Author: admin

June 16, 2021

* Currencies gain tiny amounts on Tuesday… 

* It’s Groundhog Day again for Gold & Silver… 

Good day… And a Wonderful Wednesday…  First of all I want to thank all of you who sent along messages to me yesterday regarding me not answering the bell… I do need to make one thing clear… I’ll be on chemo for the rest of my life… I have a kind of cancer that will just pop up anywhere, witness the eye cancer years ago… So, there will be no “end of treatments” for me, until they drop me down 6 feet… Or cremate me, whatever Kathy chooses to do… Not that I’m expecting that to happen any time in the near future, so I’ll keep truckin’, and have to call in sick once in a while…  Fun stuff to start the day with, eh? That’s my life…  Ok… well, we’ve passed the ½-way mark of June… Soon it will be the 4^th of July before we know it! The Moody Blues greet me this morning with their song from the Seventh Sojourn Album (one of the albums I would take to the island with me!): Lost In A Lost World…  Which is where I find myself these days… lost, in a lost world…

Yesterday’s rant about inflation, failed to point out something that I’ve talked about previously several times, and that is the supply chain disruptions causing shortages, and thus higher prices…  That is just one of the things causing inflation folks… Government printing of currency, is the main one… And let me remind everyone that I kept pointing out the inching higher of the Producer Prices (wholesale inflation) and pointing out that PP feeds consumer inflation… And yesterday, the Producer price Index for May rose .7%, which doesn’t sound that bad… But… and you knew there would be a but here, the .7% gain pushes the annual Producer Prices to a 6.6% rate… For those of you keeping score at home that 6.6% surge was the biggest 12-month rise in the final demand index since the Bureau of Labor Statistics began tracking the data in November 2010. 

Ok… I knew someone would come up with something funny about all this inflation… so here goes: Americans are getting stronger. Twenty years ago, it took two people to carry ten dollars’ worth of groceries. Today, a five-year-old can do it.  That’s one of those funny lines that would be even more funny if it weren’t true! 

So last week we had the highest consumer inflation in 13 years, and this week we get the highest producer inflation in 11 years…   And the Fed Heads meet today to discuss all these rising prices and decide whether or not they want to backtrack on their “transitory” mantra…  I don’t see them doing a mea culpa here, but maybe in some Fed-speak they come out and admit that prices are rising too quickly…  Don’t bet the farm on that!

So, once again, and Ed Steer is right, this does feel like Groundhog Day, and the metals couldn’t find a bid all day, and the currencies couldn’t find one that lasted for more than an hour or two… So, we start today with some very ugly looking numbers, but we’ve seen uglier, so we shouldn’t let it get to us too much…   But I’ve got to say this… In all my years of following markets beginning in 1973, I know most of you who have met me in person, are saying there’s no way he’s that old! HA!  But in all those years, I’ve never seen markets trade like this. Complete opposite of what should be going on…  So, as I said yesterday, James Rickards, believes inflation is a 2022 story… So, if the markets are truly forward looking shouldn’t they be looking at that? And trading accordingly? Never mind the inflation now, they’ve missed the boat on that… 

For the record…  The currencies ended the U.S. session with very tiny gains VS the dollar, it was as if currency traders were just not committed to selling dollars, which in my humble country boy opinion, they should be doing hand over fist… But they are not… at least not yet…  For comparison purposes between the morning and night in the currencies, the BBDXY began the day at 1,124.91, and ended it at 1,124.18…  

Gold & Silver like I said above couldn’t find a bid all day, and ended the day with Gold down $7.20 to close at $1,859.70, and Silver down 16-cents to close at $27.76…  Groundhog Day… 

The price of Oil is till rising and trades with a $72 handle this morning… This rise in the price of Oil has given the Petrol Currencies a little bit of comfort and they haven’t lost as much ground as the non-petrol currencies…

In the overnight markets… There’s been just a little more dollar selling, but not much, as the currencies try to push the gains higher, but are meeting major resistance. The BBDXY begins the day at 1,123.64, so some slippage from the end of the day yesterday, but the “some” is being liberally applied! 

The sad part is that it’s Groundhog Day once again for Gold, as the shiny metal is down $3.50 in the early trading, while Silver is up 4-cents, so both are not being traded a lot early this morning, which makes some sense as market participants await to hear what the Cabal Chairman has to say this afternoon about tapering… 

Well, I spoke of the Fed above, and while I was traversing through Twitter yesterday, I found this from Fred Hickey on his Twitter feed: “Years ago, the Federal Reserve Board was comprised of bankers & businessmen. Over time, it was taken over by economists, then by mostly “progressive” Ivy-league economists who care more about social activism than sound money & protecting the value of US$”

Man… that’s really doing an Aaron Neville and telling it like it is…

As I said above, the FOMC meeting is today, and is just a one day meeting, so no time to get the board games out, and hear Kashkari yell “you sunk my battleship”!   No, fun and games today, all serious business to be taken on, and then this afternoon they will announce what great plans they have to save the universe once again…  OK, they may be serious, but I’m not…  The markets kind of think that maybe, just maybe, cause you never know, the Fed will announce when they will begin tapering their bond purchases… I say, I’m from Missouri, and they’ll have to show me that this is what they are going to do, and then do it for me to believe that malarkey!

OK, after I said all that, watch, Jerome Powell get up in front of the press corps and tell them the Fed is going to start tapering in the 4^th QTR… Just to spite me!  Come on Jay, I know that someone at the Fed reads the Pfennig, and they tell you everything I say about the Cabal…

If I were one of the Press Corps there to ask a question of the Fed Chairman, Jerome Powell, I would say, “Hey Jay, did you hear the news?”  What news is that?   That a company that owns more than 100 shopping centers across the US has filed for bankruptcy, citing “significant challenges” as a result of the Covid-19 pandemic. Washington Prime Group, which currently owns 102 shopping centers across the country, filed for Chapter 11 bankruptcy protection late on Sunday…. 

I would continue with, “don’t you think that if the economy is that fragile, that we need to begin tapering bond purchases?” To which he would probably respond with, “That’s only Transitory”…  Because that’s his standard answer for everything these days… 

Speaking of currency printing… The POTUS was at the G7 meeting and telling the other member countries that they should continue their deficit spending, which means that he’s going to do that here at home…   I borrowed these numbers from Bill Bonner: $2.6 trillion in revenues through May. But $4.7 trillion in spending. You can do the math yourself, even using old school math where 2+2 = 4… And The deficit just keeps getting bigger and bigger… So, go ahead Magic Money Tree folks that include the POTUS, just keep spending money we don’t have… I shake my head in disgust, and say Tsk, Tsk…

The U.S. Data Cupboard yesterday, had May Retail Sales, and they were not a pretty sight to see, as they printed negative -1.3%, and when you just look at core sales, excluding Auto sales, the number was still negative at -.7%…  No new stimmy checks, no Retail Sales…   And Industrial Production for May disappointed, and left the markets with a sour taste in their collective mouths… But it just won’t change their “buy dollars” mantra right now…. 

Today’s Data Cupboard is dominated by the Federal Open Market Committee (FOMC)… And I’m afraid that getting excited about the outcome of the meeting is akin to playing solitaire till dawn with a deck of 51…

To recap… The currencies traded back and forth all day yesterday, and ended the day with some tiny gains VS the dollar, with the Petrol Currencies holding steady Eddie with the continuing rise in the price of Oil, which is trading with a $72 handle this morning… for Gold & Silver it was truly Groundhog Day, as Ed Steer calls it, because once again the metals couldn’t find a bid all day long…

For What It’s Worth….  Ok, I played around with the FOMC meeting today, and while I don’t believe the CABAL is ready to do any tapering, they could begin discussions on how and when to do it, and if Jay Powell decides to let the press know that these discussions took place, the markets could react violently, so we’ll have to wait-n-see, but first… I have this article that talks about the Cabal and its need to taper, and it can be found here: Fed tiptoes towards the taper stage months before the curtain call | Reuters

Or, here’s your snippet: “For the second time in less than a decade, the Federal Reserve is getting ready to launch a thorny debate over how and when to sunset a massive asset-purchase program that helped cushion an economy battered by crisis but left it with a mountain of bonds that may linger on its balance sheet for years to come.

Officials’ opening discussion about how and when to taper the U.S. central bank’s $120 billion in monthly bond purchases looks set to occur at this week’s two-day policy meeting and will take place against a dramatically different backdrop than the last time around, when they were more skittish about owning such a substantial slice of the bond market.

“I think the discussion will start” at the Fed’s policy meeting on Tuesday and Wednesday, said Robin Brooks, chief economist at the Institute of International Finance. “I think it will start very, very cautiously,” he added, and Fed Chair Jerome Powell won’t be in any rush to conclude it.

The risk of another “taper tantrum” – the market ruckus that erupted eight years ago when Fed policymakers first broached the notion of scaling back their bond-buying after the 2007-2008 financial crisis – appears remote this time. Fed officials have posted plenty of trail markers for the path to tapering, and key officials have signaled the discussion is underway in the background. Markets so far have taken it all in stride.”

Chuck again… Like I said, we’ll have to just wait-n-see in a few hours from now the FOMC meeting will conclude, and the press conference will begin…

Market price 6/16/2021: American Style: A$ .7706, kiwi .7145,  C$ .8210, euro 1.2117, sterling 1.4116, Swiss $1,1117, European Style: rand 13.7460, krone 8.3504, SEK 8.3584,  forint 290.30,  zloty 3.7276,  koruna 21.0038, RUB 72.06, yen 109.95, sing 1.3262, HKD 7.7619, INR 73.27, China 6.4008, peso 19.99, BRL 5.0602, BBDXY 1,123.64, Dollar Index 90.54,  Oil $72.34, 10-year 1.48%, Silver $27.80, Platinum $1,149.00, Palladium $2,856, Copper $4.31, and Gold… $1,856.20

That’s it for today….  Things are just so weird these days, that I have to stop myself from launching an all out attack on anyone that has anything to do with these days of opposites!  There! That’s been said! Well, my beloved Cardinals  have won two straight after last night’s 9^th inning walk off home run by Paul Goldschmidt… The Cardinals have fallen from first place to 4^th place with 2 weeks of shoddy baseball. Hopefully they’ve seen the light, and are ready to get back to playing baseball Cardinals style! As St. Louis fans, we don’t expect the Cardinals to win every game, but we do expect to see good fundamental baseball with tons of hustle, and grit at the plate every game…. There’s a day game at Busch today, and I’m going to go to the game! I hope I don’t feel like I need a nap during the game, so it’s up to you Cardinals to keep me entertained! HA! I love day baseball games…  And then tonight I’ll welcome home my beautiful bride from her 16 day vacation away from me! While she was gone, our 45^th wedding anniversary took place… 45 years… that’s a long time! OK… Midnight Oil takes us to the finish line today with their song: Beds Are Burning….  In the 90’s Midnight Oil was BIG, but then they faded away, like many of the other 90’s bands… I hope you have a Wonderful Wednesday, and Please Be Good To Yourself!

Chuck Butler

 

 

June 15, 2021

* The powers that be have said the dollar rules… 

* Gold & Silver can’t find a bid… 

Good Day… And a  Tom Terrific Tuesday to you! Well, I told you last week that there would be no Pfennig yesterday, as I had a dr. appt. scheduled. I realized over the weekend that I did not have an appt. that I had read my calendar wrong. What a dolt, right? But so I planned on surprising you with a Monday Pfennig… But it was one of those days… When the chemo catches up with me, and causes me to want to sleep all day… I finally woke up around noon… And the rest of the day, I kept thinking, I sure could use a nap! So, I guess I have to put that down as a day I couldn’t answer the bell… If you’ve never been on a chemo treatment plan, and you should thank God for that if you haven’t, you get what I’m talking about… I don’t use Chemo as an excuse for many things in life, I could… but I don’t… The Eagles greet me this morning with their song: Seven Bridges Road…

Well…  Last Thursday, we saw the stupid CPI print for May gain more than expected, and on an annual basis, consumer inflation is up 5%, a figure not seen here in the U.S. since 2008, and that’s when the price of Oil was $150.00!!!  John Williams over at Shadowstats.com reports that if we calculated inflation without the hedonic adjustments it would reflect a 13% inflation rate… Now I ask you this, doesn’t what you’re experiencing reflect more on the 13%, rather than the 5%?  I thought so… A dear reader send me a note last week telling me that his local grocery store sold a lb of bananas for 39-cents a month ago, and now they sell for 69-cents…  That looks like a greater than 5% move to me!

And still crickets from the Fed Heads about what they are going to do to put a halt to these rising prices… Do you recall that early in the 70’s after Nixon closed the Gold window, that inflation was beginning to rise rapidly, while the dollar went to hell in a hand basket, and Nixon implemented price controls?  Good try Dick, but it didn’t work!  So, what can the Fed Heads do to stop these rising prices?

Good friend, Dennis Miller sent me an article over the weekend from Zerohedge.com that was very interesting: “Denying that the current inflation cycle is nothing more than a base effect and is, therefore, “transitory” brings back memories of the 1970s. In the 1970s, Federal Reserve Chair Arthur Burns denied that monetary policy played a role in the inflation cycle. Mr. Burns argued that higher inflation was due to idiosyncratic factors, such as food shortages and the OPEC oil embargo.

Chuck again… Talk about a delusional man! I wonder what he thought by 1978?

OK, now back to the question at hand, of how can the Fed Heads stop these rising prices? Well, first of all they would have to WANT TO TAME INFLATION… And right now they, the Fed Heads, are allowing inflation to run hot… And secondly, they can’t do a damn thing to stop them! I’ve told you previously a few times that raising interest rates to combat inflation is out of the question for the Fed, that is unless they want to bring the economy to a screeching collapse!

Famous author and analyst, James Rickards, believes that inflation is NOT a 2021 story, but a 2022 story… Hmmm… Well, whether he’s right or wrong on that, mom and pops still need to deal with the rising costs of food, health care, insurance, autos, tuitions, you name it, NOW!

And reading all that, you might be thinking to yourself… Chuck has told us that inflation is the dollar’s kryptonite, and Gold’s steroids, so the dollar must be down and Gold soaring on this news…  Well, you would be wrong… Because… The powers that be have decided that this is NOT going to be the way things go with this inflation…  This can only go on for so long folks…

But for now the powers that be are winning the battles, as the dollar rallied strongly on Thursday, and Gold got whacked once again. The exact opposites of what you would have expected to see, or at least what I would have expected to see! But I do not expect them to win the war… Sooner or later, this will all be reversed… Be it now, next year (according to Rickards), or whenever… I believe in my heart of hearts that this will be reversed… So hang on Sloopy, Sloopy, hang on…  I love that song!

So, last week was a disaster for the currencies and metals… And yesterday didn’t seem to hold any elixir either, as Gold lost more ground… Gold started the day at $1,870.00, and at one point in the day was down to $1,844.00, before mounting a rally that left it down $12.00 on the day to close at $1,866.90, down $11.90 on the day.

Silver didn’t see the major selling that Gold did last week, and has stayed right around the $28 figure that I say is the line drawn in the sand by the price manipulators… To show you what I’m talking about, at one point yesterday, Silver was up to $28.10, but was forced back below $28 to close at $27.93, down 10-cents on the day… 

The currencies saw most of the selling and losses late last week, as yesterday, they drifted along all day… The Dollar Index began Monday at 90.55, and ended the day at 90.52…  Why on earth would anyone besides the government buy dollars in the face of the highest level of inflation in 13 years last week? So the only person, place or thing that would buy dollars is the Exchange Stabilization Fund (ESF) or the Plunge Protection Team, which is basically the same unit…

So, don’t doubt yourself for owning currencies to diversify your investment portfolio… Things in this country are very weird right now, and you have to be honest with yourself and admit that in your gut you know something is wrong in this country…   I borrowed this next paragraph from Tom Woods, of whom I read daily…

“Whether it’s economic trends, or the debt, or Big Tech suppression of dissident voices, or a school system that is somehow managing to get even more propagandistic, we have to figure out what we’re going to do.”

Chuck Again…  I would say that it’s not a question of whether, but all of these things! And what are we going to do?  Got Gold?

In the overnight markets last night… there was more dollar buying, which is just stupid in my opinion… The Dollar Index is 90.61, so the dollar buying wasn’t of major proportions but… it WAS dollar buying…  Gold & Silver just can’t find a bid and have given away more ground in the early trading today… Gold is down $1.80, and Silver is down 24-cents…  Ed Steer, of whom I read daily, and his letter: www.edsteergoldsilver.com, calls what’s going on in Gold “Ground Hog Day”…  

The U.S. Data Cupboard was empty yesterday, but will be restocked today, with Retail Sales for May, which the BHI indicates to me will be negative… And Industrial Production and Capacity Utilization, which should be pretty steady with the previous month.  I said last week that I just don’t trust government reports and you shouldn’t either… For instance: I told you last week that you can never tell what will be the outcome of the CPI print beforehand because of all the hedonic adjustments that are made to it… Even with that in mind, the May print of CPI was .7%, which was greater than expected, with annual inflation hitting 5%!!!! That’s up from 4.2% in April…  5%… and it’s only just begun, to live… and grow taller, and hungrier… I told you last year when the Fed said that they were going to allow inflation to run hot, that they had better be careful, because once inflation gets going, it will be too late to put the kyboshes on it! And look where we’re going now?

Inflation is the scourge of the economy, and a little inflation begets more inflation and more and more until everything costs so much, no one can afford to buy it any longer. The reason this occurs is that once Mabel hears that inflation is rising, and tells Josephine, who confirms it by saying how much more she just paid at the grocery store. Then Mabel rushes out to buy what she wanted before the prices get to high, and that causes more inflation to happen…  Now think of this, Mabel is 1 Million people, and Josephine is 5 Million people, and they tell 10 Million people, and well, I think you get the picture here… 

But in the end… Shadow Stats has inflation at 13%… So, who’s report on inflation are you going to side with, the government’s or Shadow Stats’…. I know who I pinned my colors to!

One more thing regarding the Data Cupboard, tomorrow is a FOMC Day… The Fed Heads will meet and say that inflation is “transitory”, to move long for this is not the inflation that we’re looking for…  If I were there I would ask them, “What inflation ARE you looking for? , Wages are rising, food has risen, along with a myriad of other items, so please tell me and the rest of the U.S. just what inflation you ARE looking for?”

To recap… Chuck is beside himself this morning, as he rants and rants some more about inflation. You must forgive him because he lived through the 70’s and remembers what inflation did to the U.S. economy and mom and pops’ buying power…  And with soaring inflation Gold & Currencies got sold like funnel cakes at a State Fair!  And he can’t believe that happened, but it did, and then he returns to talking about inflation some more…

One more thing today before we head to the Big Finish… The price of Oil continues to rise and this morning it trades with a $71 handle… I had to fill up my gas tank last week and paid $3.25 for gas… And said to myself, “I’m sure glad I don’t have to drive to work every day any longer”…  But I imagined people that do have to drive to work, and pay these inflated prices for gas, and how that has to put a HUGE dent in their disposable income, if they had any at al to begin with! 

For What It’s Worth… One more thing that didn’t make any sense to me as a long time investment analyst, bond trader, and currency trader, and that is the way that Treasuries reacted to the inflation news… The yield on the 10-year Treasury fell to 1.49%, instead of people selling bonds to not be locked in on low yields when rates rise to combat inflation, these knuckleheads bought bonds! And the Fed Heads are all pointing to the bond market saying that this proves their “Transitory” mantra… Well, there are other problems going on in bonds right now, and this article from zerohedge.com  talks about those problems and it can be found here: “We Are Building Up To A Big Accident” – Gap Between 10Y Yields And CPI Is The Highest Since 1980 | ZeroHedge

Or, here’s your snippet: “Even though US CPI smashed expectations again, Deustche Bank’s chief credit strategist Jim Reid correctly points out that “the data isn’t going to change anyone’s mind of whether inflation is transitory or not.”

Still, as an aside for those who still care about fundamentals, he notes that the current gap between 10yr US yields (c.1.5%) and US CPI (5.0%) is a whopping 3.5%, the highest since 1980. In fact, the gap has only been more negative for 10 months in the last 70 years, all of which were in 1974, 1975 or 1980.

While such a deeply negative (albeit crude) proxy for real yields (as opposed to the manipulated ones where the Fed is implicitly setting real rates with its purchases of TIPS) is great for financial conditions today, the DB credit strategist asks, rhetorically, if “we are building up to a big accident with such a mismatch between inflation and bond yields?”

And just as rhetorically, Reid concludes that despite this stunning observation, “no-one is going to have a different opinion to what they had yesterday though”

Chuck again… Yes, that’s right… It’s all a matter of what you are experiencing VS what the Fed Heads are telling us…  And I’m here to tell you that the Fed Heads are wrong… So wrong they’re almost right…

Market Prices 6/15/2021: American Style: A$ .7690,  kiwi .7125,  C$ .8198, euro 1.2111, sterling 1.4048, Swiss $1.1112, European Style: rand 13.7899, krone 8.3205, SEK 8.3232,  forint 291.06,  zloty 3.7381,  koruna 21.0118, RUB 72.10, yen 110.10, sing 1.3265, HKD 7.7623, INR 73.29, China 6.3967, peso 19.96, BRL 5.0919,   BBDXY 1,124.91, Dollar Index 90.61,  Oil $71.52, 10-year 1.49%, Silver $27.69, Platinum $1,162.00, Palladium $2,842.00, Copper $4.38, and Gold… $1,865.10

That’s it for today… Sorry for my rant about inflation… but someone has to be the adult in the room here and admit that prices are soaring and something needs to be done about it… Maybe Rickards is right that inflation is a 2022 story, well if that’s true can you even imagine what prices will be then? I’m also sorry for not answering the bell yesterday… Sunday was a Chamber of Commerce Day here in the Midwest, we had warm temps, and a lovely breeze that blew all day… But Monday was right back to high 90’s temps… Oh, it’s a hot one, like seven inches from the midday sun! Summer is here, and it’s not even the Summer Solstice yet! The young grandkids were all here on Sunday, only Delaney Grace had other plans (she’s going to be 14 this summer, I always knew this day was coming!)  I didn’t get up until noon yesterday, and then had clothes to clean, and dishes to wash and forgot to put my flag out for Flag Day… see like I said, what a dolt, eh?  Hang in there folks, things can only get worse… I mean better… at least that’s what I ALWAYS hold out hope for!  Dave Loggins takes us to the finish line today with his 70’s hit song: Please Come To Boston…   I hope you have a Tom Terrific Tuesday, and Please Be Good To Yourself!

Chuck Butler

June 10, 2021

* Currencies & metals lose ground on Wednesday

* Bill Bonner & Mohammed El-Erian join us for a discussion of inflation! 

Good Day… And a Tub Thumpin’ Thursday to one and all! Well, after a week of frustrating losses for my beloved Cardinals they finally won a game last night to stop their losing streak at 6…  Now they head to a weekend series with the Cubs… who are red hot!  OK… Well, today is the birthday of my good friend Mike Kettler, who happens to be on a wine tour for his birthday… Happy Birthday Mike! Mike turns 60 today… A youngster, right? HA! I sat outside watching the game last night with neighbor Paul.. So at least I had some company. Usually, I sit out there alone during the week. I go to get my new shell for my eye made today… It’s always an interesting adventure… Neil Young greets me this morning with his song: Southern Man, which was the song the band Leynyrd Skynyrd sang about in their southern rock classic: Sweet Home Alabama…

Well, all of the gains that the currencies booked in the overnight markets the night before, were wiped out in the U.S. market yesterday… Just switching things up on us… Just when I was pointing out how the overnight markets were buying dollars, and the U.S. market was selling dollars, they switch things up and go the other way… I’m sure just to throw investors off the scent of a collaborating deal with Traders… So… The BBDXY started yesterday at 1,116.10 and ended the day at 1,118.88, the euro which yesterday morning was within spittin’ distance of 1.22, fell back by about 1/3^rd of a cent… And then to make things even more obvious of what’s going on, Gold ended the day down $4.50, but Silver closed up 14-cents!  I actually kept checking the Gold price yesterday as the day went along, and it traded in a tight range of up $4 to down $4… 

So, for those of you keeping score at home…. Gold closed the day at $1,889.00, and Silver closed the day at $27.83… I already gave you the close of the BBDXY, so the Dollar Index closed the day at 90.12, up from 89.99 early in the morning…  So… the move to buy dollars was not a major event like it was earlier this week with the engineered takedown… But still it was a case of buy the dollar, which to me make about as much sense as checking on how much gas you have with a match! HA!

In The overnight markets…  There’s been little to no movement in the currencies, and they begin the day here in the U.S. looking very much like they did yesterday morning… The BBDXY this morning is 1,118.56, compared to yesterday’s close of 1,118.58, so you see right there that the currencies are flat to begin the day. Gold on the other hand is down $9.80, this morning and Silver is down 10-cents…  Gold and Silver down the morning that inflation is reported?  Greasing the tracks is what that looks like to me, getting the tracks ready for a rise today that will have to start from station… 

Well today is the day the markets and traders have been waiting for… Why I have no idea, but to them the stupid CPI (consumer inflation index) is something for them to follow, and as you may recall April’s print showed inflation rising at the fastest pace in years… The traders want confirmation that inflation is here to stay and not transitory like the Fed Heads keep telling us…  Spoiler Alert…. The so-called experts think that inflation will have cooled a bit in May from April, from .8% in April to .5% in May… There’s no telling what the number will be by the time the bean counters get finished with all their hedonic adjustments. And as I always tell you… if you want to know what the real inflation rate is, you need to go to www.shadowstats.com  For it is here that John Williams calculates inflation the way it was done before Clinton and Greenspan moved the goalposts, and added their hedonic adjustments…

You know it’s just like most Gov’t reports… You can’t and shouldn’t trust them for accuracy… The BLS adds jobs out of thin air for their Jobs reports… as just another example of the Gov’t sticking their hands in the cookie jar… To make us all feel better and keep the merry-go-round going… For if we all decide to get off at the same time, the ride comes to a halt, and that would not be what Humpty Dumpty and all the King’s Men and all the King’s horses need …. For if we all get off at the same time, the economy comes to halt, and tax receipts go to hell in a hand basket, and the deficit goes higher, and higher… I can imagine Sly Stone at Woodstock, singing “I wanna take you higher”…  Sly and his band sure put on a show at Woodstock…

That reminds me I haven’t watched that movie in a long time, it’s time for to get it back out and experience the excellence of Alvin Lee, CS&N, Santana, Sly Stone, and others at Woodstock… 

OK… back to the world…  I told you earlier this week that if I heard one more Fed Head say that the inflation we’re seeing is Transitory, I would be yelling at the walls and not holding back on the language I used!  I have Mohammed El-Erian talking inflation in the FWIW article today, so I don’t want to steal his thunder, instead I have Bill Bonner, giving us his thoughts on inflation.. So take it away Bill!

“Well… since this century began, U.S. GDP has gone up from about $10 trillion to about $22 trillion. A solid double.

But the Fed’s balance sheet? Around $700 billion 20 years ago, if it had kept pace with GDP growth, it would be around $1.5 trillion today.

Instead, it’s now around $8 trillion – five times where it should be.

If we were looking for a simple explanation of inflation, need we look any further?” – Bill Bonner from his Bill Bonner’s Diary…

Good friend, Dennis Miller, called me from the road yesterday, and told me that we will never find another Paul Volcker, ( I had said that in the Pfennig that morning) and if we did, it would not be a good thing, because….  Let’s say inflation goes to 10%, and we would need to raise rates to near 20% to combat and bring the inflation under control… That would mean that all the tax receipts the Gov’t receives would go toward paying the interest on the debt! There would be nothing left for Medicare, Soc. Security, WIC and other Gov’t programs…  Thanks Dennis…

The Data Cupboard today has the Weekly Initial Jobless Claims, of which they have become a data print that carries little interest in the markets, as the numbers keep going down… But the markets have it all wrong, because as these numbers go down, people fall off the list of Unemployed, and are no longer counted as unemployed…  There are still 3.77 Million people on continuing claims, that will eventually run out… Here we go again on the merry-go-round…

Folks, I don’t mean to sound so gloom and doom, because that’s not my nature, I’m really a very optimistic kind of guy… But all the bad things that I talk about keep happening and growing worse all the time, what should I do say everything is seashells and balloons?

We already talked about the stupid CPI print today, so let’s move on now…

To recap… The currencies lost all the ground they had gained the night before during Wednesday’s U.S. session… Switching places that’s all, as Chuck pointed out… Gold  went back and forth all day in an $8 trading range and ended the day down $4.50, while Silver experienced a similar trading range, but Silver closed the day up 14-cents… In the overnight markets last night…. the currencies are trading in yesterday’s clothes, but Gold & Silver are down to start the day. 

For What It’s Worth…  I’ve spent a lot of time in the past year talking about rising inflation, and how it can destroy your buying power. There are some economists that still don’t believe that we have inflation and say it’s still deflation… I respect them, but don’t agree with them. This FWIW article today has a very well respected analyst talking about inflation, and I think behooves us to listen to what he has to say. It’s an interview, so we have to deal with the questions too… The article can be found here:Mohamed El-Erian on inflation and the recovery – Marketplace

Or, here’s your snippet: “Mohamed A. El-Erian: I’m more and more worried because of what I’m seeing on the ground, talking to CEOs and other people that really are participating in the price-formation process. We’re seeing significant supply bottlenecks. We’re seeing soaring transportation costs, difficulties in hiring. And all of these things are not immediately reversible. So when you look at the economy from the bottom up, you start sensing mounting inflationary pressures that are being encouraged by incredibly loose monetary policy.

Ryssdal: As you know, though, [Federal Reserve Chairman] Jay Powell and many others say, “You know what, we see all that too, but it’s transitory. These are weird times in this economy.” I’m paraphrasing the chairman here. These are weird times in this economy, we’ve been deeply scarred, it’s all gonna work itself out. And clearly you don’t buy that.

El-Erian: I buy the view that these are uncertain times. What I don’t buy is the notion that we are therefore confident that inflation is transitory. Undoubtedly, there are two elements that are transitory. One are called base effects. Simply, when you compare with the previous year, it really does matter that the price level came down. And the other one are very short-term imbalances between supply and demand. But we are seeing deeper things going on in the economy. And I just think you have to be open-minded to the fact that the supply side and the demand side are evolving structurally in a way that may be pro-inflationary.

Ryssdal: Can I read that as you saying that perhaps the Fed is not being open-minded right now, and that maybe Chair Powell has painted himself into a corner?

El-Erian: I fear that’s the case. And I say I fear because Fed credibility is key. So the Fed has done two things. One, it has repeated the “transitory” narrative, and it has become a mantra. Literally a mantra. And the second one is that it shifted at an unfortunate time from a forecast-based approach to an outcome-based approach. So if the Fed is wrong, it will be late. And if it is late, it’s gonna have to slam on the brakes. And if it has to slam on the brakes, history suggests we end up in a recession, and we may end up with financial instability. So there’s a lot at stake here. And that’s why slowly easing your foot off the accelerator is a much better outcome than having to slam on the brakes.

Ryssdal: Let’s translate here for a second. When you say “slam on the brakes,” you mean raise interest rates precipitously, which will then drive the economy into recession and markets will go haywire.

El-Erian: Correct. And the last thing we need right now is to derail the recovery and to derail what I think is a significant economic policy shift by the [Joe] Biden administration.

Ryssdal: So what are you looking at to let you know when this might not be transitory? I mean, Treasury Secretary [Janet] Yellen said this weekend she’s looking at expectations, right, what people are thinking about inflation. Also low-wage earners and their pay increases. What are your tells here?

El-Erian: So first, I’m looking at the fact that from the aggregate data, we have completely missed the surge in both CPI inflation and what’s called [personal consumption expenditures] inflation. Second, I listen very carefully to what companies tell us on their quarterly earnings and then look at the functioning of the labor market. How do you explain that booming demand is not resulting in higher jobs being created? How do you explain the fact that we have over 8 million openings that are not being filled? So I look —

Ryssdal: Well, sorry to jump in. But you look at the pay of these jobs. You look at the fact that people are still being scared of catching a disease. And then also, as you know, in this country, there’s the whole discussion about federal [unemployment insurance] benefits. I mean, there’s a lot of factors here.

El-Erian: Correct. And over the next few months, some of them should be reversed. So the UI argument we will know by the end of September. We will also get a better feel for how worried people are about going back to work. We will also get a better feel for what happens when you open schools. But I do think child care is important. I do think that we are having skill mismatches. There’s simply too many uncertainties. The alternative of just repeating over and over again, that it’s transitory inflation suggests that you have conviction when there’s little foundation for that view.”

Chuck again… I know that was a long snippet, but well worth it, right?  El-Erian said that he feared the Fed had painted itself into a corner, and that reminded me of a slide that former boss and good friend, Frank Trotter us to show in his presentations, of a man with a paint can and brush, standing in a corner with the rest of the room’s floor painted…

Market prices 6/10/2021: American Style: A$ .7741,  kiwi .7188,  C$ .8260, euro 1.2160, sterling 1.4097, Swiss $1,1164, European Style: rand 13.6530, krone 8.3235, SEK 8.2737,  forint 284.37,  zloty 3.6847,  koruna 20.8660, RUB 72.19, yen 109.48, sing 1.3246, HKD 7.7594, INR 73.00, China 6.3889, peso 19.73, BRL 5.0467,  BBDXY 1,118.56,  Dollar Index 90.18,  Oil $70.01, 10-year 1.50%, Silver $27.73, Platinum $1,146.00, Palladium $2,847.00, Copper $4.42, and Gold… $1,879.20

That’s it for today… Pretty wordy today, but that should hold you through the weekend and through Monday too, as I explained yesterday, there will be no Pfennig on Monday… My last weekend of batching it. HA! Darling daughter Dawn, as been here each night this week teaching swim lessons to little swimmers… Those little kids are so cute when they learning to swim, and when they finally “get it”, the smiles on their respective faces… Just so cute! I can’t wait for little Evie to start swim lessons… Now that will be priceless! Monday will be Flag Day… Don’t forget to fly your Flag!  Well, we’re going from spring weather that was back and forth, to hot summer days this weekend! As the heat index will be 102!  I’m sure the grandkids will be over to swim! I think I’ll go to the butcher today after I get my new eye, and buy a Pork Butt, and smoke it it in my Big Green Egg for when the kids and grandkids come over… I can almost taste some tender pulled pork, with BBQ sauce and Cole slaw already! YUM! Ok… I get a double shot of Neil Young today, and Neil Young and Crazy Horse (his band) take us to the finish line with a song from their Live at the Filmore album titled: Cowgirl In The Sand… I hope you have a Tum Thumpin’ Thursday, and Please! Be Good To Yourself!

Chuck Butler

June 9, 2021

* Currencies & metals end up getting sold on Tuesday

* The price of Oil rises to $70! 

Good day… and a Wonderful Wednesday to you! I’m going to start the letter today acknowledging the birthday of one of my fave people in the world…  Happy Birthday Laura Baur!  Whenever I mention a song that she likes, she lets me know… I get a chuckle out of that! And the fact that she calls me Mr. Butler…  Anyway, I hope your day is Grand, Laura!  Ok… Before I go on, next Monday there will be no Pfennig, as I will be reporting to the hospital to see my oncologist. My monthly visit, which includes a blood draw, and lots of poking… But I love her, she is the best oncologist I’ve had, and I’ve gone through 3 before her!  The Beatles greet me this morning with their song: Let It Be…  One of their best in my book…

Well… for awhile on Tuesday, it was turning out to be a Turn Around Tuesday… Gold had recovered its early morning losses and was up to $1,904, and then the trap door was sprung once again… And by mid afternoon, Gold was back to showing losses on the day… Profit taking?  Or more short Gold paper trades? That $1,900 figure for Gold sure does seem to be a line drawn in the sand for the price manipulators… And that’s all I have to say about that, today…

For those of you keeping score at home, Gold ended the day down $7.20, to close at $1,893.50, and Silver lost 29-cents yesterday to close at $27.70… The BBDXY ended the day at 1,118.04, and the Dollar Index was 90.07…

The currencies drifted all day and didn’t move the meter very much, as there was little data to spur traders to sell dollars.. And I guess the news of the wage increases in the first QTR was old news.  If I hear one more Fed Head call the inflation we’re seeing “Transitory”, I’m going to yell at the walls, and I won’t be holding back, on the language! The Fed is going to be too late to pull the punch bowl from the party, and the next thing we know, our economy will be engulfed with inflation… But the Fed Heads will not be taking any blame, they’ll point to Congress and their spend thrifts, and say they caused it… 

But at that point consumers aren’t going to want to know who caused it, they’re going to want to know who’s going to be our next Paul Volcker… And looking around the room I see no one that fits that description at the Eccles Building, or the joint session of Congress… We’re going to be sc$%#@&

I just have one thing to add…. Got Gold?

In the overnight markets last night… We saw some dollar selling for the first time this week in the overnight markets. The euro is within spittin’ distance of 1.22 at 1.2193 this morning, and the BBDXY has fallen to 1,116.10, from the close last night of 1,118.04…  Gold is struggling to find a bid this morning and is down $2 in the early trading, and Silver is flat to down a cent or two…  Everyone is waiting for tomorrow’s stupid CPI (consumer inflation) for May… I would tell them to not waste their time, as the the CPI is not THE “go to” when it comes to real inflation calculation… I’ve explained this many times in the past about the substitution, and changing of weightings so I won’t go into that again, at least not today… 

Well how about that widespread outage at a cloud internet services on Monday? It left some big players without internet…  That’s the trouble with depending solely on digital…  I’m just saying, but it should be a warning to those that depend so greatly on the internet for their business…. Better have a Plan B… Hello? digital currency owners, are you listening? 

OK, I don’t know why this bothers me, but it does… I was reading an article yesterday that claimed that the Big boys the Bezos, Musks, and Buffetts don’t end up paying any taxes… I get it… they have lots of CPA’s that know all the loopholes in the tax books, and they have lots of losses they can throw at their gains…  But then longtime reader, Bob, sent me an email that included how this information about the Big Boys got out, and here are two paragraphs that explain it all…  (Thanks Bob!)

“Federal officials are investigating the release yesterday of a sweeping set of tax filings from some of the wealthiest Americans. Published by ProPublica, the leak included returns from Amazon CEO Jeff Bezos, Tesla CEO Elon Musk, Berkshire Hathaway CEO Warren Buffett, and others.

 

Investigators are probing whether the confidential documents were leaked from inside the IRS, which would be a crime. ProPublica did not disclose who provided the returns, and said it would use the data to publish a series of articles covering specific tax mechanisms used by the ultrawealthy in the near future. “

Chuck again… OK, let’s go on to something else!  The price of Oil has reached $70 this morning… I told you last week that the next stop for Oil was $70, and here we are!  That’s got to tickle the toes of the Petrol Currencies, I would think!   The Steady Eddie, Canadian dollar/ loonie, leads the pack… The Norwegian krone, Brazilian real, Russian ruble, and even the pound sterling, and Mexican peso can be thrown in… They’ve all shown some perkiness lately, and that should continue in my opinion. 

Speaking of the Russian ruble…  I noticed that the interest rate on my ruble CD has increased 50 Basis Points to 3%…  You get an Oil Play, and earn 3%, not too shabby…  And the ruble is just being held back by those that think it is unpatriotic to own the ruble… Russia announced yesterday that their GDP for this year should reach 4%…  And that’s without all the Gov’t spending that the U.S. GDP depends on… 

Before I head to the Big Finish I have an error to correct… And the great Mogambo Guru is here to straighten out something he wrote to me last week, so take it away Mogambo Guru! “But I am sorry to say that it was another sad, sad moment when I realized it demonstrated how old I am, in that early solar panels, apparently a long, long time ago when dinosaurs roamed the Earth,  put out 3 watts of power per square meter, but having just looked it up,  they are now generating up to 150 watts per square meter.  Oops! “  

I told the Mogambo Guru that he should not worry about it.. I told him, “no harm, no foul”…  I love the Mogambo Guru… and have the utmost respect for him, especially after stepping up to the plate and correcting himself…  I also like that he calls me JMR Chuck…  (Junior Mogambo Ranger)…

The U.S. Data Cupboard continues to be empty… which has thrown a spanner in the works for currency Traders this week… They have no direction, the poor little guys and gals… HA!  Tomorrow’s Data Cupboard will be restocked and ready to rock-n-roll… But that’s tomorrow, and only today is promised to us… 

To recap…  For awhile yesterday, it appeared that a Turn Around Tuesday was going to be in the books, Gold was up to $1,904, and the dollar was getting sold, but around midday, the trap door was sprung, and all the non-dollar asset classes were in the red by the end of the day…  Chuck talks about inflation, and taxing the Big Boys, and Oil this morning… 

For What It’s Worth…  Well, I had a couple worth FWIW articles line up for today, but this one came to me VIA Ed Steer’s letter www.edsteergoldsilver.com  and I thank him for supplying many of the articles I use every day…  This article is about our loss of freedom in this country, and it can be found here: The Freedom Fairy – Doug Casey’s International Man

Or, here’s your snippet: “For some time, it’s been apparent that the former “free world” countries (the U.S., E.U., Canada, Australia, Japan, etc.) have been on a downward progression – socially, politically and economically.

But, in the last ten years, the awareness of this has become increasingly pronounced. With each successive year, more and more people recognize that all facets of life in these formerly great countries are heading in a decidedly negative direction.

At this point, even those who don’t understand the decline intellectually, feel in their gut that this is not going to end well. Further, they feel it all around them and sense that when the condition becomes critical, it won’t just affect others. When it reaches the crisis stage, they’ll find it right on their own doorstep.

The average person in each of these jurisdictions already no longer trusts either the media, big business or the government and feels that, somehow, they’re all in this together and that they, the electorate, will be the ones who will be the ultimate victims.

So, is this a question of “collective imagination” gone haywire?

Not at all, I’m afraid. Their instincts are quite correct. Governments and big business alike have sold out the populace, regarding them as mere fodder in their pursuit of increased power and wealth. Governments in the former “Free World” have for decades become increasingly collectivist, promising ever-greater largesse to the hoi polloi, and the majority of voters, sad to say, have eaten it up.

Yet, as the electorate becomes more worried, they don’t ask the government to go into reverse and stop the economically illogical largesse. Quite the opposite. As their fears grow, they demand more largesse.

And so, it shouldn’t be surprising that, as we get closer to the collapse of this house of cards, new candidates arrive on the scene, offering to take entitlements to Never-never land, promising universal free health care, free education through university and a guaranteed income without the need to earn it in any way.

Of course, when this happens, those who understand that 2 + 2 = 4, not 8 or 12, recognize that any government that attempts to deliver on such promises will cause the collapse of the system – not just the economic system, but also the social and political systems.”

Chuck again… Man, I couldn’t agree with this guy any more than I do! And want to know something else that’s going on in schools? Teachers are told not to fail anyone, no test, nothing… for if a student was lazy and didn’t study, he or she will still get credit…  Now how in the hell is that supposed to prepare these young people for real life? I shake my head in total disgust folks…

Market prices 6/9/2021: American Style: A$ .7747,  kiwi .7200, C$ .8280, euro 1.2193, sterling 1.4171, Swiss $1,1167, European Style: rand 13.5490, krone 8.2473, SEK 8.2520,  forint 284.55,  zloty 3.6544,  koruna 20.8097, RUB 72.53, yen 109.44, sing 1.3231, HKD 7.7588, INR 72.89, China 6.3953, peso 19.64 (a great year!) BRL 5.0415, BBDXY 1,116.10, Dollar Index 89.99, Oil $70.23, 10-year 1.49%, Silver $27.68, Platinum $1,160.00, Palladium $2,884.00, Copper $4.45, and Gold… $1,891.30

That’s it for today… Again happy birthday, Laura Baur!  Well, my beloved Cardinals found a pitcher to start the game last night… They only have 3 of their original 6 starting pitchers still healthy… I could point to that to explain how they are 10 games under 500 in their last 17 games, but this the major leagues, and the front office should have had a Plan B… But nooooooo…. And that pitcher didn’t last 5 innings! And they lost, again! UGH!  This season is getting ugly… Now is the time to trade for Max Sherzer!  Ok, enough baseball talk!  Did I mention that today is Laura Baur’s Birthday? HA! Well… Bob Marley has some good advice for me and us this morning, as he takes us to the finish line with his song: 3 Little Birds…  “People don’t worry, about a thing, ‘Cause every little thing is going to be all right”…    I would sing: People don’t worry, about a thing, because there’s nothing you can do about it any way”…   Ok, time to get out of here: I hope you have a Wonderful Wednesday, and Please Be Good To Yourself! 

Chuck Butler

June 8, 2021

* Currencies & metals rallied in the U.S. on Monday

* Wages in the U.S. are soaring higher… 

Good day… And a Tom Terrific Tuesday to you! Well, the doc called yesterday after my bloodwork was run through the gauntlet, and told me that I’m no longer bleeding, and that my blood counts are improving, which was good news… But I asked her what about all this swelling on my abdomen? She said, “I told you that it could take a couple of months for that to go down”.. I said, Ok, I was just making sure I heard you right the first time!  My beloved Cardinals had a day off yesterday, to lick their wounds… I’m starting a drive to send a memo to the Cardinals to trade for St. Louisan, Max Sherzer, now! I do that in hopes that it gets more traction than my drive to get the Cardinals to sign Bryce Harper a couple of years ago! America greets me this morning with their song: Daisy Jane…

Well, yesterday’s early morning red marks in the currencies, Gold & Silver were turned around as the day went along, and by the end of the day, the euro had recovered 1/3 rd of a cent, Gold turned its $6 loss in the morning to a $7.70 gain! And Silver turned its 38-cent loss in the morning to a 7-cent gain… I think what caused this to happen, was traders and such finally looked into the BLS Jobs Jamboree that printed last Friday, and saw that the. Earnings (Wages) had seen a whopping increase in the 1^st QTR… We’re  talking about a 7.2 % increase…  Wage inflation is on its way, as employers are learning that they have up the ante up wages to attract people off their couches, while they eat chocolate bon-bons… The gov’t is so proud that they are getting employers to increase the min. Wage to $15…  They didn’t count on the spike in prices because of all this new found money in the hands of consumers… And.. don’t forget what I told you would happen is that employers would just adjust prices higher to offset the wage increases… 

So, Gold closed yesterday at $1,900.70, and Silver closed at $27.98… The BBDXY started the day at 1,119.01 and ended the day at 1,116.54, with the Dollar Index starting the day at 90.22 and ending it at 89.95..  So, you can see that there was some good turnarounds done yesterday…

In the Overnight markets…. Well, we’re going to have to have a Turn Around Tuesday today, as the currencies drifted overnight with some dollar buying, and Gold is down $6 in the early trading and Silver is down 14-cents..  That marks two consecutive nights were the overseas markets bought dollars, and then when they hand the books over to their U.S. kissin cousins, those dollars get sold…  You don’t think… Nah, that wouldn’t/ couldn’t happen, could it?  Oh, I might as well tell you what idea popped into my head right there… That this is an arrangement to keep the dollar at a certain level, and not let Gold get its legs under it completely… You sell, and I buy, and it all works to even out at the end of the day… 

OK… I owe you some stuff to learn and read about this morning, so let’s get to it! Yesterday morning I made mention of the BASEL 3 new regulations on Gold, and after digging into the BASEL 3  report, I found something that I think is important…  This is a response from someone representing the bullion banks, which he has a complaint… Let’s listen in: “The LBMA-WGC protest contends that Basel 3 would make the “unallocated gold” business — the business of the LBMA banks — prohibitively expensive by requiring the banks to amass huge new deposits to offset what Basel 3 considers the derivative liabilities of “unallocated gold,” and would impair transactions undertaken for central banks.”

Chuck again… The words, “would impair transactions undertaken for Central Banks”  Tells me a couple of things… That the bullion banks ARE doing the Central Banks’ dirty business of suppressing the price of Gold. In addition, it tells me that the bullion banks don’t see how they’ll be able to suppress Gold with the new regulations….

This is why I said yesterday, that I thought that the regulations would be bullish for Gold.. And we all know that what’s good for the goose is also good for the gander, and by that I mean what’s good for Gold is good for Silver… And the other metals… because although I don’t talk about them much, they too have many short contracts on them too…  In Ed Steer’s Saturday Column he always gives the update on how many days of production it would take to equal the ounces represented in short contracts… Silver’s number is 165, Platinum’s number is 110, Gold’s number is 75, and Palladium’s number is 35… 

And yesterday I mentioned Russia announcing that they would remove dollars from their SWF… (Sov. Wealth Fund)… A dear reader sent me a note and asked me if I thought this was a pollical move…  And I told him that first of all Russia has not hid the fact that they have implemented a dedollarization program, that has gone on for a couple of years now…  And then there’s the fact that this could very well be a way for Russia to retaliate for the economic sanctions that the U.S. continues to place on them since 2014.

OK… On June 30^th of this year ( in 3 weeks), the cryptocurrencies wll come under the microscope of the House  Financial Services subcommittee… Let’s see what Pam and Russ Martens of Wallstreetonparade.com  have to say about this upcoming meeting: “The House Financial Services Subcommittee on Oversight and Investigations, chaired by Congressman Al Green of Texas, will hold a hearing on June 30 titled:  “America on ‘FIRE.’ Will the Crypto Frenzy Lead to Financial Independence and Early Retirement or Financial Ruin?” The announcement of the hearing came yesterday, the same day that Wall Street On Parade reported that the Federal Trade Commission was witnessing a skyrocketing increase in crypto scams. The FTC wrote on May 17: “Reports to the FTC’s Consumer Sentinel suggest scammers are cashing in on the buzz around cryptocurrency and luring people into bogus investment opportunities in record numbers. Since October 2020, reports have skyrocketed, with nearly 7,000 people reporting losses of more than $80 million on these scams.”

I’ve also been reading about how many bitcoin investors have had their computers hacked, and lost their holdings…  And this is something that concerns me… Think about this for a moment, and hear me later… Russia and China are being blamed for all the hacking going on so they may as well be the ones doing it, right? But if they really want to hurt U.S. investors with some financial cyberwar, they’ll find a way to hack Bitcoin and then… Well, say bye, bye to your millionaire status…  I’m just saying..

And then there’s one more thing I want to talk about this morning, and it’ll require you dear readers that have been with me for awhile to put your memory hats on, and remember me telling you that the Trade War with China was a wasted effort, because there was no one to watch the Chinese to see if they were abiding by the agreement… Ok, now take your memory hats off and come with me as I check the Chinese renminbi…  Oh, looky there! The renminbi is stronger VS the dollar now than it was before the Trade War! Which is why the Chinese tried to put the brakes on the appreciation of the currency a couple of weeks ago… Chinese officials are scared that foreign direct investment (FDI) will increase as currency investors see the appreciation of the currency and want in… And that could cause inflation to rise… 

Ok, that wasn’t the last thing I wanted to talk about, but this will be, for sure! Speaking of FDI,

Russia ranks 11th among the most attractive countries for foreign direct investment (FDI) in Europe. And like everyone else, 2020 and COVID knocked their FDI down to 2014 levels… But that should be turning in Russia’s favor now…

The U.S. Data Cupboard remains, for the most part, empty, and will remain that way until Thursday. Today we will see the Small Business Survey and the Job Openings… neither of which would be considered as market moving data…  I still can’t get over the wage increases in the first QTR… Hourly compensation jumped 7.2 percent in the first quarter, according to the BLS’s [Bureau of Labor Statistics] revised estimate of labor costs and productivity Wage inflation is revving up the engine folks..

To recap… The early and overnight selling of the currencies and metals was turned around during the U.S. market yesterday, with the euro gaining 1/3re cent, Gold $7.70 and Silver 7-cents which were big turnarounds from what was going on yesterday morning, that’s for sure!  Chuck goes further into discussion of the BASEL 3 rules, talks about Bitcoin a bit, and discusses how useless the China Trade War was…

For What It’s Worth…  The folks at Wallstreetonparade.com, Pam and Russ Martens do a tremendous job of research into the items they write about… And this article is no different. It’s about how Janet Yellen continues to take in huge payments for speaking, from the banks that she supposed to regulating, and it can be found here: The Wall Street Captured Fed Consolidates Its Power Under Biden (wallstreetonparade.com)

Or, here’s your snippet: “When Yellen was not reappointed as Fed Chair by Donald Trump when her Chairmanship term expired in 2018, she immediately cashed in her chips on Wall Street, collecting millions of dollars in speaking fees in 2019, and undisclosed millions more in 2018. (See Janet Yellen’s Cash Haul of $7 Million Is Just the Tip of the Iceberg; She Failed to Report Her Wall Street Speaking Fees from JPMorgan and Others in 2018.)

Yellen was a Federal Reserve Board Governor when she was appointed Fed Chair. Her term as a Governor didn’t expire until 2024. Yellen could have remained in that position. Instead, she opted for millions of dollars in quick cash from the very same mega banks that the Fed had been regulating during her tenure there. These were also the same banks that had blown up the U.S. financial system in 2008 and received a super-secret $29 trillion bailout from the Fed. The details of the Fed’s astronomical bailouts to the Wall Street mega banks were only made public after the Fed waged and lost a multi-year court battle to keep the size and recipients of its bailouts a secret.

The largest recipient of the Fed’s bailouts was Citigroup. It received a cumulative total of more than $2.5 trillion in below-market rate loans from the Fed from 2007 through at least the middle of 2010. After Yellen was nominated by President Biden to serve as U.S. Treasury Secretary, her financial disclosure report showed that she had spoken three times at Citigroup, on March 6, March 11, and March 12, 2019. She made $217,200 for each event, for a total of $651,600.

Oodles of cash were also flowing into Yellen’s bank account from Citadel, a giant hedge fund recently under scrutiny before the Senate Banking and House Financial Services Committees. Yellen’s financial disclosure report showed she had been paid $992,500 for speaking engagements at Citadel and had refunded it $50,000 to $100,000 for a cancelled event.

The most poignant analysis of Yellen’s cash haul from Wall Street came in a Tweet from Jesse Eisinger of the public interest publication, ProPublica. Eisinger wrote: “Deeply troubling two-fisted money grab from banks by Janet Yellen. This is corruption, but isn’t called that because it’s so quotidian.” Eisinger also noted: “Sure, Yellen might think she can make independent decisions once in office. But how arrogant is it to imagine that money corrupts everyone but you?”

Chuck again…  Janet Yellen has a ton of power now, and this could all become a real mess if one of her babies (casino banks) get into trouble…

Market Prices 6/8/2021: American Style: A$ .7742,  kiwi .7208,  C$ .8277, euro 1.2180, sterling 1.4140, Swiss $1,1157, European Style: rand 13.5589, krone 8.2494, SEK 8.2745,  forint 285.45,  zloty 3.6700,  koruna 20.8510, RUB 72.81, yen 109.48, sing 1.3235, HKD 7.7591, INR 72.87, China 6.3969, peso 19.77, BRL 5.0437, BBDXY 1,117.91, Dollar Index 90.10,  Oil $68.72, 10-year 1.55%, Silver $27.79, Platinum $1,166.00, Palladium $2,904.00, Copper $4.45, and Gold… $1,895.40

That’s it for today… I was happy to hear the news from the Doc about my internal bleeding mess… But I’m very unhappy that I lost a ton of weight only to find that I had to go back up 1 shirt size because of the lump on my side… I was down 2 shirt sizes, and 3 pant sizes… UGH!  Man I got a wild idea yesterday, and decided to make meatballs! I had never made them before, and probably won’t again, because of all the stuff I had to get out to make them! I was on my feet for over 3 hours, and it was the longest I have been on my feet since before the blood loss… So, I guess I AM getting stronger again! YAHOO! I work 5 different crossword puzzles each morning, while I drink my coffee, only to keep my mind sharp… I really enjoy doing them each day.  Ian Gomm takes us to the finish line today with his song: Hold On…  “I’ve been dreaming of a new tomorrow, And wakin’ in the morning sun, For so long, for so long” This song was a hit in 1978, during the height of Chris Gaffney’s favorite music, Disco, and proved that you didn’t have to have a disco beat to have a hit song!  I hope you have a Tom Terrific Tuesday, and Please Be Good To Yourself!

Chuck Butler

June 7, 2021

* Another engineered takedown on Thursday… 

* Russia announces they will remove dollars from their SFW… 

Good day… And a Marvelous Monday to you! I have some news this morning, I was not thinking on Thursday last week, and failed to alert you to the fact that I had a hospital appointment on Monday morning, for blood work, and wouldn’t be writing a Pfennig… But I decided late last night that since I failed to tell you, I would get up extra early and get at least something out… So… Let’s not dawdle around here, let’s get to the stuff that matters!  Carlos Santana greets me this morning with his song: Evil Ways…  

Well, Thursday was another engineered takedown of the metals, and currencies… It got very ugly at one point in the day with Gold down $40, the short paper trades were flying around, and it was getting quite dark, and then in a space of time of a NY Minute, Gold turned, and fought back, ending the day down $37… But I said to anyone that would listen to me at the close of Gold, that the fight was a good sign for Friday’s trading.  

And that’s exactly what we had on Friday, and recovery of sorts… Gold gained $21.20 on Friday, closing the week at $1,893.00, and Silver gained 38-cents to close the week at $27.91…  What a whirlwind end of the week! 

So, did the price manipulators know that the Jobs Jamboree of Friday would disappoint, or that Factory Orders would print at negative -.06% for April, and decide to take the wind out of the sails of Gold & Silver ahead of that news hitting the markets on Friday? I believe in my heart of hearts that’s exactly what happened… Because when those two data items printed on Friday and were disappointing, Gold & Silver got bought by the truck load… 

The Dollar really bounced higher on Thursday too, with the BBDXY moving from 1,117 in the morning to 1,124 at the end of the day… On Friday the index dropped back to 1,118.  

In the overnight markets the dollar is getting bought again… As the data prints from Friday have been forgotten already… The BBDXY is up to 1,119 this morning, and the euro can’t find a bid, as it has slipped down to 1.2150, after pushing toward 1.23 last week before the engineered takedown took place.  Gold is down $6 this morning, and Silver is down 25-cents.  

Well there was some news on Friday that really pushed the dollar down, and it came from Russia, where they announced that they will remove dollars from their Sovereign Wealth Fund, and buy Gold, euros and renminbi… I have that story reserved for you in the FWIW section today, so you can get the skinny on that there… 

Late last week I reported that the Eurozone Inflation had risen to 2% for the first time in a month of Sundays…  And wondered what the ECB would do  next?  Well there’s been no news from any of the ECB members as to what their next move will be, but given the fact that Germany is the largest member of the European Union, and therefore has the largest vote in the ECB, and the fact that Germany is still scared to death of inflation, given their past, that the ECB will at least jawbone that they are going to act to combat rising inflation…  Whew! that was a long winded sentence!  My fat fingers need a rest after that one! 

OK, let’s go to the Data Cupboard. We’ve already talked about the Jobs Jamboree and Factory Orders from last week…  The ADP Employment report on Thursday last week showed that nearly 1 Million new jobs were added in May…  That marks two consecutive months where the ADP and the BLS Jobs report had very wide differences…  The BLS said that 559,000 jobs were created, and that included 218,000 jobs that they added to the surveys…  So, what gives with these wide differences?  I’m going to dig into this further, and report back at a later date… 

The Data Cupboard this week is basically emptied out for the first 3 days this week, and then on Thursday we’ll see the stupid CPI for May… Recall that April’s CPI (consumer inflation) had sprung higher, and I expect May’s data to add to that…  But in reality folks, you should pay no attention to the stupid CPI, unless you want to look at it for amusement purposes!   I always make a quick visit to www.shadowstats.com for a report of what real inflation is, after the CPI prints… 

To recap… Chuck is on the timer this morning and has to get to the hospital for blood work this morning, so the Pfennig is short-n-sweet. Gold & Silver got the snot kicked out of them on Thursday, but recovered a bit on Friday… Another engineered takedown is what happened on Thursday…  Russia announced that they are removing dollars from their SWF… And the overnight markets are buying dollars…  

For What It’s Worth…  Ok, I teased about this above, so here is the article regarding the announcement by Russia late last week, and it can be found here: (RUB USD) Russia Cuts Dollar Holdings From National Wellbeing Fund Amid Sanction – Bloomberg

Or, here’s your snippet: “Russia said it will eliminate the dollar from its oil fund to reduce vulnerability to Western sanctions just two weeks before President Vladimir Putin holds his first summit meeting with U.S. leader Joe Biden.

The National Wellbeing Fund will shift its dollar holdings into euros, yuan, and gold, Finance Minister Anton Siluanov said.

The dollar pared gains on the news today before bouncing back as analysts said the immediate market impact is likely to be limited.

The transfer will take place within the central bank’s huge reserves. It affects about $119 billion in liquid assets, of which about a third is held in dollars.

The central bank isn’t planning to resume gold purchases as a result of the wealth-fund shift, a person familiar with the situation said, speaking on condition of anonymity to discuss matters that aren’t public.

“Geopolitics does play a role,” Siluanov told state television at the St. Petersburg International Economic Forum. “We’re trying to protect our investments.””

Chuck again…  I would think that this would eventually support the price of Gold…  but then stranger things have happened… I’m just saying… 

Market Prices 6/7/2021: American Style: A$ .7744,  kiwi .7206, C$ .8275, euro 1.2152, sterling 1.4130, Swiss $1.1111, European Style: rand 13.4956, krone 8.2780, SEK 8.2735,  forint 284.54,  zloty 3.6743,  koruna 20.8974, RUB 72.81, yen 109.47, sing 1.3240, HKD 7.7575, INR 72.73, China 6.3942, peso 19.84, BRL 5.0473, BBDXY 1,119.01, Dollar Index 90.22,  Oil $ 69.38, 10-year 1.57%, Silver $27.66, Platinum $1,169.00, Palladium $2,919.00, Copper $4.46, and Gold… $1,886.40

That’s it for today, and again sorry about the shortness of the letter this morning, I’ll do better tomorrow.  Oh Woe is me for my beloved Cardinals, who were swept by the Reds this past weekend…  Baseball is like that… The last time the Reds were here, the Cardinals did the sweeping…  Oh well, move on to the next game…  Andrew, Rachel, Braden and little Evie came to visit yesterday… Little Evie will steal your heart in the first 5 minutes she’s around you, and yesterday she stole good friend, Duane’s heart… I heard from the great Mogambo Guru last week! Talk about brightening my day!  Here’s short bit from his email to me: “And of course I am standing behind my enthusiasm for gold, silver and oil.  I am constantly amazed that the idiots pushing a “green” economy don’t understand how silly it is.  With the sun providing roughly 3 watts per square meter of solar panel, I would be surprised if any of them can compute how many square meters of solar panels it takes to power a 1,500 watt hair dryer!”

Ok… gotta go!  James Taylor sends us to the finish line today with his song: Carolina In My Mind…   I hope you have a Marvelous Monday, and Please Be Good To Yourself! 

Chuck Butler

June 3, 2021

* Currencies & metals rally on Wednesday… 

* But give back those gains in the overnight markets last night… 

Good Day… And a Tub Thumpin’ Thursday to one and all! What an awful game last night for my beloved Cardinals… The starting pitcher gave up 11 runs in the first inning, and only recorded 2 outs before leaving the game… I don’t ever remember seeing a game start like that before… UGH! That was a long 10 game road trip, and as I write, so early in the morning, the Cardinals players are probably just arriving back in St. Louis. Gotta go home, rest, and back to the ballpark this afternoon… I don’t feel badly for them, they get paid millions of dollars to deal with that stuff… I recall, when I used to travel so much to speak, I took quite a few “red eyes” on Sunday night to arrive in time to get to my desk and start a new day… Unshaven, and probably looking like death warmed over, but I was there! After a few of those, I made an executive decision to always take Monday off if I was traveling on Sunday… Our best pitcher is on the IL, and now we don’t have an ace to go into a series with… My Cardinals are in trouble!  They are probably singing along with the song that greets me this morning, it’s the Allman Brothers and their song: Statesboro Blues…  I know that I’ve been there many times too!

Ok, well just to prove to the PPT and the price manipulators that you can’t keep Gold under your thumb… Gold rallied on Wednesday gaining $8.70 to close back above $1,900 at $1,909.20, and silver climbed back above $28, gaining 28-cents to close at $28.26…  And the euro rallied back above the 1.22 level yesterday, towing all the other currencies along for ride…

In the overnight markets last night… it got ugly once again, as traders overseas bought dollars and sold the currencies… The euro dipped below 1.22 overnight, but is hanging on to the 1.22 level by the skin of its teeth this morning. Gold is down $12 in the early morning trading, and Silver is down 30-cents, with both of them falling back below $1,900 and $28 respectively…  

This selling makes no sense to me… The U.S. is talking about an infrastructure deficit spending spree that the Democrats will do with or without Republican support… That means more debasement of the dollar, and traders overseas bought dollars?  I used to talk to these guys and get the skinny on what they were thinking, but no longer, as I have no contacts any longer… I sure would like to know what they are thinking here… Because it makes no sense to me! 

The price of Oil was trading with a $69 handle overnight but has fallen back below that figure this morning… As the price of Oil continues to move higher this year… Do you remember the chaos last year about this time when the price of Oil when negative? That was a one day phenomenon to say the least. But since that time the price of Oil has steadily moved higher and higher, with the next stop at $70…  Oh, and you can thank our President for some of that increase at the gas pump you’ve been paying for recently, since he shut down the keystone pipeline and put 52,000 oil workers out of jobs… That’s not a political statement, it’s just a statement of one of the reasons for the price of Oil to be rising, that’s all, nothing more… 

Look, I know that there are scientists that believe that the fossil fuels are causing all this weird weather…  But do you have any idea how much the world runs on fossil fuels? I don’t just mean for cars and trucks, I mean for plastics, and fuel to run the solar wind mils, and there are thousands of things that are made that depend on  fossil fuels…  I told Dennis Miller the other day that by 2035, I don’t think I’ll be around and I’ll be glad to not have to drive an electric car…  I know, I know, they are pretty cool to have now, but until they get the long term battery issues figured out, I’m not one to have to recharge every 300 miles… I’m just saying

We used to be, at least for a short time, energy independent as a country, with all the shale Oil being pumped out… But the other day I told you that Russia reported a record amount of Oil being shipped to the U.S. so far this year…  Better be careful who you tick off here… Wouldn’t it be nice to live together in the kind of world where we belong?  (Beach Boys)

Ok, let’s talk about something else… OK… I’ve spent a lot of time over the years, tracking the Dollar Index…  And to my knowledge, the highest the index has been was during the previous strong dollar trend when it reached 119.55 on 1/1/02. Our research back at EverBank showed that the next weak dollar trend began in Feb 2002, and at the peak of the dollar weakness the Dollar Index had fallen to 71.31 on 3/1/2008…  Last April, I said, “Let’s watch the Dollar Index’s direction, for I believe it’s about to go downward. At that time the index was 98.52…  So, today’s index number of 89.90 represents a 10% downward move in the dollar since April 2020…  Now, I don’t think most of you have considered that a 10% drop in the dollar represents 10% loss of buying power… So, as items that you buy, no matter what it is, go up in price, you know where that’s coming from… 

Inflation can be shown in dollar weakness folks… and a weak dollar invites inflation to be imported into the country from other countries..  So, with inflation soaring right now, and the dollar losing buying power, you’re receiving a double whammy…  Joker, Joker, Joker! (remember that game on tv?) The move in the dollar, downward, has been very methodical, sloth-like, but here we are, and like I said last year, that we were seeing the beginning of a new weak dollar trend, it’s here among us now, and I just have one question for you…. Got Gold?

Speaking of Gold… Recently there was news that in India, one the world’s largest consumers of Gold, they were setting up an Gold Exchange, that wouldn’t allow paper trades, only spot transactions in an attempt to put their foot in the door on the pricing of Gold… Yesterday, the good folks at GATA sent me this note they reprinted from Bloomberg.com : “India is moving closer toward setting up spot contracts for gold, finalizing rules for trading and providing the world’s second-biggest consumer a firmer grasp over setting the price of bullion.

The gifting of gold at weddings and festivals, and its purchase as a store of value are deeply held traditions in India, and the country has been trying to overhaul its fragmented gems and jewelry industry to make supply more transparent, help enforce purity standards and bolster confidence among consumers.”

Chuck again…  That would make the 2^nd country outside of England and the U.S. to start their own Gold exchange, with the other being the Shanghai Gold Exchange…  these two didn’t start their own Gold Exchanges because they liked the way things were getting done in London and NYC. As these things go on, they don’t seem to be major news items, but a few years down the line when most of the gold trading is done outside of the U.S. people will stop and say, “When did that take place, or How did that occur?”

I think about this a lot these days… Wouldn’t it be cool if as individuals we could start our own Gold Exchange? And bypass the price manipulators and all their short paper trades?  But we’re stuck with what we have, and I don’t like it one iota!  But it is what it is… let’s move on to something else… 

The U.S. Data Cupboard today has the ADP Employment Report for May, and the experts are calling for 680,000 jobs to have been created in May… We’ll also see the Weekly Initial Jobless Claims, along with first QTR Productivity… 

Yesterday’s Cupboard has the Fed’s Beige Book, and in it the regional Fed offices reported that the economy is growing but not at the break neck speed that was forecast, and that the recovery is very uneven…  they didn’t mention about the latest setback for the shipping industry…

Yesterday, Dave Gonigam reported in his letter The 5-Minute Forecast, that a shipping port in China had to shut down because of an outbreak of Covid…  this will cause major pipeline disruptions in shipping folks… more problems down the road for sure!

To recap…  The Currencies and metals fought back on Wednesday and regained the ground they lost on Tuesday, thus kicking sand in the face of the PPT and price manipulators… The price of Oil is trading higher again and on its way to $70… How much did you pay for gas recently at the pump? I believe that gas prices are back to pre-Covid levels… Chuck talks about how we can see the weakness in the dollar from a year ago in the Dollar Index…  And India is opening a Gold Exchange that will only deal in spot transactions, no paper trades… Good for them!

Ok… on a sidebar this morning, I thought this news was interesting… It was announced yesterday that Anheuser Busch is going to buy a round of beer for all once the U.S. reached 70% vaccinated…  Ok, now I’ve got a reason to tell people to get vaccinated! HAHAHAHAHA!  I’ve always said that there’s nothing like “free beer”!

For What It’s Worth… Ok… well, there is a shortage of FWIW worthy articles out there this morning folks… I searched and searched and finally gave in to this article on Reuters that talks about the flood of cash that’s out there that causing rates to fall even lower, and it can be found here: Analysis: A ‘tsunami’ of cash is driving rates ever lower. What will the Fed do? | Reuters

Or, here’s your snippet: “Banks have too much cash on their hands – and they’re running out of places to put it.

Nowhere is this more evident than in the rising popularity of a Federal Reserve program that lets firms stash their cash overnight with the U.S. central bank in exchange for at best a small return. The payout these days: Zero percent.

But usage is soaring to record highs as money market funds and other eligible firms cope with what some analysts are calling a “tsunami” of cash.

The banking system is swimming in nearly $4 trillion of reserves, thanks in part to the Fed’s asset purchases, a fall off in Treasury bill issuance and a rapid drawdown in the government’s store of funds at the Fed. The Treasury General Account, or TGA, has dropped by nearly $1 trillion since last fall, mirrored by the surge in bank reserves.

All that cash is pushing down short-term rates and increasing expectations the Fed will need to respond with a technical adjustment at its June 15-16 meeting, if not earlier, in order to keep its key policy rate from sliding further.

The situation is also a headache for money market funds, which are absorbing much of the money and finding fewer options for investing it, a dynamic the Fed is watching closely.”

Chuck again…that last part of the snippet really interests me, as these money market funds take in cash, they have nowhere to go to invest it and get a return on their investment… Sort of like what individuals have faced these past 10 years!  So, don’t cry for the money market funds… 

Market prices 6/3/2021: American Style: A$ .7730,  kiwi .7220,  C$ .8292, euro 1.2205, sterling 1.4197, Swiss $1,1119, European Style: rand 13.5389, krone 8.2950, SEK 8.2732,  forint 283.36,  zloty 3.6512,  koruna 20.8468, RUB 73.35, yen 109.71, sing 1.3231, HKD 7.7575, INR 72.75, China 6.3820, peso 19.91, BRL 5.1222, BBDXY 1,117.38, Dollar Index 89.90,  Oil $68.87, 10-year 1.60%, Silver $27.96, Platinum $1,193.00, Palladium $2,893.00, Copper $4.58, and Gold… $1,896.20

That’s it for today and this week… Like I said yesterday, I sure do like those Holiday shortened weeks! I still can’t get over how badly the Cardinals starting pitcher pitched last night! UGH!  I foresee the Cardinals having to make a trade for a starter, out of necessity… I hope they don’t give away the store! Last week I went to have a new prosthetic made for my eye, but she couldn’t make one for me until the infection in my eye was healed… Well, I do believe that after a week of dealing with the medicine for the eye, that the infection is gone… So, it’ll be back to the oculist next week… The rectus hematoma on my abdomen is getting better. The pain is gone, and the swelling seems to be abating, which is good with me! I’ve seemed to have lost my appetite… My oncologist always asks me about my appetite and I’ve always said no problem… I wish the loss of appetite came with weight loss! I could stand to lose quite a few more pounds, that don’t seem to want to come off!  Ok… no weddings, no holidays, nothing for this weekend… I think I’ll take ride in my car and go west, and see where it takes me… I’ll report on that on Monday… For now, The Moody Blues take us to the finish line today with their song: Story In Your Eyes… “And the sounds we make together. Is the music to the story in your eyes.” I hope you have a Tub Thumpin’ Thursday, and Please Be Good To Yourself!

Chuck Butler

 

June 2, 2021

* The PPT spends The ESF’s funds to defend the dollar… 

* Inflation is not transitory… 

Good Day… And a Wonderful Wednesday to you!  I like holiday shortened weeks! And I’m not even employed any longer! Day one of being by myself wasn’t unlike most days… I read, I researched, I napped, and tried to stay awake to watch my beloved Cardinals play the daunting Dodgers…  I only made it for 3 innings the night before! Darn Pacific Time games! Well, little Evie came home from the hospital yesterday, I was relieved, to say the least! My girl, was sick, and I didn’t like that one iota! Ahhh, the joys of daycare… sharing germs…  The weather here is weird… Just plain weird… chilly days, no sun, strange brew, mother nature, girl what’s inside of you? (Cream, with an addition by Chuck!) Paul McCartney and Wings greets me this morning with their song: Let ‘Em In… 

Well, around noon yesterday, I checked the price of Gold to see if I was right, yesterday morning, when I said that Gold should turn around that early morning, $3 loss… And my gosh by golly, Gold had indeed turned that early $3 loss into a $5 gain! Yahoo! Said I! But then later in the day I checked it again, and that gain had turned into a loss… Gold held the $1,900 figure, but barely, while Silver couldn’t hold its $28 figure…  What the heck happened?

At one point of the day, the euro was rallying, up to 1.2250, and Gold was rallying, and then quicker than a NY Minute, that all ended, and the dollar was rallying…  The PPT again?  I mean there was nothing else to move the markets the way they turned, yesterday, but some intervention… So, go ahead PPT use all the Exchange Stabilization Funds (ESF) you want, sooner or later you’ll run out of funding… Especially if the Fed demands their funds returned to them! 

You may recall me talking about this from several months ago, how there was Trillions of dollar allocated to the Fed for them to use in case of an emergency, and former Treasury Sec. Mnuchin, recalled the funds, becoming persona non gratis with the Fed Heads…  I have a dear reader that reminds me every time I refer to the Federal Reserve, as the Fed, that they are not Federal in any way, and that they don’t have reserves either!  I guess he thinks I don’t know that… when it was me that a very long time ago recommended everyone to read the book: The Creature From Jekyll Island, by Edward Griffin… 

Ok, so the dollar rallied yesterday, for whatever reason the PPT wants to make up that will appease the markets journalists….   Gold ended the day at $1,900.50, down $7.50 on the day… And Silver closed down 17-cents to end the day at $27.98… The BBDXY rallied to end the day at 1,117.08 up from 1,116.82 to start the day… The old time Dollar Index started the day at 89.87 and ended it at 89.83…

In the overnight markets last night… the dollar buying has intensified, and for some strange reason, traders are buying dollars like they are worthy… But like Wayne and Garth, they are NOT worthy! HA ! The BBDXY has risen to 1,120 overnight, and the Dollar Index has risen to 90.23… The euro slipped back below 1.22, and Gold finally gave up the ghost, and fell back below $1,900 overnight. Silver has lost another 11-cents this morning, so our Wonderful Wednesday is turning into a Worrisome Wednesday… UGH! 

Well, I wanted to talk about this yesterday, but in my hurry to get the letter out and get my wife to the airport on time, I forgot about it… And this is important stuff!  Well, I’ll let you be the judge of that! But the U.S. Mint announced last week that they were not minting any Silver coins, for now, and they admitted that there was a shortage of Silver…   Now, why that news didn’t send the price of Silver soaring I have no idea, but, I do know that I’ve been writing about a coming shortage in Silver for years, due to Silver being included in Solar Panels… And now…. Well, now we all know why there hasn’t been any new minting of Silver coins at the U.S. Mint lately…  There’s a Shortage in Silver!

Well…  longtime readers know that I’ve been beating the drum about deficit spending and deficits for, well, let’s see… I began writing the Pfennig in 1992, but it wasn’t until probably 2000 that I began harping about the debt… So for 21 years!  And, just so you know, I’m not stopping here!  Here are some things I came across yesterday in my reading and research…  These aren’t pretty numbers, so put away the sharp objects…

Prior to the distribution of COVID-19 stimulus money, there were ~$13 trillion in US savings accounts that earn less than 1% interest.  According to Shadowstats.com, the real rate of inflation is ~12% versus official government numbers of ~4%.  That means the $13 trillion of banked money is losing ~$2.6 trillion of its purchasing-power each year.

And if you add in all the people that have had their unemployment benefits run out, and therefore are no longer counted as “Unemployed” (I know, makes about as much sense as a screen door on a submarine, but that’s the Gov’t for you!) The figure would be actually around 40 Million people, which would mean a real Unemployment Rate of 25%!!!!!!  (according to Shadowstats.com)

Now, you can do the math just like I can, so you tell me how the Gov’t is going to get tax receipts out of those 40 Million people?  And that brings us to the Biden Budget that calls for $6.1 Trillion Budget… I don’t see how that works, do you? Which means more issuance of Treasuries, and the hope that the kindness of strangers continues…  You know you can only fill a bottle with water until it overflows, and you can’t add any more… The same thing will happen with foreigners buying our debt/ Treasuries, there will come a time when they say, “no mas”…  And I do fear that that that time is drawing near…

In full credit, I got some of these numbers from an article here: You Won’t Believe How Bankrupt the US Is Till You See This – LewRockwell

Now Isn’t Life Strange, a turn of the page…  (Moody Blues)  You know the whole premise of the MMT (Magic Money Tree) folks is that you can print as much currency as you need and then some, as long as we don’t get big inflation…  They think the folks at the Fed have the arrows in their quiver to shoot at inflation to make it go away quickly…  I think they are full of baloney! To say so nicely I might add! The Fed has no more arrows, they’ve all been either shot in the air or taken away from them by the architects of Deficit Spending…  You see there will never be another Paul Volcker to run interest rates up to 17% to combat 10+% inflation… The U.S. had little debt back in the late 70’s and so running up their debt servicing costs with higher interest rates, was no big deal…

But when you flash forward to today’s debt levels, and the amount of IOU’s that are represented by U.S. Treasuries that have been issued, and will need to be issued to finance all the deficit spending the President is talking about, if you raise interest rates to 5%, you would cause major chaos in financing of things like Medicare, and Social Security… In other words… bye, bye Miss American Pie… (Don McClean)

I wonder where the old folks are tonight… ( Gordon Lightfoot) Oh, that’s right, I’m an old folk now, at least that’s what my wife tells me all the time!  But all us Baby Boomers need to fight the good fight VS these Magic Money Tree folks… They’re looney Tunes in my opinion…  But we are at the end of the U.S. Empire’s rule, so when you get near the end, you try anything to survive right?  Remember what I told you Doug Casey said about this yesterday… “Eventually, of course, such irresponsible economics will cause any country, no matter how powerful, to collapse economically, no matter how many Keynesian economists such as Thomas Piketty, Paul Krugman, and Larry Summers declare otherwise.”

Ahh.. the End of the Empire that is the U.S. let’s see what we have in common with other empires that have collapsed… For one let’s take Rome…  they debased their currency, they extended their armies too thin, and spent beyond their means…   Sound familiar?

Or how about Egypt, or Mesopotamia… it doesn’t matter what Empire you bring up, they all have similar reasons for collapsing and one of those similar reasons is currency debasing, and deficit spending on wars… 

I know, you don’t need me to teach your about the history of Empires… So, I’ll move along to other things that are on my mind this morning…  Oh, that’s right I wanted to talk about this… Eurozone inflation rose to 2 percent in May, the first time the rate has surpassed the European Central Bank’s (ECB) target in more than two years… So, inflation is running around the world now, eh?  And what’s the ECB going to do about this rising inflation? Will they be nilly willy about like our Fed and allow inflation to run hot? Or, will they find their inner Hans Tietmeyer, and fear inflation, because of the runaway inflation that ruled Germany in the 40’s?  

For those that don’t know who Hans Tietmeyer was… he ruled the Bundesbank, Germany’s Central Bank back in the 90’s and made it his mission to keep inflation under his thumb… 

Wim Duisenberg, was the ECB’s first President, and he too was an inflation fighter… and probably the best President the ECB has ever had!

Ok, enough!

The U.S. Data Cupboard today has the Fed’s Beige Book today. This is a report from each of the Fed’s regions on how the economy is doing in their respective region… This used to be a big deal for the markets, but now it’s more passé then relevant…  We’ll also see the vehicle sales from last month, which should be a bummer given all the cars that are waiting for chips from China and Taiwan… 

To recap… The currencies and metals were rallying in the morning yesterday, but their rally was stopped in their tracks, and Chuck can only figure that the PPT was in spending their ESF dollars on defending the dollar… Gold ended the day in the red, along with Silver, and the dollar pushed back against the euro and other currencies… In the overnight markets….   There was more dollar buying, and it has intensified… The euro has slipped back below 1.22, and Gold & Silver are slipping lower too… And Chuck talks about real unemployment numbers, taxes, deficit spending, and other things that you might want to go back and reread, to let the numbers sink in… Oh, and he also talks about collapsed Empires!

For What It’s Worth… OK… with Gold slipping this morning, this is a good time to print this article that talks about how Gold’s price slippage is “Transitory” , and not inflation is not!  And it can be found here: https://www.sprottmoney.com/blog/Gold-Price-Dips-Are-Transitory-Craig-Hemke-June-1-2021 

Or, here’s your snippet: “Much has been made about The Fed’s extensive use of the word “transitory” when describing the current inflationary environment. If you understood why they keep using that word, you’ll soon appreciate why all price dips in COMEX gold are transitory, too.

“You keep using that word. I’m not sure it means what you think it means.”— Inigo Montoya

Let’s begin this week with The Fed’s overuse of this word. What are Powell and his goons attempting to accomplish by relentlessly repeating this term with every public appearance?

First of all, understand that this current inflationary cycle is most definitely NOT transitory. It is being pushed along by BOTH of the two classical inflation drivers:

Cost-Push Inflation: This is where input costs force manufacturers to pass along higher prices to consumers. As examples of higher input costs, consider the recent surge in the prices of lumber, iron ore, steel, copper, soybeans and corn.

Demand-Pull Inflation: This inflation is caused by “too many dollars chasing too few goods”. Government stimulus checks combined with surging wages is prompting this problem, as well.

Typically, in response to higher inflation, bond investors demand higher yields. Consider it this way: Who in their right mind would accept a 2% yield in a 10-year U.S. Treasury note when price inflation is at 4%? That investor would be guaranteeing himself a 2% loss of purchasing power over the life of the note if inflation remains unchanged. Therefore, a rational investor would demand a higher nominal interest rate and would forestall buying a treasury note until the interest rate increases.

But the U.S. government cannot afford higher interest rates and The Fed cannot allow higher rates for a multitude of reasons, chief among them the need for negative real interest rates to inflate away the current extreme levels of debt.

Therefore, in an attempt to “jawbone” interest rates lower and reassure bond investors that it’s OK to buy U.S. treasuries with a yield of under 2%, The Fed is desperately pumping the word “transitory”. Again, why? Because if you believe that, by the end of the year, inflation will be back under 2%, then maybe that 10-year T-note you’re thinking about buying doesn’t sound too bad.

But again, this current inflation is NOT transitory. Instead, it’s a direct consequence of all the fiscal and monetary policies the U.S. has pursued since the onset of The Covid Crisis in March of last year. It was a predictable outcome and here we are.”

Chuck again…  Yes, like I keep saying this is not your dad’s inflation, this is different, and a direct result of all the fake money printing and debt levels…  But I’ve been saying this for months so nothing new here to you dear reader… 

Market Prices 6/2/2021: American Style: A$ .7717,  kiwi .7213,  C$ .8274, euro 1.2170, sterling 1.4124, Swiss $1.1089, European Style: rand 13.7490, krone 8.3418, SEK 8.2936,  forint 284.36,  zloty 3.6706,  koruna 20.9203, RUB 73.42, yen 109.85, sing 13241, HKD 7.7593, INR 73.08, China 6.3767, peso 19.99, BRL 5.1871,  BBDXY 1,120.51, Dollar Index 90.23,  Oil $68.38, 10-year 1.60%, Silver $27.87, Platinum $1,188.00, Palladium $2,889.00, Copper $4.57, and Gold… $1,897.70

That’s it for today… Quite wordy today… sorry about that… but I had lots to say! My beloved Cardinals pulled out win in Los Angeles last night… I checked the score when I woke up at 2 am and seeing that the Cardinals won, I was able to go back to sleep easily… One more late night game tonight. UGH! Lots of strange noises in this house that I noticed yesterday because there was no other noise…  Another rainy day today, did I move to Seattle while I was asleep? HA! I have a bumper sticker displayed at my writing desk, and it’s a picture of the Great Mogambo Guru, with his saying, What would Mogambo Guru Buy? (Gold, Silver, and Oil, moron!) And every time I look at it, I smile because I really adore the Mogambo Guru! Our favorite musical terrorist, (that’s what we used to call him on the trade desk) Cat Stevens takes us to the finish line today with his song: Wild World…  I hope you have a Wonderful Wednesday, and Please Be Good To Yourself!

Chuck Butler

 

 

 

June 1, 2021 

* dollar gets sold to end the week last week

* Yesterday’s U.S.  holiday, left markets without any direction… 

Good day… And a Tom Terrific Tuesday to you! And welcome to June! Pfennig Tradition calls for this: June is busting out all over, all over the meadow and the hill… I sure hope you had a relaxing and fun holiday weekend, and you took a minute yesterday to think about those soldiers that have given the greatest sacrifice to our country.  I had to get “dressed up” twice over the weekend for the wedding celebrations of Kathy’s niece. I don’t know how I used to “suit up” every work day, back in the day… I’m a shorts and polo shirt, and tennis shoes kind of guy these days! I’m still feeling the effects of the blood loss last week, but I am feeling more normal as each day goes by… Blood, Sweat & Tears greet me this morning with their song: Spinning Wheel…  Most people don’t catch this, but in this song the music time goes to 5/4, which is common for jazz, but not rock and roll!

So, it’s been a few days since we last talked… In that time we saw more rotten economic data, and the dollar get sold, albeit, not like funnel cakes at a State Fair, but more like “gee we’re going to sell dollars, but not let’s not get anyone upset”…  We also saw Gold move back above $1,900, a level that seemed to be a line drawn in the sand for the shiny metal, and Silver move back above $28…  So, wrap all that up, tie it with a pretty bow, and you’ve got what’s happened in the markets I care about and write about since we last talked.

For the record… Gold closed Friday at $1,908.10, and Silver closed at $28.15… The BBDXY was down on Friday and closed the week at 1,116.55, and the Dollar Index was 89.85… Both of these showing that the dollar was weaker, but not by a wide margin…

In the overnight markets last night…  There was nothing going on trading wise as the dollar is sitting about where it was at the close on Friday, as we start the day… Gold is down $2.30 in the early trading and Silver is up 14-cents, so a hodgepodge of prices to start the trading day…  I don’t believe the small loss in Gold is anything to be concerned with, as it will probably get turned around today, as I see things…  The price of Oil is pushing higher once again and this morning it trades with a $68 handle…  but don’t worry about it, for there’s no inflation, it’s only a transitory number….  As if! 

So, we start the week with the dollar weaker, once again, that is until the PPT spends some of their treasure chest of Exchange Stabilization Funds (ESF) Gold & Silver biding their time, drinking their wine, trying to decide what to do. (James Gang). And the markets looking as confused and convoluted as ever before…  This week, we’ll see lots of data, but not much of it is “real economic data”, that is until Friday, when the May Jobs Jamboree prints… You may recall that last month the so-called experts said 1 Million jobs would be created in April… But they were sadly mistaken when the crooks, I mean the folks at the BIS reported just 264,000 jobs created in April, and as I pointed out last month, even that number was goosed higher by the BIS after the surveys were received, and showed that real job growth for April was negative!

For this month’s forecast, the so-called experts are calling for 674.000 jobs created in May…   Remember when I kept reporting the business failures during the pandemic and kept repeating my thought that many of those businesses wouldn’t be coming back? Well, good friend, Dennis Miller of www.milleronthemoney.com sent me this note yesterday… Check it out…

“While while 16 million people are still claiming state or federal unemployment compensation….

My observation…….. When the pandemic hit many small businesses were closing their doors.  We lamented, “those jobs are not coming back!”  It looks to me like the government has sent out so much money they may have proved us wrong…..instead the workers may not be coming back.”

Yes, businesses are finding out that they’re going to have to up the ante with wages and benefits to lure these people that don’t feel they need to work as long as the government keeps sending them checks, back to work, and that’s going to push wages higher and isn’t that one of the items that the naysayers to rising inflation right now, point to? That there’s no  “wage inflation”?  Well, it appears that argument is being thrown our with the bathwater!

OK, onto other things…  Reuters reported yesterday that China has directed financial institutions to hold more foreign exchange in reserve, a move that analysts say could help temper a rally in the yuan after the currency hit a three-year high against the dollar on Monday.

The People’s Bank of China said it will raise the FX reserve requirement ratio for financial institutions to 7% from 5%, from June 15. The increase will make it more expensive for banks to hold dollars.

Man these communists sure seem to know how to take the fun out of the markets, eh?  HA

Speaking of Communists, well, they used to be and in some ways still are, although they have become quite capitalistic in recent years, Russia, reported some good economic news in the face of the economic sanctions still hanging over them like the Sword of Damocles….  Here are three pieces of news reported by the RT.com “: Russia’s industrial production surges over 7% in April.

Russian unemployment falls to 5.2%, almost back to pre-coronacrisis levels.

Exports of Russian crude to US soared to 12-year high despite ongoing political tensions.—

You know, and all you longtime readers will recall me saying this over and over again in the past, that Russia is an “Oil play”…  And while the price of Oil has recovered a lot in the past year, the Russian ruble has not… So, what gives?  Well… in my humble opinion, it’s investors that think it’s unpatriotic to buy and own rubles…  It took quite some time before investors got over the fear of being unpatriotic when it comes to the Chinese renminbi / yuan, and while I’d like to think I’m a patient man, I know in reality that I’m not… And so my patience grows thin with these investors that fear that owning rubles are unpatriotic…   

I was looking at Google the other day, and came across an article that said, that “two additional stimulus checks may be coming my way”…  I thought, OMG! That’s impossible! No wait, we’ve already seen that 3 stimmy checks were possible, so instead of saying that’s impossible, I’ll say that’s ridiculous! And you know how you’re not supposed to read everything on the internet as the truth? Well, I’m going to put that one down as false info! And hope it goes away!

I was reading Doug Casey’s latest letter on Sunday, and got to a part that I had to share with you…  Doug was talking about the every increasing money supply, and referred to the Magic Money Tree people here: “Eventually, of course, such irresponsible economics will cause any country, no matter how powerful, to collapse economically, no matter how many Keynesian economists such as Thomas Piketty, Paul Krugman, and Larry Summers declare otherwise.”

You tell ‘em Doug!

Ok… so the U.S. Data Cupboard this week will conclude with the Jobs Jamboree on Friday, leading up to Friday, we’ll see all kinds of data like the ISM manufacturing index, Vehicle sales, Productivity, and the Beige Book (Fed regional reports). We’ll also see the Weekly Initial Jobless Claims, and the ADP Employment Report…  So, a busy data week, just not full-o-market moving data….

To recap…  Since we last talked, the currencies and metals have moved positively VS the dollar, albeit at a slowed pace… In the overnight markets last night,   not much went on, except the price of Oil is pushing higher again..  Also, Chuck talks about Russia, China, people not coming back to work, and the potential for wage inflation…

For What It’s Worth….  Man-o-man, did this article really stick out like a man with a hatchet in his forehead when I came across it this past weekend…  It’s an article about the Fed increasing their powers and how people are starting to notice, and it can be found here: The Fed keeps expanding its powers, and that’s making some nervous (cnbc.com)

Or, here’s your snippet: “The Federal Reserve seems to be having an identity crisis.

Not that long ago, the U.S. central bank was seen solely as a watchdog of the nation’s financial system as well as the entity charged with using its various policy levers to control inflation and keep unemployment low.

Nowadays, well, things have changed.

In recent months, the Fed has extended its responsibilities as a bank regulator to the fight against climate change. Where once the Fed used its power over interest rates to control inflation and keep borrowing costs low, it now is taking on the role of making sure job gains are spread equally among income, racial and gender groups.

If this doesn’t sound like your parents’ Fed, or even legendary former Chairman Paul Volcker’s, you’re not alone.

Wall Street increasingly has noticed the central bank’s expansion of its mandate, and some are none too happy about it.

“They shouldn’t be getting involved in these things even if progressive politicians want to drag them in. They have to have the courage to say ‘no,’” said Christopher Whalen, a Fed veteran and former investment banker and now head of Whalen Global Advisory. “Since 2008, they have capitulated on so many fronts I don’t even recognize the institution anymore. The bank I worked for is gone.”

Of course, 2008 was a pivotal year for the Fed.

That was the year Wall Street stalwart Lehman Brothers collapsed, part of a series of cataclysmic events that sent the U.S. and global economy into its worst tailspin since the Great Depression.

To put the economy back on its feet, then-Fed Chairman Ben Bernanke, then-Treasury Secretary Hank Paulson and then-New York Fed President Timothy Geithner headed the “Committee to Save the World.” The group put together an array of programs that ultimately did save the economy but also embarked the nation on an era of unprecedented influence for the Fed.

Over the years, the symbiosis between the Fed and Treasury has only strengthened.

Now, the dynamic has gotten even more intense. Powell and Yellen, who worked together on the Fed for nearly six years, now run the Fed and Treasury respectively.

The Fed has long been considered immune to outside pressures, free to move interest rates and otherwise implement policy in the way it deems most appropriate, outside of political concerns. The fear is that the Powell-Yellen dynamic could change that.”

 

Chuck Again…  Yeah, maybe they are extending their mandate, but who’s going to stop them? Congress? Yeah, right, and I’ve got a bridge to sell you too!  This is getting really bad folks… I want my old fed back, you know, the one that monitored interest rates, and inflation…  Times change, but not always for the better, and the Fed is a classic example of not for the better!

Market Prices 6/1/2021: American Style: A$ .7732,  Kiwi .7258,  C$ .8298, euro 1.2223, sterling 1.4180, Swiss $1,1118, European Style: rand 13.7706, krone 8.2705, SEK 8.2607,  forint 283.96,  zloty 3.6545,   koruna 20.8360, RUB 73.34, yen 109.60, sing 1.3228, HKD 7.7590, INR 72.84, China 6.3672, peso 19.91, BRL 5.2278,  BBDXY 1,116.82, Dollar Index 89.87, Oil $68.04, 10-year 1.62%, Silver $28.29, Platinum $1,182.00, Palladium $2,890, Copper $4.60, and Gold… $1,904.80

That’s it for today… Well, I took Kathy and her relatives to the airport this morning already… I’ll be alone for the next 16 days… I know, I know, it’s not a big deal, but, it will be interesting to see how many times my kids check on me while she’s gone…  Man, did we ever experience a cold spell last week! It was the end of May, and the temps weren’t anywhere close to normal for that time of year! I had to switch to long pants and long sleeve shirts, with my hoodie! Maybe June will bring more normal temps our way….  My grandkids, all four of them, had a part in the wedding this past weekend, and little Evie stole everyone’s hearts as she walked down the aisle with her rose petal basket… Then she had to go to the hospital with the croup cough that night… It’s her second hospital visit in here first 19 months… Poor thing… Delaney was a junior bridesmaid, and was the cutest of all the bridesmaids! And Braden and Everett were “ring security”… And brother did they have a blast at the reception! Ok, time to get going… The Electric Light Orchestra (ELO) take us to the finish line today with their song: Telephone Line…  I hope you have a Tom Terrific Tuesday, and Please Be Good To Yourself!

Chuck Butler

 

 

May 27, 2021

* Dollar gets bought on Wednesday… 

* Chuck takes us back to the 70’s… 

Good Day… And a Tub Thumpin’ Thursday to you… I won’t be joining anyone doing any Tub Thumpin’ today, as I’m still weak, but… getting stronger each day, which means my blood loss is being restored, or at least that’s what I’m hoping it’s doing!  My beloved Cardinals got out of Dodge (Chicago) with just one win in three games, and head to Arizona for 4 games now… Maybe they can get well (hitting and fielding) in Arizona… They played rotten defense for 2 games in Chi-Town, but finally had a good game yesterday… It was a beautiful, Chamber of Commerce, day here yesterday, and I sat outside watching the game… Ahhhh, day baseball!  Our Blues are all playing golf now, as they were eliminated in 4 games.. Swept if you will… UGH! So, now I can concentrate on baseball!  I have the perfect storm going for me that makes me sleep during the day… Chemo effects, and blood loss… I might sleep 3-4 hours during the day, and still not have a problem getting to sleep at night!  My dad would have called me “lazy bones”…  So, I had better get stronger fast I wouldn’t want anyone to think that way about me! Loggins & Messina greet me this morning with their 21 Minute song: Vahevala…  Some real good tropical sounds in this song…  Makes me think of sitting on the beach under a palm tree or umbrella, with a tropical beverage in my hand…

Well, it was bound to happen sooner or later. I would rather get it over with, and move on to higher grounds… What am I talking about this morning?  Another engineered takedown of Gold & Silver yesterday, by the price manipulators…  Gold was adding up the days of positive moves, when here come the price manipulators showing up at the COMEX with arms full of short Gold paper trades… (And Silver paper trades too!)  Gold buyers yesterday, were adamant about keeping Gold’s run of positive days going, but at the end of the day, the short paper trades were just too much, and Gold closed down just $2.00, but given the fact it was up more than $7 during the day, that was the turnaround… Gold Closed Wednesday at $1,897.80, and Silver lost 32-cents to close at $27.76…

The dollar was also bought yesterday, out of the blue… Currency traders were happy with their short dollar trades until yesterday when dollars were the belle of the ball…  Maybe, just maybe there was some PPT participation, but right now I’m not sure, so I won’t say for sure that the PPT was in defending the dollar like it has every time things look bad for the green/peachback, in the past…

The BBDXY closed yesterday at 1,118.23/ Dollar index at 90.04… The euro fell back below the 1.22 handle, and all the other currencies fell into line with losses of their own.  It was a day to commemorate Chuck’s Return! Yeah, that’s the ticket, that’s my story and I’m sticking to it!  HA!

Of course manipulated markets are nothing to laugh about, and I used to get so darn upset when days like yesterday happened, but these days… These days I sit on cornerstones, and count the time in quarter tones to ten… And when I’m finished, I just go on with life because there’s nothing I can do about the price manipulation, nothing, absolutely nothing, say it again!  The Treasury’s Exchange Stabilization Fund (ESF) was created and funded just to manipulate the currency markets…

Now we hear about different trading units that get their hands slapped when they are found to be manipulating prices in currencies, but it’s just peachy dandy for the U.S. Treasury to step in whenever they see things getting sketchy, just find and dandy indeed!  Do, you find that to be somewhat immoral? I do…  And it’s also not fair… But life’s not fair, so you move along, and hope they don’t get in your way very often…

In the overnight markets last night… It was back to the business at hand, which was the continuation of the dollar erosion… the overnight markets were not influenced in any way by the goings on in the U.S. markets on Wednesday, and so the dollar got sold some more. The euro is back above 1.22 this morning, the BBDXY had dropped to 1116.80/ 89.97, and things look about right again this morning. Gold & Silver were not allowed to participate in the dollar selling overnight, and Gold starts today, down $3, and Silver is down 6-cents… Neither of those two negative amounts have me concerned this morning… 

On the Central Bank Digital Currency watch… The Bank of Canada (BOC) yesterday decided and announced that they don’t see the need to develop a digital currency… Really?  So, the rest of the world is going to develop their own digital currency, including your neighbor to the south, and you don’t feel the need to have your own digitial currency?  I found this to be outrageous… And very stupid… like the little guy used to say on the Laugh-In Show… “Very interesting, but stupid”…

Or, and I’m being very, very, very facetious here when I say this… But maybe all those folks that said that the Amero was a real currency (The U.S., Mexico and Canada) will get their dreams come true, when the digitial currency that’s being developed by the U.S. envelops both Mexico and Canada and the digital currency will be call the Amero!   Please do not think I’m being serious here one iota, only having some fun with these stupid digital currencies…

Is it me, or doesn’t everyone question how something that has no backing, no intrinsic value, no real money uses, be worth $38,000?   Do you see the effects of free money at play here? I’m going to stop here because I know I’ve ticked some people off with that thought, and I want us all to be friends…

Longtime acquaintance, Rich Checken, did a video presentation titled: Whip Inflation Now!  It was good and you can find it on YouTube… But hearing that phrase took me back to the 70’s… Come along with me to a visit to the 70’s…   Let’s see, we started the 70’s off with our army in Vietnam, a place most people couldn’t point to on a map, then Richard Nixon closed the Gold window, and soon afterward he resigned. Then we had a replacement president who once played football at Michigan, and had a problem with falling down. But it was in the early to mid-70’s that the removal of Gold from the dollar, began to show its ugly side…Oh, but first we had an Oil embargo, from our friends, NOT!, at OPEC, which caused long lines at gas stations and the price of gas to go from 30-cents to more than a dollar overnight! And then inflation came along, and President Ford, who had a propensity to fall down a lot, started wearing a WIN button… Whip Inflation Now!   But that didn’t do the trick, and it wasn’t until Paul Volcker took interest rates to new heights in the late 70’s that we finally did whip inflation…

OK, now we’re back in current times, and inflation is soaring once again… Some say it will only be transitory, but I’m one that while, I do see that we had come from a shutdown economy (who’s Idea that was to do that should be, oh never mind), but supply chain deliveries are all whacked out, demand is very strong, given the low interest rates, and the all the free money,  inflation is here to stay until we beat it back with higher interest rates again…  I’m just saying…

So… for investor to whip inflation now, they have to have an inflation hedge, and TIPS are not the answer… TIPS (Treasury Inflation Protection Securities) are Treasury bonds tied to inflation, but that’s only going to get you help VS inflation in that security, unless that’s all you own!  No, the real inflation hedges are Gold, Silver, and land… And if the inflation is only rampant in one country, you need to sell that country’s currency and buy some other non-inflationary country’s currency!  Those countries will be difficult to find, given all the run up in debt these past years, but countries that have Central Banks that mandate inflation be no more than 2%, like Australia and New Zealand, would be pieces to the puzzle, along with the Russian ruble, which has virtually little debt to speak of…  

The U.S. Data Cupboard today finally has some real economic data to print… First we’ll see the color of the Weekly Initial Jobless Claims, and then comes the real meat… Durable Goods and Capital Goods Orders… these two will bring the bacon home on the economy folks…

To recap… everything was going along nicely with the erosion of the dollar, until yesterday, when it appeared to Chuck that there was an all-out effort to defend the dollar on both fronts, VS currencies and metals…  Chuck refuses to get too upset about these days any longer, and just accepts that they will happen from time to time…  In the overnight markets, the erosion of the dollar continued, despite what happened in the U.S. on Wednesday… And then Chuck goes back in time to the 70’s, and not to listen to any stupid disco songs! To describe what led up to the inflationary times of the 70’s…  And he explains how to Whip Inflation Now!

For What It’s Worth…  I got this from Ed Steer’s letter yesterday….  It’s an article on Zero hedge.com about how all the stimmy checks have been spent, and now the crash in buying appliances comes, because everyone’s stimmy money has been spent! And it can be found here: Here Comes The Hangover: Soaring Prices Result In Record Crash In Home, Appliance Buying Plans | ZeroHedge

Or, here’s your snippet: “For the past several months we have warned about the pernicious effects soaring prices are having on both corporations (“Buckle Up! Inflation Is Here!”) and consumers (“”This Is Not Transitory”: Hyperinflation Fears Are Soaring Across America”), prompting even otherwise boring sell side research to get (hyper) exciting, with Bank of America predicting that “Transitory Hyperinflation Lies Ahead.”

But none of this has spooked the Fed into conceding – or believing – that inflation is anything more than transitory. And maybe just this once, the Fed has a point because all else equal, by which we mean lack of rising wages, the best cure to higher prices is, well… higher prices.

Presenting Exhibit A: understanding that Biden’s stimmy bonanza is about to end and that soon they will have to live again within their means, Americans’ buying intentions (6 months from today) as measured by the Conference Board, have cratered across the 3 major spending categories: homes, automobiles and major household appliances.

The drop was so massive, it amounted to the biggest one-month drop in intentions to purchase appliances…

This confirms what we noted earlier, namely a record divergence between crashing home buyer confidence (due to record home prices) and soaring home builder confidence (also due to record home prices). Guess which one will matter in the end.

This, for better or worse, screams stagflation: as Lynn Franco, senior director of economic indicators at the Conference Board, said while consumers’ assessment of present-day conditions improved, “consumers’ short-term optimism retreated, prompted by expectations of decelerating growth and softening labor market conditions in the months ahead.”

While it’s clear why stagflation will be “worse”, we say better because if nothing else these data confirm that U.S. consumers are now tapped out, if not today, then certainly 6 months from today when Biden’s trillions in stimmys will have been long spent, and the spending spree will be over.”

Chuck again…  This is something that I’ve said long before there was stimmy check 1… That U.S. Consumers are tapped out…  This is all crazy folks…  will it lead to more stimmy checks?  I bet it does…. Oh, and this one last thought… Whether it’s inflation or Stagflation, it’s all bad! 

Market Prices 5/27/2021: American Style: A$ .7750,  Kiwi .7305, C$ .8266, euro 1.2207, sterling 1.4135, Swiss $1.1132, European Style: rand 13.7157, krone 8.3577, SEK 8.2971,  forint 285.07,  zloty 3.6731,  koruna 20.8478, RUB 73.47, yen 109.15, sing 1.3228, HKD 7.7613, INR 72.48, China 6.3935. peso 19.84, BRL 5.3206,  BBDX 1,116.80, Dollar Index 89.97,  Oil $65.72, 10-year 1.59%, Silver $27.71, Platinum $1,195.00, Palladium $2,824.00, Copper $4.52, and Gold… $1,894.80

That’s it for today… and this week of course…  I now have a couple of days to rest up… We’ll all be busy this weekend as Kathy’s niece is getting married… Good luck to Brian and Lauren…  Some of my kids are participating in the wedding, with little Evie probably stealing the bride’s thunder, when she waddles down the aisle! HA!  This will be the unofficial start to the summer, Memorial Day… Memorial Day is an American holiday, observed on the last Monday of May, honoring the men and women who died while serving in the U.S. military. May God Bless those men and women who died protecting our freedom..  So Memorial Day is more than the local pools opening… So stop to think about the real reason for the holiday on Monday…  Next time we talk it will be June 1…  And I’ll be all by myself once again for two weeks…  All by myself, don’t want to be all by myself any more… (Nilson)  Ok, I nerd a real rockin’ song to send us to the finish line today, and Deep Purple will do the trick with their song: Space Truckin’  don’t know that one? Google it, or YouTube it, you’ll like it, I’m sure! So, please be careful this weekend, and Be Good To Yourself!

Chuck Butler