Gold Continues To March Higher…

April 7, 2020

* Currencies rally in the overnight markets… 

* Chuck answers some questions…. 

Good Day…. And a Tom Terrific Tuesday to you! It’s a good thing I start each day with a day of the week ditty, as I would for sure lose track of what day it is…. And don’t Laugh, I’m sure that now that most of you are working from home, you know if it weren’t for you signing in each day, that you would lose track of what day it is too! The clouds and gray finally gave way to sunshine yesterday, and I was able to get back outside! I sure do miss my baseball…. What’s a poor boy like me supposed to do without baseball? I began listening to Classic Rock’s Top 100 on my Sirius XM radio app yesterday… Most of the songs I have on my iPod already, but have heard some that I had forgotten about! Music is what I have now… I sit out in the backyard, and sing out loud with the songs, and there’s no one anywhere to complain! HA! The Beach Boys greet me this morning with their love song: Wouldn’t It Be Nice….

Yes, wouldn’t it be nice to put all this in our rear view mirror? But it’s still with us, and the worst is yet to come, although we, as Americans sure have done better with the stay at home rule than I would have thought we would do…. Look, we are “social people”, we get out among the people, make new friends, etc. I really thought by now, my fellow Americans would be saying “to hell with that!” But then again, we ARE Americans, and we rise to the occasion, when its placed in front of us…. You know, my publishers, Mary Anne and Pamela Aden, aka The Aden Sisters, have always been on me to come to Costa Rica… And right now I’m thinking that just might be where I go and never come back until there’s baseball again! Hello, Mary Anne…. This is Chuck, I was wondering if I could bring my whole family down to Costa Rica… Yes, there are 12 of us…. You have a hotel we could use? That would be great, we’ll be there by the end of the week… No wait! We have to get shots before we go, right? Oh, well, forget about that then, because there’s no way we can get them while this COVID-19 virus thing is ruling the day!

I’m sorry,,,, I started typing and the next thing I knew I was in Costa Rica! Silly me! OK…. Well, the euro couldn’t hold onto the 1.08 handle yesterday, as the dollar bugs continued to work their magic spell over the markets, that have them believing that this shut down in the economy will be short-lived, and therefore it’s time to buy stocks and dollars again….

But in the overnight market, there was some healing in the currencies, and as I look at them this morning, they’re all trading with better numbers this morning than yesterday morning…  I know, there’s really nothing out there in currency land that screams, “buy me, buy me”…  Unless of course you’re willing to take a flyer on the Russian ruble, which to me fundamentally seems to be the best, but with their main business, Oil, looking for production cuts to keep it from falling below $20, the ruble gets ignored….  I’m just saying, that maybe, it’s worth a section of your investment portfolio, where you have your “pet investments”… 

For full disclosure, I own rubles….  And I bought them for all the great fundamentals, and the fact that they pay a yield, which in this day of negative and zero yields, is a big thing in my book! 

I was scanning the stories on yesterday and came across this quote that I thought played nicely in the sand box with my thoughts that there’s another shoe to drop with stocks… Check this out… “When the markets start to see some of the data on unemployment rising and economic growth and corporate earnings contracting, there will be another level of panic in the market.’ — Scott Minerd

If you don’t know who Scott Minerd is, well he’s themanaging partner and chief investment officer of Guggenheim Partners, so maybe, just maybe he knows a thing about what’s going on, eh?

Gold found a way to push the dollar down by another $20 and in the early trading today the shiny metal is giving back some of those gains from yesterday, but it’s early…  There have been a lot of articles by very smart people in the past week that believe the days of engineered takedowns are ending, as the COMEX is like the Emperor without clothes right now having defaulted last week on a delivery of a 400 oz Gold Bar…. Basically it works like this, folks…. 400 oz Gold Bars are what is know as “good delivery” Gold…. So, large institutions, banks, Central Banks casino Banks (that is if they ever got their heads out of their …. And bought some Gold) when they take delivery of Gold that they purchased, it’s in the form of a “good delivery bar”…. Apparently, the COMEX had to deliver one last week, and couldn’t find it…. Wait! What? Yes, the COMEX in a desperate attempt to keep the paper Trading alive, introduced a new 400 oz Gold Paper Contract, but then found out they didn’t have any in stock in case someone needed delivery!

Not to worry, I’m sure that’s all been taken care of now, right? HA!

Come on Chuck, this is supposed to be the Holy Week, you’re supposed to be kind to your fellow man…. Well, I’m trying, it’s just that the morons keep stepping out in front of me! I’ll try to do better the rest of the week….

Well, what I really wanted to talk about is all the articles talking about an end of the paper contract’s ability to move the Gold & Silver Prices….. I want to know just who they know that told them this is going to be the case, because, if that’s the case, then Beep, Beep, Beep, Yes, that’s the sound of my truck backing up to the loading dock to take on as much Gold as I have money for! Hey…. I just thought of something…. If you could go into debt, and take the cash and buy Gold, and when the fit hits the shan, and the Gov’t forgives everyone’s debt, you would be left with Gold that you didn’t pay for! OK, I’ve got to get a day job, my mind is working overtime on this stuff these days, ! HA!

OK, after climbing to a $27 handle yesterday, on news that Trump and Putin are going to cut Oil production, by 10 Million barrels a day, the price of Oil slipped a buck downward, this time on news that a production meeting is going to take place in a few days, and there are now questions of the production cuts…. Oh my…. Why can’t you all get together and decide where Oil is going and then get out the way!

OK. I want to get to a couple of questions I received in the Pfennig Replies box, that seemed best to answer in the Pfennig so that everyone can read what I have to say…. Yesterday, I mentioned that there could be a new financial system soon…. This is where the debt that every country, sans Singapore and Russia, have accumulated, gets repriced, or even written off… This gives all the debtor nations an opportunity to reset the system, and when resetting the system, the main thing will be at what price do they reset Gold…. Is it $10,000 or $15,000? And that’s when all the countries in the world meet and show their hands, like in poker. Their hands? How much physical Gold do they have in reserves…. They’re will be some BIG surprises…. Like here in the U.S. when we find out that ½ our Gold has been leased out…. We still own it on paper, but possession is 90% of the law, right? The other BIG surprise will be just how much Gold China has accumulated…. I’m betting that their total is north of 15,000 Tonnes…. Which would put them at the head of the table, eh?

And then the other question was about why do I bash Gold ETF’s…. OK…. I’m sorry if I appear to be bashing Gold ETF’s…. To me, if you are simply attempting to track the price of Gold to trade it somewhere down the line, then go ahead and buy the ETF…. But…. At some point in the future, push comes to shove, and you need physical Gold…. Well, you won’t be able to get it out of the ETF…. And with everyone buying physical Gold, there will be none to buy, and then what are you going to do, with the dollars that, if Gold is that important that point, I can’t see the dollar being worth much,.

I say that with the thought that keeps creeping into my brain, and that is that there’s nothing in writing that says the dollar would be worth less if Gold was worth so much… It’s just the way it’s always been, Gold up, dollar down… but this last year has brought the idea that the dollar can remain strong in the face of a Gold rally….  Strange? yes it is, but it is what it is, and I don’t argue with things like that, I just take them as they come…. 

You buy auto insurance in hopes that you never need it, right? You buy health insurance in hopes you never need it, right? You buy home insurance and fire insurance in hopes you never need it, right? Well, there’s nothing different about buying physical Gold…. You buy it, store it, and hope you never need it…. Period!

Can you believe that my old stomping ground wouldn’t allow me to say that last paragraph? They really had a problem with me telling people to buy investment insurance, which would reduce their dollar holdings… I’m just saying…. OK, I’m past the time I agreed not to talk about them, so there! Whoa, there, Chuck… you had better tread lightly there…. 

There’s one more reoccurring question in the PRB… This one asks me why I don’t mention TIPS….  You know the inflation protection bonds that the Gov’t came out with about 20 years ago?  Well, if you can allocate enough money to TIPS then you’ve got inflation protection for that amount of money… See what I’m talking about? I consider TIPS to be a self-centered investment…. And then there’s also the fact that when I went to the bond screen this morning to check on how low yields were for TIPS… And guess what? The whole yield curve is negative!   No thank you ma’am I’ve had enough! 

Well, remember Michael Burry, of the Big Short movie? He saw the housing bubble (after I wrote about it in the White paper, the Year of the euro, 2003) and made bets against the housing sector, and came out looking like a genius…. Well, he’s back to bashing things, this time it’s the economic shutdown here in the U.S.   Apparently, like me, he’s concerned that we won’t be able to “kick start” the economy, just like that!  

As I told you yesterday, the U.S. Data Cupboard was a barren as the moon, and today it just has a couple of data prints that won’t really move the markets, but there is one that I follow… Consumer Credit (read debt) which is really old, as it’s the Feb. print, before the COVID-19 virus came to our shores, so this print will be interesting to see how much debt consumers took on in Feb. 

To recap… The dollar bugs ruled the day yesterday, but in the overnight markets the currencies, and I mean all of them, rallied to win back some lost ground…  Gold was up again with yesterday’s move bringing $20 more to Gold’s price…. The early markets this morning have Gold giving back about $6 of that gain yesterday, but… it’s still early….  Chuck answers some  questions, and wonders what the interest in TIPS is all about?

Before I head to the Big Finish today…. I took a ride last night in my car…. I hadn’t really driven my car in 4 months, and while I thought that it was getting driven while I was gone, the battery barely turned the motor over…. I went straight to the QT for gas (I had my disinfectant cloth with me so I could touch the gas handle…. I then set out for a ride on the highway, which was pretty much empty…. Oh, and the QT was eerily empty, I was the only car on the lot pumping gas! That place is usually busy at 3 in the morning! I love to drive in Missouri, it’s such a beautiful state, with its rolling hills, and scenic vistas…. I got back home around dark, and thought, I’m going to do that again tomorrow!

For What It’s Worth….  I was reading last night an article that explained that Gold futures to the next rollover data are much higher in price the spot Gold…. That’s got to be good right?  Well, here’s an article on that gets into this for you, and it can be found here:

Or, here’s your snippet: “COVID-19 appears to have impacted the deep fiscally-conservative regions of the brains of politicians more than many suspected possible as left, right, and center seem to be coalescing around the fact that more spending is better, more helicopter money is even better-er, and more zeros in the national debt is better-est!

Tonight’s latest utterance/demands from Speaker Pelosi – that the next, fourth, round of virus-relief stimulus must be at least $1 trillion – appears to have confirmed one thing (as @hkuppy notes so pointedly): “Glad to see both parties supporting gold $10k…”

And sure enough, gold is soaring after hours following this headline…

Referring to his institutional market research at Global Macro Investor, we give the last word to Raoul Pal and his most recent thoughts (excerpted) on “A Dollar Standard Crisis” are…”Don’t forget – the $13tn short dollar positions (foreign dollar debt held mainly by foreign corporation and investment vehicles) is the largest position ever taken in the history of global financial markets.”
It can only mean a massive, uncontrolled dollar rally.

QE will not fix this. Swap lines will not fix this. A debt jubilee would fix this or multiple trillions of dollars in write-downs and defaults.

It is the dollar strength that brings to world to its nadir (just like the 1930s). It is the dollar system that is the really big problem.

The dollar has eaten all of its competitors and now it is going to eat itself.”

This eventually breaks the dollar after a super-spike as global central banks are forced to find alternatives.

The world’s elite have long wanted to replace the U.S. dollar with a single global super-currency, as The World Bank’s former chief economist said in 2014, it will create a more stable global financial system.

“The dominance of the greenback is the root cause of global financial and economic crises,” Justin Yifu Lin told Bruegel, a Brussels-based policy-research think tank.

“The solution to this is to replace the national currency with a global currency.”

Chuck Again…. Yes, I want to make something perfectly clear here…  All the deficit spending, all the Fed’s measures,  all of it, is only here to extend the bad loans that everyone has made, and to provide short-term liquidity….  I’m just saying… 

Currencies today 4/7/20 American Style: A$.6185, kiwi .5987, C$ .7136, euro 1.0880, sterling 1.2320, Swiss $1.0272, European Style: rand 18.3352, krone 10.2425, SEK 10.0225, forint 330.47, zloty 4.1751,   koruna 25.0016, RUB 76.44, yen 109.05, sing 1.4243, HKD 7.7520, INR 75.40, China 7.0905, peso 24.25, BRL 5.3048, Dollar Index 100.18,  Oil $26.91,   10-year .74%, Silver $15.21, Platinum $744.64, Palladium $2,209.90, and Gold… $1,655.10

That’s it for today…  Pretty wordy today…. Oh well, what else do you have to do today, besides read a long Pfennig! HA!  Fox Sports Midwest is showing the 2011 World Series games this week… I already know the outcomes of the games, but it’s great to just see some baseball being played! Even though it was 9 years ago!  There were some players in that game 1 last night that I had forgotten that they had played for the Cardinals! WOW!  The Great Al Stewart takes us to the finish line today with his song: On The Border….  I hope you have a Tom Terrific Tuesday, and will Be Good To Yourself!

Chuck Butler