- The U.S. dollar continues to get sold…
- The dollar’s use in trade slips again…
Good Day… And a year-end, Tub Thumpin’ Thursday to one and all! I don’t know up front how long this letter will be today, as I’m very anxious to begin to get ready for my trip to my winter home in the South… These days, my wife has flown and spent so much that she has a companion pass, so she booked our trip to Florida, and just added me as her free companion… I thought we had talked about leaving today 12/28, but she threw me a curve and we are now scheduled to leave next Wednesday… UGH! That means for the first time in many years, I will be home for NYE, I guess I had better find a restaurant that will take a reservation! The great Al Stewart greets me this morning with his song: The Year of the Cat…
Well, the year-end drive to get the dollar lower continued yesterday, with the dollar getting sold again, and the BBDXY losing 4 index points… The feeling has been cast on to the dollar bugs that the Fed Heads are eventually going to cut rates next year, and so all the dollar buying because the Fed Heads were in a rate hike cycle is now being unwound… There’s a lot more unwinding to go, I’m just saying!
Gold had a stellar day, gaining $10.50 and closing at $2,077.50. Silver turned the early morning selling around yesterday, and gained 5-cents on the day to close at $24.28… You know it occurred to me the other day that Gold is really coming into a period where individuals, hedge funds, pensions, etc. are realizing what a store of value it is, especially in these times of geopolitical problems, and unknowns…. Those “unknowns” are really scary things folks, especially to traders… So as we go into year-end 2023, Gold is putting on a rally to bring it to new all-times highs… put that in your logbook, so you can always go back and say, I remember the day Gold hit its all-time high, and hasn’t looked back!
I have to mention the short paper traders here, even with Gold climbing higher, the short paper traders have been in trying to manage the price of the metals, both Gold & Silver… Here’s Ed Steer’s view of what’s going on: “It was yet another day where the commercial traders of whatever stripe made their presence felt both in Globex and COMEX trading, as it was another case of where if they hadn’t, gold and silver would be beyond the moon.
It was most notable once again in silver, where ‘da boyz’ only allowed it to close higher on the day by a few pennies…well off its high tick.” – Ed Steer at www.edsteergoldsilver.com
Chuck again… So, while Gold seems to be rid of the short paper traders, it’s not like that at all… They have to keep at it to keep the Ponzi scheme that they have created going… I’m just saying…
The price of Oil slipped a buck yesterday, and ended the day trading with a $74 handle. And bonds continue to get bought with the 10-year’s yield falling to 3.80%…
In the overnight markets last night… The Dollar got sold more overnight… The old Dollar Index has fallen below 101, and looks like it’s headed to a sub 100 figure soon… The BBDXY lost 2 index points overnight, and all that has brought the euro to a 1.11 handle… And the rest of the currencies are all looking much healthier. Even the Japanese yen is getting in on the dollar weakness… Remember I told you weeks ago that this could be in yen’s future, as long as the Bank of Japan (BOJ) comes through with a rate hike… The BOJ is still hemming an hawing about when they will hike rates, so for now, it seems the large traders are piling into yen, maybe forcing the BOJ to hike rates sooner than later…
The Chinese renminbi is also perking up… The Peoples Bank of China (PBOC) are really the engine of the de-dollarization plan that’s been hatched and headed by China and Russia… I have something for you on the dollar’s slipping in use for trade in the FWIW section today…
The price of Oil has slipped another buck overnight and trades this morning with a $73 handle. And bonds continue to get bought… Was it too soon for the bond rally? Only time will tell… and forecasts are useless, here…
This scenario that’s playing out right now with the Fed Heads contemplating a rate hike in 2024, reminds me of the late 70’s and early 80’s… Let’s go back in time and revisit this time to see what I’m talking about… Inflation was soaring in the 70’s and head Fed Head, Paul Volcker hiked rates to 20%… Then it appeared that he had beaten inflation back, as it dropped… And a rate cut came too soon it turned out… For inflation roared back and the Fed Heads had to hike rates again…
So, see what I’m talking about here? Will history repeat itself here? I’m thinking that the chances are better than average that will happen… I’m just saying… And if that happens, all these bond buyers will be in deep dookie…
It’s been quite the event-filled year for yours truly… I went on my first cruise, without my kids, I suffered a stroke, but quickly recovered, I had my first low-sugar event, that was scary, until i realized what it was… I changed chemos twice during the year, my youngest son, Alex got engaged, and is busy planning a wedding… And I’ve spent two nights in the ER with bleeding that won’t stop… Other than those things, I lead a pretty boring life… I’m just saying…
Well… Zerohedge.com reported yesterday that: “A new report from the Financial Times shows twenty of the world’s largest banks slashed 61,905 jobs in 2023, a move to protect profit margins in a period of high interest rates amid a slump in dealmaking and equity and debt sales. This compared with the 140,000 lost during the GFC of 2007-08.
Chuck again… yes the GFC… Great Financial Collapse… Remember that one? The Housing Market Bubble that I first warned people about in my White Paper titled: The Year of the Euro, in 2003, popped and left no prisoners behind.
Ok.. Well, I hesitated to talk about this but then I thought, what the heck! We all know that this is happening around us… This is from Michael Snyder for Lew Rockwell.com “The ominous trends that we see all around us are taking us somewhere. Needless to say, 2023 was not a good year for our country. Hunger and homelessness have been absolutely exploding, the suicide rate just continues to go even higher, and there is chaos in the streets on an almost nightly basis. It is in this environment that the election of 2024 will happen. I expect election season to add an additional level of strain to our society, and I don’t think that our society will be able to handle it. We are headed for a nightmare, and at this point everyone should be able to see that.”
Chuck again… I know, not too uplifting, but stuff that has to be talked about…
The U.S. Data Cupboard today has the Initial Weekly Jobless Claims…. I’m sure the numbers will be skewed because of the holiday shortened week we had last week. There’s really not much going on here in the Data Cupboard today or tomorrow… And tomorrow the Bond Market closes early… So, the bond boys have that going for them!
To recap… The dollar continues to get sold, on a daily basis… Yesterday it was 4 index worth of losses in the BBDXY, and overnight it got sold some more! Gold is reclaiming its role as the preservation of wealth… Chuck says to put in your logbooks when Gold breaks its all-time high, which could be today, so you can look back and say that you know when that happened! Worldwide banks are axing employees… Not a good time to be a banker… I’m just saying…
For What It’s Worth… this article talks about how the dollar has already run into the BRICS iceberg… And I think that at this time, when the dollar seems to be teetering… It’s a good article to read… And you can read it all here:Has the U.S. Dollar Already Struck the BRICS Iceberg? – LewRockwell
Or, here’s your snippet: ” As of this writing, US dollar reserves have fallen by 6.5% as foreign central banks cut ties with the currency. The BRICS countries, especially those in the global South, are leading the charge to depart from the decades-long dominance of the American currency. China and Japan’s central bank shares show the most significant rise in central banks. Interestingly, the Euro is just slightly behind in losing a share in the world currency market.
If BRICS stops using the USD, there will likely be a financial disaster in the United States, with hyperinflation wreaking havoc across all sectors in the US. However, losing the dollar as the medium of exchange worldwide is not the most significant danger for the American hegemony. Collaboration and stronger ties between the BRICS and emerging nations are essential. Xn Iraki, an associate professor in the Faculty of Business and Management Sciences of the University of Nairobi, offered this via China Daily:
“BRICS is at a watershed in terms of global economic organisations, with less-developed countries now having access to technology from more advanced ones and having an opportunity to diversify their exports and gain access to new sources of funding.”
The BRICS account for 37% of the world’s GDP, while the G7 only squeaked out 30%. With the UAE, Saudi Arabia, and Iran joining the group, oil production on Earth will be firmly in the hands of BRICS members. US government data shows BRICS’ share of global oil production blossoming from 19% to 41% after the recent expansion.
The US dollar, which is increasingly weaponized through economic sanctions on Russia, Venezuela, Iran, and many other countries, will take the biggest hit if a BRICS counter currency situation arises. In America, increasingly burdensome debt and deficit spending on wars and programs that do not directly benefit the nation’s people will cause major internal problems.”
Chuck again… first of all, I meant to write about how the dollar’s share of world trade had slipped again, but forgot, so I’m glad it was revisited here this morning… 2ndly… There are 40 or more countries that are asking to join the BRICS… This is going to become an us VS the world thing, I’m afraid…
Market Price 12/28/2023: American Style: A$.6837, kiwi .6328, C$ .7560, euro 1.1116, sterling 1.2772, Swiss $1.1954, European Style: rand 18.5509, krone 10.1315, SEK 9.9297, forint 344.53, zloty 3.9010, koruna 22.2227, RUB 90.16, yen 140.80, sing 1.3178, HKD 7.8166, INR 83.17, China 7.1017, peso 16.89, BRL 4.8450, BBDXY 1,208.59, Dollar Index 100.79, Oil $73.06, 10-year 3.81%, Silver $24.31, Platinum $1,000.00, Palladium $1,143.00, Copper $3.96, and Gold… $2,075.69
That’s it for today, this week, and this year! Another year in the books! I’ve now been writing this letter for 30 years! That’s amazing to me, and I’m still surprised to find out someone from years past, still reads it! At a party I attended a couple of weeks ago, I ran into the University of St. Louis Economics Professor that used to come to our office and give us some views on current economics… She told me that she still reads the Pfennig each day… I was flabbergasted to say the least! But very proud of the fact that she still finds it to be worthy of reading! Well, tomorrow night is the Big Cotton Bowl Game, featuring my beloved Mizzou Tigers VS The Ohio State Buckeyes… A HUGE Game for Mizzou, and one I hope everyone comes to play in… Fight Tigers fight for Ol’ Mizzou! Well, the next time I talk to you it will be 2024, so I sure hope that if you go out to celebrate the NYE, that you do so carefully… My dad used to call NYE “amateurs’ night”… Ambrosia takes us to the finish line for the last time in 2023 with their song: I Keep Holding On To Yesterday… Hey! that’s a pretty appropriate song for the last day (for me )! I hope you have a Tub Thumpin’ Thursday today, and fun-filled NYE… be careful out there! And don’t forget to Be Good To Yourself!
Chuck Butler