Currencies & Metals Slide Downward Again…

January 28, 2021

* not a good day for the currencies & metals… 

* Why don’t traders give two hoots about the Cartel’s balance sheet? 

Good day… And a Tub Thumpin’ Thursday to you! Yesterday morning, after sending out the Pfennig, I was really draggin’ the line, and closed my eye, and the next thing I knew I had slept until 11 am… it was “one of those days”… Then I got up, and went outside where it was full sun, and 85 degrees, I stayed outside for about 2 hours, and then decided it was time to get out of the sun! I heard the news yesterday oh boy… That my spring training buddies are bagging me this year… Which means that Kathy will have to go to all the games with me, and I can tell you right here, right now, that she will not enjoy that one iota! One game here and there, OK… Day after day of games, no thank you, as far as she’s concerned… And now we’ll be sitting in the sun for the games with masks on… That will be uncomfortable for sure! There will only be 1,000 fans at the games in the ballpark, so it’ll be like being at a Marlins game! HA!  Al Wilson greets me this morning with his song: Show and Tell… “That’s a game I play when I wanna say, I love you”… 

OK… Well, it was not a good day for the currencies & metals.. No, it wasn’t one of those engineered takedowns for Gold, but the shiny metal did lose $6 on the day… The currencies gave back about 1/2-cent to the dollar across the board, and the Dollar Index closed at 90.67… Up from the early morning reading of 90.47. 

As I peruse the currency screen I’m taken aback by how much ground they’ve lost this week… Shoot Rudy, even the Chinese renminbi and Japanese yen have given back recent gains VS the dollar!  And like I said yesterday, ever since Gold rose by $32 last Wednesday, it has seen small drops every day…  

The day was dominated by the FOMC meeting and press conference that followed no rate change announcement. Cartel, I mean Fed Chairman, Jerome Powell was doing his best imitation of Dr. Fauci, and this ended up being the most important thing he said, “There’s nothing more important to the economy right now than people getting vaccinated.”  I wonder how the media will react to those comments when in 5 years, we find out that the vaccine shouldn’t have been given, especially to elderly people…  OK… I don’t know this to be a fact… So, stop right there with your nasty email to me! I’m just speculating… Remember a couple of months ago, when the vaccine came out, and I said then, what happens when a new strain of the virus appears?  I didn’t know anything more than anyone else at that time, I was just speculating, and well… we know the rest…

Ok, now I’m playing scientist… mad scientist at that! So.. Igor… where did I put that syringe?

So.. nothing new from the FOMC yesterday… Rates remain near zero, bonds are being bought.. The Cartel’s, I mean Fed’s balance sheet is now $7.2 Trillion, and I betting that free undercoat that their balance sheet will be $10 Trillion by the end of the year…   That’s $10 Trillion of interest rate expostre folks… This is something that has never been this size before, and it’s only getting larger every day. And nary a word from the Cartel chairman about tapering bond buying…  Like I said the other day, the temper tantrum the markets would throw would be something to behold, if there was tapering mentioned…

But with all that in mind, the dollar bugs ruled the day…  Go figure, right?  The dollar has begun 2021 much like it did most years when it was in the last weak dollar trend… Giving everyone the idea that the dollar will rebound the rest of the year, only to be disappointed as the months went along… But that was during the last weak dollar trend,  it will be interesting to see if the dollar can retain any strength in this calendar year, given all the stuff that’s building up against it doing so.

I read yesterday that the new $1.9 Trillion Stimulus package is making its way through Congress with no roadblocks… So, gotta get those stimmy checks out… because the sooner you get those out, you can begin to talk about the next ones that will be needed…

In the overnight markets… there’s been additional slippage in the currencies VS the dollar and Gold is down $5 in the early trading… Has everyone lost their collective minds?  Give me a break here!  One of the things that was drilled into my head when I first started in the financial business is that “markets/ traders are always looking forward”…  But I truly believe that that thought has gone our the window with the bathwater, for if it were still true, then the dollar would be getting taken to the woodshed..  For what’s coming down the pike is all bad for the dollar, so why aren’t traders “looking forward”?   

In the U.S. Data Cupboard yesterday, we had the long awaited December Durable & Capital Goods Orders, and they certainly didn’t give the economy a warm and fuzzy…  Durables only rose .2% VS the 1.2% in November, and Capital Goods only rose .6%, down from 1.0% in November. So, going the wrong way as far as a recovery is concerned, that’s for sure! 

Today’s Data Cupboard will be a busy little bee, with the usual Tub Thumpin’ Thursday fare of Weekly Initial Jobless Claims… Then after the dust settles on that data, we’ll see the first print of 4th QTR GDP… What ever it prints at, keep in mind that it will see 3 revisions to that number…   And December Leading Indicators finish out the day for Data Cupboard… I suspect that the Leading Indicators number will be down from Nov.  

For those of you new to class, Leading Indicators, and Capacity Utilization are about the only forward looking pieces of data that we see… The CAPEX (Capital expenditures)  is close to being forward looking… But circling back to what I talked about above, what’s the use of looking forward any longer? It’s all about what have you done for me lately!  Instant gratification… What ever phrase you want to you use to say looking forward is dead as a door nail! 

To recap… The dollar bugs ruled the day yesterday, and the FOMC meeting and press conference didn’t yield anything to move the markets…  Powell did his best imitation of Dr. Fauci…  And Chuck has a problem with it… But then Chuck always has a problem with what the Cartel chairman says!  Chuck talks about the Cartels’ Balance Sheet, and how it has exploded higher and keeps growing, with all that interest rate exposure…  Oh, well, people don’t care about the Fed’s Balance Sheet… do they?

For What it’s Worth…  Ok, this is all old news for most of you, as I went through this a couple of weeks ago for the about the 10th time… But… just like your kids sometimes need another adult to talk sense into them, I have gotten Luke Gromen to talk to you about Gold Price Manipulation… I first came across Luke when he was on a podcast with Grant Williams, and since then I follow him on Twitter, and read his notes whenever he posts them… He’s a very well respective analyst, and he’s here to talk to you and you can find that talk here: Why gold price is not at $6k already and why it was ‘managed’ by the government – Luke Gromen | Kitco News

Or, here’s your snippet: “Gold is a political metal, and competes with U.S. treasuries, said Luke Gromen, president of Forest for the Trees, and because of this, government authorities have historically been trying to “manage the price.”

“It’s a political metal because it competes with the U.S. Treasury bond as a primary reserve asset and so to the extent that gold does well, historically that is a threat to the U.S. government being able to finance its deficits painlessly. So, there has been a need to manage the gold price and that’s not conspiracy theory,” Gromen said. “You can read any number of central bankers at the Bank of England, Greenspan at the Fed, the U.S. State Department wires and cables from the 1970s, they are stating that to be a fact that the gold price needs to be managed.”

Gold has the potential to reach $6,000 an ounce but is being held back, Gromen said.

“Gold collateralization of U.S. foreign obligations went from 20% in 1989 to 4%, 3% at the lows in 2003,” Gromen said.

Should it return to the same 20% level, gold should be trading at $6,000 an ounce, he noted.

I doubt that governments [particularly the U.S. government] are directly involved in the COMEX futures market, but it would come as no surprise to me if they weren’t involved behind the scenes in some way.  And as I said in my January 9th commentary regarding the latest Bank Participation Report, it would not be shocked to see the Exchange Stabilization Fund involved in bailing out some or all of the Big 8 shorts when the time comes.”

Chuck again…  And again I remind everyone that when there’s so much physical demand to buy Gold & Silver the short positions will be squashed, and gone where the gobblins go… Also, I truly appreciated him mentioning the wikileaks cables I’ve talked about for years, where U.S. leaders talk about the need to keep Gold from rising…  It’s all there folks, all the proof you would ever need to know that the Gov’t is behind all this… 

Market Prices  1/28/2021: American Style: A$ .7610,  kiwi .7125, C$ .7781, euro 1.2110, sterling 1.3652, Swiss $1.1233, European Style: rand 15.2370, krone 8.6730, SEK 8.3596,  forint 297.63,  zloty 3.7541,   koruna 21.5538, RUB 75.41, yen 104.35, sing 1.3320, HKD 7.7527, INR 73.09, China 6.4716, peso 20.36, BRL 5.3725,  Dollar Index 90.70,  Oil $52.77,  10-year 1.01%, Silver $25.35, Platinum $1,068.00, Palladium $2,382.00, Copper $3.52, and Gold… $1,840.70

That’s it for today…  I feel much better this morning. Yesterday, when I woke up, I just didn’t feel like doing anything, but I made myself go outside, and I was glad I did, for soon the sun put some life into me! So, back to the real life this morning… coffee is brewing, and soon it will render, that hot concoction that helps me get along… HA!  The Cold front came through overnight, and today we’ll only see a high of 70… poor me, right? HA!  There’ll be Floridians walking around with winter coats on… I’m not kidding! Not all, but some will be bundling up! OK… The next time we talk will be on Monday, Feb 1st, and I’ll be getting ready to get on the horn and order my ball game tickets!  So, that means this is the end of one of my most dreadly months…  (sp check says “dreadly” isn’t a word, but I say it is!) And there will only be about two weeks before pitchers and catchers report…  The Gap Band takes us to the finish line today with their 80’s song: You Dropped A Bomb On Me… I hope you have a Tub Thumpin’ Thursday, and a Fantastico Friday tomorrow, and Please Be Good To Yourself!

Chuck Butler