Back In The Saddle Again…

March 28, 2023

* Paper Traders put the kyboshes on metals buying

* Paring Down banks to a workable number? 

Good Day… And a Tom Terrific Tuesday to you! Well, I threatened to not return, but here I am, it’s early morning, the sun hasn’t even rose out of the ocean yet, and I’m back! I’ve been writing the Pfennig for over 31 years now, it’s a part of me, it’s what I do… I guess it will be very difficult for me to walk away from it when I do decide that I’ve had enough!   Well, the Final Four is in place for the NCAA Basketball Tournament, and I didn’t pick one of them! YIKES! My beloved Mizzou Tigers got beat by an Ivy League team… UGH!  And the Cardinals finished their spring training at Roger Dean with a win… They head north now, and I’ve always said that when the Cardinals go north, I will too…  Jimi Hendrix greets me this morning with his song: Fire

Well, how was last week without me? Fun, eh? Nobody, telling you the sky is falling, and being a Chicken Little… And asking you if you’ve Got Gold?  Let’s do a quick review of last week, before we get into today,.. Well, the data last week wasn’t what a good strong economy is made of… Durable Goods for Feb followed Jan’s negative result with a negative result of its own… The S&P Flash PMI (manufacturing) remained under 50, which means contraction, and on top of that, the FOMC hiked rates 25 Basis Points…  Thus continuing their battle with inflation with a pea shooter…  No more banks failed last week, but there are a few on the edge of failing… Credit Suisse got taken over by UBS, and Deutsch Bank is reeling.. again!

Gold & Silver were having a wonderful week until they weren’t… I was looking at Twitter one day last week, and a pundit said, “Gold is really performing nicely this week, how far will the paper traders take it down this time?”   It WAS just a matter of time, WASN’T it? Gold had touched $2,000 once again, and then the rug was pulled out from under it… One of these days, Alice! 

And the dollar was getting sold like funnel cakes at a State Fair, until it wasn’t…The PPT had to spend some of that Exchange Stabilization Fund that they have, and proceeded to wrap a tourniquet around the dollar’s bleeding, at least for a day… We’ll, have to see if the non-dollar traders still have the intestinal fortitude (guts) to still short dollars…  I think the currency traders all over the world are seeing what’s going on in the U.S. and don’t’ want any part of owning dollars… But there’s always that pesky PPT that keeps throwing a spanner in their plans…

The BBDXY was 1,252 when I left you on 3/16… Last week, the BBDXY had fallen to 1,228, when the PPT stopped the bleeding…  The euro was nearing 1.10 last week, and this morning it’s trading 1.0825… That’s a drop that probably was needed to clean out the profit takers, but now we’ll see where the euro goes now..  The currencies, as a whole, were all looking much healthier last week, until they weren’t…

So, to tie it all together… Last Friday, Gold lost $21.90 to close the week at $1,957.30, and Silver lost 14-cents to close the week at $23.16… The BBDXY ended the week at 1,235… The Price of Oil had rebounded to $72, and the 10-year was 3.53%…   That was how we ended the week last week…

So, that brings us to the overnight trading last night…  The overnight traders didn’t seem to get the memo from late last week, about not selling the dollar any more, because they sold the dollar overnight!  The BBDXY lost nearly 3 index points overnight, and starts the week at 1,232…  There has bee some saber rattling going on with the U.S. and Iran (again!), and that has furthered the need, as the markets participants see it, for more safe haven buying…

Gold is off by a buck this morning, no biggie… Silver has lost 12-cents to start the day, but remains above $23 as I write…  The saber rattling with IRAN HAS THE PRICE OF Oil on the rebound, and Treasuries are a mess these days. I have more on Treasuries in the FWIW section today, so don’t miss that!

This safe haven buying was behind the big move by Gold last week, and the strong moves higher in euros, sterling, and you won’t believe the next currency I’m going to say is a safe haven… The Japanese yen! As amazing as that is, the yen has seen its level rise VS the dollar, to 130…  This is one thing that has me believing my thought that this is a world of opposites, these days… For yen, which is a basket case at best, to be considered a “safe haven” is beyond my comprehension.. .But it is what it is…And we move along..

So… the dollar was on the run last week away from the dollar sellers… And it appears that it will begin this week on the run once again… It’s about time, but that’s a discussion for another day, right now, let’s talk about what happens if the dollar continues to get sold… Well, a weaker currency has always been to blame for allowing inflation enter its respective borders… And what do we, as a country, not need in any shape or form right now?  More inflation!  

And what do we have for a Central Bank that is supposed to protect the dollar’s value to keep inflation from eating the value away? We have a Central Bank that is going after inflation with a pea shooter… 25 Basis Points rate hike? What was that all about? That’s not going to slow inflation one iota! Our Fed Funds rate is still below the rate of inflation, and that’s even using the watered down inflation rate that the BLS puts out each month that would be funny if it weren’t what they try to get the markets to believe is real inflation.. The BLS should be required to meet John Williams at  now I would love to be a fly on the wall at that meeting!   

I read a piece from Ed Dowd, who explained that all these bank problems will lead to the shrinking of banks all over the country, down to just 6 major banks, and that will make the introduction of digital currencies easier… Hmmm… now there’s some real food for thought there folks…  That would mean that we’ve still got some time before they take away all our folding cash…  Banks defaulting, or getting taken over is not a good thing, folks…

Ok, remember when I wrote that we would see defaults, because of debt to the eyeballs of Corporations, States, Countries, etc. and that the default of these entities would then be the reason for the Gov’t to issue digital currencies?   Well, while I was on vacation, Paul Craig Roberts, wrote this: “There is, of course, the question:  Is this real stupidity or is a plot unfolding to collapse the financial system as we have known it in order to “save” us with the introduction of central bank digital currency?  Are we passing from the remnants of democracy and self-government into total tyranny?”

Chuck again… yes, the loss of the last of our civil liberties, will be the result of the introduction of digital currencies… The Gov’t will then know everything they need to know about you… Does this sound a bit like 1984? The book, that is… By George Orwell…  Now that’s some scary stuff, folks, but it’s what is going to be the result of digital currencies… Mark my words on that… One day, in the future, you’ll tell your grandkids, or great grandkids, that Chuck Butler, warned them and very few listened…. Got Gold?

I read this morning, that $286 Billion has been taken from banks and deposited in money market funds… Uh-Oh… These are not the FDIC insured money market funds, folks, these are the uninsured funds that had to bailed out in the financial meltdown of 2008…  Look, the U.S. was in a pickle in 2008, but the debt they held was no where near the $30 Trillion they’ve racked up since then… So, for the gov’t to think that they will be able to bail out Tom, Dick and Harry, they are sadly mistaken, the financial system will be strained to the end… I’m just saying…

The U.S. Data Cupboard today just has the Case/ Shiller Home Price Index for Feb… I do believe that home sales were still iffy at best in Feb.. We’ll see this morning if that’s right…   The rest of the week is lacking any real economic data, until we get to Friday… So, section of the letter will be a big bore, this week!

To recap.. last week was a good week for the currencies and metals until it wasn’t… The price manipulators and PPT decided enough was enough, and stopped the dollar selling, and metals buying in a heartbeat… Now we begin this week starting over, and see how far we get this time… Banks are still in trouble, folks… and that could lead us to an eventual number of banks that would make introducing digital currencies easier… We’ll see where that goes from here…

For What It’s Worth… Well, while on vacation, I read a piece from Matthew Piepenberg, from Gold Switzerland, and his words, once again are ringing true… This article is about how U.S. Treasuries have lost their shine, and it’s the debt and tons of issuance of the Treasuries that have them getting sold, and not wanted any longer.. the article can be found here: Je T’Accuse: To Bond Killers & Other Villains Destroying Our World – Matterhorn – GoldSwitzerland

Or, here’s your snippet: “As I recently observed, there’s something very unsettling when the most important bond in the global financial system–one for which 1) bank safety and liquidity levels are measured, 2) derivative markets are collateralized and 3) global sovereign nations hold (> $7 trillion) as reserve assets—suddenly loses its shine, trust and credibility.

In short: The UST matters.

Sadly, however, after years of backing unsustainable debt levels and exporting U.S. inflation around the world, no one trusts this critical sovereign bond anymore.

In fact, Uncle Sam’s infamous IOU is less of a promise of “risk-free-return” than it is an objectively corrupted symbol of “return-free-risk.”

Hard to believe?

Well, let’s just look at the unprecedented (and so-oft predicted/warned) volatility in the UST market of recent days.

Last week, for example, liquidity in US Treasuries (and German bunds, btw) sank like a rock, with ripple effects throughout the world.

On Monday, the 2-Year UST saw yields fall in single-day trading to levels not seen since 1987.

By Tuesday and Wednesday, intra-day volatility levels in the UST market surpassed those of the Great Financial Crisis of 2008.

But that’s not the real record-breaker. Far from it.

As Bloomberg’s David Ingles confirmed, last-week’s extreme volatility and yield-moves in the 2-Year UST posted 3-sigma moves, something that MIT mathematicians argue should only occur statistically once every 50+ million years.”

Chuck again… As I always say when using a snippet from Matthew Piepenberg, it would behoove one, to click on the link and read the entire article.. .

Market Prices 3/28/2023: American Style: A$ .6673, kiwi .6225, C$ .7316, euro 1.0825, sterling 1.2318, Swiss $1.0896, European Style: rand 18.1969, krone 10.4330, SEK 10.3656, forint 354.56, zloty 4.3260, koruna 21.9099, RUB 76.61, yen 130.79, sing 1.3284, HKD 7.8499, INR 82.19, China 6.8811, peso 18.19, BRL 5.1967, BBDXY 1,232.30, Dollar Index 102.62, Oil $72.92, 10-year 3.54%, Silver $23.02, Platinum $969.00, Palladium $1,411.00, Copper $4.02, and Gold… $1,956.63

That’s it for today… I’m back in the saddle again, Out where a friend is a friend, Where the longhorn cattle feed, On the lowly gypsum weed… Ahhh, Gene Autry, the singing cowboy! Yes, I’m back, and this time for a long time until my annual summer vacation comes along, but that’s not for a few months… my new iWatch tells me that I’ve reached my Activity goal 19 straight days! Woo Hoo! But there’s no more walking to the ball park, etc. so I’ll have to get out and move during the day… UGH!   How about that STL City SC that’s 5-0 to start their inaugural season?  Now that’s exciting!   I sure hope it warms up in St. Louis for my first game which will be 4/15!   I don’t know how I’ll get through a game there, as the fans all stand the entire game!  I can stand about 5 minutes… Uh-Oh!   The late great Marvin Gaye takes us to the finish line today with his song: Mercy, Mercy Me…   I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler