- currencies and metals get bought on Monday
- But the overnight markets see profit taking..
Good Day… And a Tom Terrific Tuesday to you! Well, no baseball last night for me, instead I watched the Jeopardy Masters Championship quarterfinals… I always try to answer the clues on Jeopardy, and every now and then I get the whole category right! But not often! Did I tell you that I’m home all by myself until tomorrow as Kathy has gone to the lake with “the girls”… This is just a precursor for June 10th through 20th, when Kathy will be in Florida… I guess she thinks I’m good to go now, and I wouldn’t argue with her on that! Steelers Wheel greet me this morning with their song: Stuck In The Middle With You…
Well, a headline on Kttco.com said it all last night… “Gold looks good, but silver looks better, and the USD looks terrible”… Couldn’t have said it better myself! The dollar did get sold yesterday, as the rate cut thought we talked about yesterday, filtered through the markets. The BBDXY lost 5 index points on the day, and ended the day at 1,206… The euro remained above the 1.14 figure and the rest of the currencies all perked up during the day.
Gold, without interference, took off for the hills.. And gained $84 to close at $3,382, and Silver outperformed all the assets, by gaining 86-cents, and was up over $1 at one point in the day… It’s all about a July rate cut, folks… I told you yesterday that it would be the focus of the media and markets until July 29th when the FOMC next meets…
The price of Oil remained above $63 on the day, and the 10-year Treasury saw its yield rise by 2 BPS to 4.45%…
In the overnight markets last night… What are the foreign markets thinking? The bought dollars hand over fist last night, and the BBDXY Sits this morning up 7 index points at 1,213… I can’t find anything that explains this upward move in the dollar, after getting sold yesterday in the U.S. So, you know what I’m thinking?… The PPT and their treasure chest of Exchange Stabilization Funds stepped in to apply a tourniquet and then some to the dollar…
Gold can’t add to yesterday’s euphoria in metals and sits this morning down $21 and Silver is down 32-cents… it seemed yesterday, that the past was put in the rearview mirror for the metals, as they rallied BIG TIME… So, I’ll put this down to profit taking this morning…
The price of Oil bumped up to a $63 handle overnight, and the 10-year’s yield dropped back to 4.43% I get it, all the talk is about a rate cut in July, but seriously, there are a basket full of things that can take place between now and July 29, so why get all lathered up now? But that’s the markets for you…
Ok, so, have you ever wondered what happened to the Audit Fort Know hysteria that was so prevalent this past winter? Well, it was put on the back burner, where it will remain, probably forever… Why? Because, in my humble opinion, someone with some gray matter thought it over an decided that to make a big deal out of Gold and all the photo ops that would be available, that the public didn’t need to see, and bring Gold to their attention… Remember, Americans for the most part, do not buy or own Gold… Why? Because they must not have the elevator go to the top floor… But that’s just me thinking out loud…
It has long been the view of the U.S. Gov’t that Gold is an enemy of the dollar, ad it goes back to right after Nixon removed Gold from the dollar in August 1971… Longtime Pfennig Readers may recall when I printed a discussion between Kissinger, and a state dept head, talking about how they need to diss Gold in the public’s eyes… That’s when I realized that the short paper trading scheme came about from the U.S. Gov’t… That’s my viewpoint, and you won’t change it… All those calls on the red carpet at EverBank telling me to “cool it with the Gov’t interventions talk” didn’t budge me on iotal… So, don’t even think about trying to change my mind!
OK, I had a dear reader send me a note asking me about BASEL III and Gold… So, basically, BASEL III is a set of internationally agreed upon regulatory standards for banks, has a significant impact on gold, particularly in how banks classify and manage it. Under Basel III, physical gold is now recognized as a Tier 1 asset, meaning banks can use it as a high-quality reserve asset, similar to cash or government bonds. This change has implications for gold’s demand, price, and its role in the financial system.
The Basel Framework as implemented in the EU, UK and the US also recognizes gold as a form of eligible “financial collateral” that banks can use for the purpose of credit risk mitigation with respect to collateralized transactions. This places gold alongside other assets, such as cash, debt securities, and equities. And….
Would open the door to Banks buying Gold and holding it in reserves, and using it for collateral etc. This has been in the cards for sometime and I recall writing about it when it was first passed, but its start data was so far out, that it just got put on the back burner… But I recall me saying that this regulation was BIG for Gold back in the day, and I still believe that!
And there are thoughts that BASEL III will be the end of the short paper trading… For, IF banks do partake in owning Gold as collateral, they won’t want some entity to mess with their accounting and pricing of the collateral… Now, that would be simply wonderful, folks… I’m just saying…
OK, the dollar seems to be teetering here… it’s gone back and forth around the 100 level in the Dollar Index and 1,215 in the BBDXY… There are plethora of items lining up to take a short at the dollar these days… We have the tariffs on/ off debacles, we have the ratings cut by Moody’s, we have the new thought that interest rates could be cut in July, we have the debt, which is still growing and most likely to get a boost in debt growth with the passage of the Big Beautiful Bill, and then we have questions about our ability to sell enough Treasuries to finance the debt…
There are more, but what’s the use of listing them when we know that the PPT will not allow the dollar to drop too much… Much like the Fed Heads prevent a recession from happening, and cleaning out all the excesses, the PPT won’t allow a weak dollar trend to gain roots…
And since this is a Jobs Jaboree week, this article on zerohedge.com is appropriate… “For years, the federal government has been telling us that the unemployment rate in the U.S. is very low.
Everyone knows that is a bunch of hogwash.
According to a report that was recently released by the Ludwig Institute for Shared Economic Prosperity, the true rate of unemployment in the U.S. was 24.3 percent last month…
The article then goes on to say: “Do you ever feel like you are “functionally unemployed”? If so, you are definitely not alone. There are lots of people out there that cannot pay the bills each month even though they have jobs. In fact, there are lots of people out there that literally cannot afford to put a roof over their heads even though they are employed. Yes, there are many hard-working Americans that are now living in their vehicles or in “tent communities” because that is all they can afford. In recent years, the cost of living has been rising much faster than paychecks have, and so now a substantial percentage of the population is living in a state of constant financial stress. The middle class has been collapsing all around us, and we are witnessing an extraordinary amount of economic suffering all over the country right now.”
Chuck again… I know that this all sounds like Armageddon, but the truth hurts… I don’t like writing about this stuff, but it’s there, and needs to be discussed… I’m just saying…
The U.S. Data Cupboard yesterday had the May ISM (manufacturing index) and like I told it would do, it printed below 50 at 48.5… Still contracting, as the tariffs haven’t helped yet…
Today’s Data Cupboard will have the April Factory Orders for our viewing… I suspect that this print will be negative as Durable Goods were, and the ISM was negative…
To recap… The dollar and metals got sold BIG TIME yesterday, as the July rate cut scenario played out for the markets… Chuck warned us yesterday that the talk about the July rate cut would become daily stuff in the media and markets and it has already started! Chuck is very opinionated this morning, laying it on the line (Triumph)…
For What it’s Worth… i’ve talked about this scenario several times in the past, but as usual I find that people sometimes listen to someone else better… This is about the financing of the debt and it can be found here: Finance leaders fear destructive U.S. debt scenario
Or, here’s your snippet: “Hundreds of times a year, the U.S. Treasury auctions off debt securities — bills, bonds, and notes. This is how Uncle Sam borrows the billions needed to finance the government’s deficits.
The big picture: Top financial and business leaders, including some who served at high levels in President Trump’s first term, are increasingly worried that something could go awry.
The fear is that not enough buyers will show up one day, resulting in a damaging loss of confidence and a spike in all Americans’ borrowing costs.
If that were to happen, leaders warn, it could cause lasting damage by shifting the entire U.S. economy into a new, higher interest-rate equilibrium.
What they’re saying: “If you want an unpredictably wide swing in volatility, have a failed debt auction in the United States,” Gary Cohn, a former Trump White House adviser and president of Goldman Sachs, said in a Reagan National Economic Forum panel Friday at the Reagan Library in Simi Valley, California.
“We have the most robust debt market in the world until we don’t,” he said. “If there lacks interest from foreign investors, and there lacks interest from U.S. investors … rates will move out dramatically.”
Chuck again… Yes, this all works until it doesn’t, and then we as a country as up the creek without a paddle…
Market Prices 6/3/2025: American Style: A$ 6453, kiwi .5992, C$ .7282, euro 1.1381, sterling 1.3504, Swiss $ 1.2149, European Style: rand 17.8792, krone 10.1313, SEK 9.5991, forint 354,74, zloty 3.7603, koruna 21.8701, RUB 79.99, yen 143.42, sing 1.2890, HKD 7.8445, INR 85.57, China 7.1883, peso 19.25, BRL 5.6916, BBDXY 1,213, Dollar Index 98.83, Oil $63.31, 10-year 4.43%, Silver $34.52, Platinum $1,066.00, Palladium $1,030, Copper $4.79, and Gold… $3,361
That’s it for today… I know, I’m late today with the letter… I overslept… good for me! I totally missed that yesterday was Lou Gehrig day… The Ironhorse of baseball died of ALS… My sister, Barbie doll, died of ALS… So, the day that they talk about Lou Gehrig, I think of my sister… The rain comes back tonight… and stays with us through Thursday… UGH! No sitting outside to read! I’m into reading the Cormoran Strike books now… These are 1,000-page books! So, I can’t knock them out in a couple of days like I do other books… Paul Simon takes us to the finish line today with his song: You Can Call me Al…. I hope you have a Tom Terrific Tuesday today, and will Be Good To Yourself!
Chuck Butler