mean the Fed heads are working on… And Chuck gives us something to think about regarding inflation…

For What’ It’s Worth…. Well, I’ve been talking about Russia’s desire to dedollarize and how they’ve recruited China to join them for some time, but this morning I found this on Bloomberg.com and it stuck out like a man with a hatchet in his forehead, that this should be today’s FWIW… And so it is..  And it can be found here: Russia Must ‘Barricade’ Itself Vs. Dollar, Senior Diplomat Says – Bloomberg

Or, here’s your snippet: “Russia must take urgent steps to cut its use of the dollar to a minimum as the new U.S. administration of Joe Biden signals it will ramp up sanctions, a top diplomat said.

“We need to barricade ourselves against the U.S. financial and economic system to eliminate dependence on this toxic source of permanent hostile actions,” Deputy Foreign Minister Sergei Ryabkov said in an interview today in Moscow. “We need to cut back the role of the dollar in any operations.”

Russia is bracing itself for the latest U.S. punitive measures over the nerve-agent poisoning and imprisonment of opposition leader Alexey Navalny. In a speech to the Munich security conference last week, Biden said that addressing “Russian recklessness and hacking into computer networks in the United States and across Europe and the world has become critical to protecting our collective security.”

The U.S. has imposed more than 90 rounds of sanctions in recent years targeting state banks and corporations, the oil and gas sector, top officials, and business tycoons and is likely to add more restrictive measures, Ryabkov said.

Chuck Again… I have an idea for you Mr. Deputy Foreign Minister, please whisper in Mr. Putin’s ear that he should be using the selling of dollars to buy more physical Gold…   

Market Prices  2/25/21: American Style: A$ .7984,  kiwi .7455,  C$ .8013, euro 1.2232, sterling 1.4149, Swiss $1.1035, European Style: rand 14.7578, krone 8.3423, SEK 8.2217,  forint 294.30,  zloty 3.6870,  koruna 21.3299, RUB 73.74, yen 106.12, sing 1.3181, HKD 7.7539, INR 72.49, China 6.4547, peso 20.65, BRL 5.4281,  Dollar Index 89.80,  Oil $63.42,  10-year 1.44%, Silver $28.03, Platinum $1,255.00, Palladium $2,454.00, Copper $4.19, and Gold… $1,786.80

That’s it for today and this week… It’s a froggy morning here, but a truly expect it to burn off soon to reveal another beautiful day…  So, spring training games will begin this weekend! I really don’t like the new way tickets are dispersed. They show up on your smart phone, no more saving ticket stubs from memorable games!  And, I’m not even your last choice for a tech-savvy person, so there’s that…   The great Al Stewart takes us to the finish line this morning with his song: The Year of The Cat…  I just love the melodic music that he plays…  Ok… I hope you have a Tub Thumpin’ Thursday, and a Fantastico Friday tomorrow, and will promise to Be Good To Yourself all weekend long! 

Chuck Butler

February 23, 2021

* Currencies see little to no movement on Tuesday

* Chuck brings The 5 to the Pfennig… 

Good day… And a Wonderful Wednesday to you! Well, I spent another afternoon out on the deck reading with the sun coming down on me, and blue umbrella skies above… The beach restoration that has been going on for a month here is completed, and I have to say that this is the best I’ve seen the beach look here in the over 12 years we’ve been coming here… Chuck & Kathy sat out on the balcony a couple of nights ago, watching the beach restoration team work under the lights!  I have to knock on wood before I say this last piece…  Man, have I been feeling pretty good lately! Stronger, and not as fatigued as usual… This is when something happens that sets me back usually… So, let’s hope that isn’t in the cards this time!  The late great, Otis Redding greets me this morning with his song: Can’t Turn You Loose…  It’s from his recording at the Whiskey A-Go-Go back in the day…  Many years later I met some dealers from New Zealand in the Whiskey A-Go-Go and kept thinking that this was the place that Otis Redding performed…

Talk about a nothing day in the currencies! The Dollar Index yesterday morning was 90.10, and at the end of the day it was still 90.10…  One of the currencies not included in the basket of currencies that make up the Dollar Index, the Aussie dollar (A$) has very quietly, and stealthlike, moved higher nearly every day… The A$ yesterday morning was .7907, and at the end of the day it was .7945… So, moving higher day by day… And it gets me wondering what this is all about… Back in the day, you could count on a nice interest rate differential between the U.S., euro, or yen and the A$… With the A$ holding the advantage, and attracting investments all over the world… But in today’s world of zero interest rates, the interest rate differential for the A$, just isn’t there… So… What is it that is garnering such interest to the A$ these days?

The Aussie have the front seat to the economic growth in China…  And for that, I believe they are being rewarded with a stronger currency…  See? It’s not often that you get the answer to your question so quickly! HA!

Gold & Silver didn’t fare as well as they did the previous day… Gold lost $4 to close at $1,807.50, and Silver lost 46-cents to close at $27.75… And I was just commenting yesterday that the $28 handle that Silver had risen to looked good… And then the $28 handle was lost! Don’t worry, for it is my belief that because of the shortage of Silver supply, and the demand for physical Silver, that it won’t take long for Silver to regain the $28 handle and as Buzz Lightyear says, “to infinity and beyond!”

And just like Silver, the price of Oil couldn’t hold its newly found $62 handle yesterday… Back and forth the price of Oil goes… Have you experienced gas price shock?   The price of regular gas has moved steadily higher as the Texas freeze plays a part of that… Refineries were shut down and no oil has been refined to gas in over a week, so even with the demand still not what it once was, it is still stronger than 6-months ago, and with supply problems… voila! Gas price shock!

When you have to shell out more each week for gas than you used to have to shell out, that increase in gas prices reduces your overall disposable income…

In the overnight markets… There was a definite quiet to the overnight markets as if they didn’t want to wake anyone up! The Dollar Index is trading at 90.09, so there’s been little movement in the currencies overnight.  Gold & Silver are trying to erase the bad taste of yesterday’s selling, and are up marginally in the early trading today.  The Price of Oil is back above $62, and the 10-year Treasury’s yield is steady Eddie at 1.36%

And nothing seems to standing in the way of the rise in the price in Copper these days…  Copper is a good inflation indicator folks… And the base metal is trading with $4.16 price per pound this morning…  

I had a dear reader send me a note yesterday, after the FWIW article with Michael Burry talking about hyperinflation, and asked me to go deeper into how  investors can protect themselves from such hyperinflation… And that got me thinking… Hadn’t I already told you dear readers over and over again that having up to 20% of your investment portfolio allocated to Gold & Silver to hedge against dollar weakness and inflation?   And apparently Copper should be added to the portfolio allocation…  So, there you have it! 

In Agora’s 5 Minute Focus or The Five, yesterday, editor Greg Gonigam, featured some thoughts from James Rickards about the issuance of SDR’s (Special Drawing Rights)… This is very important folks, and so I’m going to borrow some of The Five and bring it to you here…

“But whatever the source of the panic, we know this: “The next panic will be bigger than the central banks’ ability to put out the fire,” as Jim explained here in 2015. “The only source of bailout cash will be the SDR.”

Result?

“The SDR has the power to reduce the dollar to the status of a local currency no different than the Mexican peso.”

Again, you and I will still use dollars. But they’ll no longer be the world’s go-to currency. That will be the SDR’s function in the aftermath of the present crisis — whatever it is.

The genius of the scheme is that SDRs would create inflation… but everyday folks would have no idea SDRs were the cause.

“Any inflation caused by massive SDR issuance would not be immediately apparent to citizens,” Jim wrote. “The inflation would show up eventually in dollars, yen and euros at the gas pump or the grocery, but national central banks could deny responsibility with ease and point a finger at the IMF.”

Chuck again… Thank you Dave for allowing me to share the 5 with my readers…  The other thing that this would do is devalue the dollar… And you can refer to my Pfennig yesterday, when I explained how the dollar didn’t have value any longer… A devaluation of the dollar would be the end game for the dollar, in my opinion…

OK… Well that’s a lot to take in on a morning with your coffee… So, I’ll move along here for now…  But you, dear reader, know all too well, that I won’t allow that discussion to end there, and there will be more on that in the future!

Before I go on… Got Gold?

The U.S. Data Cupboard is still lacking today, with only Jerome Powell, Cartel, I mean Fed Chairman testimony on the docket…  We’ll have to wait until tomorrow for any real economic data, which will come our way on Thursday with the Weekly Initial Jobless Claims, Durable and Capital Goods Orders will print for our review…

To recap… The Currencies basically traded in the same clothes as Monday, with the Dollar Index not changing on the day at 90.10…   Gold lost $4, and Silver lost 46-cents  on the day, with Silver losing the $28 handle. Chuck doesn’t believe that it will be lost too long…  In the overnight markets there was little movement in the currencies, and Gold & Silver are trying to remove the bad taste of yesterday’s trading this morning… And Chuck brings the Five Minute Forecast to the Pfennig this morning…

For What It’s Worth… OK, the good folks at GATA sent me the link to this article about how to achieve price discovery again in Silver… And it can be found here: A Modest Proposal For Price Discovery In The Silver Market | Investment Research Dynamics

Or, here’s your snippet: “Price discovery is the process by which a free market uses price to balance supply and demand. But price discovery has been absent from the gold and silver markets for decades. This is why a shortage in physical gold developed in March 2020 and why an even more severe shortage in silver has developed currently.

I believe a push to impose price discovery on the entire market will come from the authorized purchasers pushing the various mints to raise significantly the price the mints will pay the refiners for silver.

Refiners can then turn around and give purchase orders to mining companies at much higher prices. This will require a very aggressive push from the APs to hammer on the mints. Perhaps even cc:’ing the refiners in the effort to make refiners aware that the market will bear a much higher price for silver.

If mints offer refiners considerably more than the current “market” price, refiners will divert production to the higher bidding mints and away from selling production of bars to the Comex and LBMA. This will force the players on each exchange to at least match the new market price for silver.

At the very least, the current holders of silver will sell some or all of their holdings if the price rises enough to induce selling. Proper price discovery will find the level that creates enough supply to fill demand.”

Chuck again… Now wouldn’t it be nice to see price discovery return to the markets?  (Bet you thought I would break into the lyrics of the Beach Boys song Wouldn’t it be nice)

Market  prices 2/24/21: American Style: A$ .7930, Kiwi .7390,  C$ .7965, euro 1.2165, sterling 1.4138, Swiss $1.1020, European Style: rand 14.4634, krone 8.4239, SEK 8.2919,  forint 295.59,  zloty 3.7143,   koruna 21.3283, RUB 74.06, yen 105.80, sing 1.3201, HKD 7.7545, INR 72.31, China 6.4616, peso 20.38,  BRL 5.4531,  Dollar Index 90.09,  Oil $62.23,  10-year 1.36%, Silver $27.88, Platinum $1,267.00, Palladium $2,402.00, Copper $4.16, and Gold… $1,809.60

That’s it for today… I was looking at the calendar yesterday, and realized I had not given any notice that I’ll be taking my traditional spring vacation starting March 18, and returning March 30^th…  And then it will be time to get ready to head home for Easter! Only 5 more days until my first baseball game of the year… I’m psyched! And  we’ll have guests this weekend too! YAHOO! Man, did my St. Louis U. Billikens get homered last night at VCU! That was an absolute homer call at the end of the game that cost the Billikens a chance at the win…  I was very disgusted with the refs last night… My beloved Mizzou Tigers also played last night,  and the outcome of that game was not any better, as the Tigers couldn’t keep from turning the ball over… They didn’t “value the ball”!  The NCAA Tournament, that hopefully won’t be cancelled this year, will have their Selection Sunday March 14, and then the March Madness begins!  Paul Revere and the Raiders take us to the finish line today with their song: Kicks…   “Kicks just keep gettin’ harder to find. And all your kicks ain’t bringin’ you peace of mind.”  I hope you have a Wonderful Wednesday, and please Be Good to Yourself!  

Chuck Butler