Gold Rallies Despite The Weight Of Price Management

January 5, 2022

* Currencies get sold on Tuesday

* But get bought in the overnight markets… 

Good Day… And a Wonderful Wednesday to you! Well, my first day down here in my winter home, sure was grand… The sun was full in the sky, the temperature was warm, a slight breeze was blowing, and I assumed my place on the deck that overlooks the ocean, and after inserting my air buds, got to reading my next book…  I’m still fighting this nasty cold, and I have in my mind, that the warm sun will help heal me of this dang cold! Please don’t tell me that I’m wrong about that, for I have it in my head that it does me good, and that’s that!  The band, Yes, greets me this morning with their song: Yours Is No Disgrace…

That song should be played over and over again at a 10 Volume in the ear of Fed/ Cabal/ Cartel Chairman, Jerome Powell…  To get him to think that he’s not responsible for the soaring inflation, and then maybe, just maybe because you never know, he would do the right thing, right here, right now, if he thinks that he won’t be made fun of by the other kids for allowing inflation to get out of hand…  See how I went full circle there? I bet for a second there, you thought I had gone soft, plushy Teddy Bearish on you!  No Way!

So… On Monday, we had price engineered takedowns of the metals and currencies…  Then on Monday night going into Tuesday morning, we saw the dollar get sold again… Mass Confusion, eh?  Well, yesterday it was a little strange, we saw Gold & Silver rally, while the dollar fought back and regained the title belt… That always seems to be quite strange to me, that the dollar rallies, at the same time Gold & Silver rally…

There was still some price management of the metals during the day. As Gold was higher at one point in the day… But still Gold gained $13 on the day to close at $1,815.40, and Silver gained 16-cents to close at $23.13…  The price of Oil rose again and now trades with a $77 handle, and there was some disheartening news yesterday in the Oil industry… Apparently, 2021 was a very bad year for Oil discoveries, and recovery…  Well, when you bad mouth Oil people, and tell them they’re responsible for global warming and what have you, what do you expect them to do, other than crawl under a rock and hide?  I’m just saying… 

The country was built on Oil, folks, look at everything that runs on fossil fuels, and how would we have gotten there without them?  And then you decide that you no longer want them?  Give me a break!  What moron decided that would be a good idea?  

The BBDXY started the day at 1,173 and ended the day at 1,179… A HUGE jump higher in the dollar… For what reason? Well, if you read the articles like do every day, except when traveling or on vacation, you would read that currency traders are looking at the increase in the 10-year Treasury’s yield, as the reason for buying dollars…  

So, let look at that for a moment…  The yield on the 10-year Treasury is rising because of a response of rising inflation, and don’t lose sight of the fact that there are less and less buyers of the bonds, and therefore yields need to rise to attract investors.  So, do either of those reasons seem like a reason to buy the dollar?  A rising yield that needs to rise more than 15 BPS to reach neutral with inflation doesn’t seem to cut the mustard with me… But then I’m a prudent investor, and don’t like to own negative yielding investments, do you?

In the overnight market last night… Once again, the dollar ran into some sellers in the overnight markets, the euro rose above 1.13 once again, and all the other currencies looked stronger as we started the day today. The BDDXY has dropped to 1,177 , and there just doesn’t feel like this will be a good day for the dollar, but then there’s always the PPT to prop it up… 

While I was on vacation, we saw a strong Retail Sales number, which I explained as being trumped up by pre-Christmas purchases. But the number just kept eating at my brain, and I kept being so close to explaining what was going on, it was on the tip of my fingertips, but… then I would fail to explain it, and not until I saw @econoguyroise (David Rosenberg), explain it on Twitter that I finally had my V8 moment head slap…  So, let’s turn to David Rosenberg on Twitter, and see what he had to say about the Retail Sales number: “It’s almost comical to see everyone gushing over Mastercard’s data showing +8.5% YoY holiday sales off the depressed levels of a year ago. Back out the math since we already know November’s spending activity and it means a sequential MoM retail sales slide for December!” – David Rosenberg

Thanks @econoguyrosie! Twitter… you know that I’m on Twitter @chuckobutlerjr , and while I try to remember to post my thoughts from time to time, I fail miserably at that job… But an economist as widely followed, like David Rosenberg, Tweets something nearly every day… Besides, most of my tweets have been about baseball!

OK, back to regular programming… Yesterday, I left you hanging, and I apologize for that… midway through the Pfennig yesterday, I told you that the price manipulators’ plans had worked out perfectly, and that I would circle back to explain later in the letter… And then crickets… So, here it is… Basically this is their price manipulation plan A….    You drive down the price of Gold (Silver) to a level that makes it look attractive again, and then they reverse course and buy at those cheaper levels…. Now they watch it move higher because that’s what Gold should be doing, and once it reaches a level that insures them a great profit, they start selling short again, locking in their profits, and thus starting the game all over again…

So, did you hear that the POTUS mentioned the other day that he too had finally realized, that grocery prices were becoming inflationary?   I don’t make this stuff up folks, now other people may make it up, but to me this is comical relief… So, take with as many grains of salt as you wish…

I really don’t believe most of what I hear, or read these days, and trust me, I hear and read a lot! And I certainly don’t believe any economic report that comes out of Washington D.C. And that leads me to this week’s upcoming Jobs Jamboree… Recall that November’s Job tally by the BLS only had 210,000 news jobs created for the month, which was well below expectations. And magically, December’s expectations are for double the November tally… 420,000 newly created jobs are expected, but they don’t tell you what kind of jobs will be created… or how many jobs will be added to the surveys by the BLS for the end total?  And quite frankly, we couldn’t have two disappointing months in a row in the labor markets could we?  That’s not going to happen, not under the BLS’s watch it won’t!

Yesterday’s U.S. Data Cupboard has the Dec. ISM (Manufacturing index) and while it remains above the 50, line in the sand, figure, it did drop a significant amount in December, falling to 58.7% from 61.1%… It’s going the wrong way, folks… I’m just saying…

Today’s Data Cupboard has the ADP Employment Report for December, and we’ll see the color of the FOMC Meeting Minutes from their last meeting. There should be no surprises with the Minutes, and I expect them to fly under the radar this afternoon.

To recap… It was a strange day for the currencies and metals yesterday… The dollar rallied strongly throughout the day, as too did Gold & Silver…   Chuck goes through his thoughts on the rise in the 10-year’s yield, and why it’s not as good a thing as the dollar buyers would have you believe it to be. And in the overnight markets….

For What It’s Worth…. This is a very interesting article in that it goes though the loss of the dollar through ownership, and its place in the world, and how Central Banks around the world continue to add to their physical Gold reserves, and it can be found here: Countries accelerate shift away from US dollar — RT Business News

Or, here’s your snippet: “The holdings of gold in the foreign exchange reserves of the central banks have been growing worldwide, hitting a 31-year high this year. At the same time, US dollar holdings have been dropping.

According to the World Gold Council, the banks have built up their stockpile by more than 4,500 tons over the past decade. As of September, the reserves totaled some 36,000 tons – the largest haul since 1990, and up 15% from a decade earlier.

At the same time, the presence of the dollar in foreign exchange reserves has dropped sharply over the past decade. In 2020, the currency-by-currency ratio of the greenback plunged to the lowest level in a quarter of a century.

Analysts say that the central banks, particularly in emerging economies, are continuing their shift to gold, reflecting global concerns about the dollar-based monetary regime. In the first nine months of 2021, Thailand bought some 90 tons, India 70, and Brazil 60.

Central banks and public institutions started boosting holdings of gold after the global financial crisis of 2008, which caused an outflow of funds from US government bonds, resulting in falls in the value of dollar-denominated assets.

Trust in dollar assets thus “faltered,” market analyst Itsuo Toyoshima says, as quoted by Nikkei Asia.”

Chuck again… There are two points here to be taken… That Central Banks continue to add to their physical Gold reserves, and notice they’re not buying Bitcoin, and two… That even as strong as the dollar has been in the past 10 years, it’s still losing ground in foreign ownership… Doesn’t that spell that these countries don’t trust the dollar?

Market prices 1/5/ 2022: American Style: A$ .7253,  kiwi .6819,  C$ .7859, euro 1.1312, sterling 1.3545, Swiss $1.0819, European Style: rand 15.8266, krone 8.8208, SEK 9.0599,  forint 320.32,  zloty 4.0348,  koruna 21.7286, RUB 74.95, yen 115.79, sing 1.3553, HKD 7.7947, INR 74.33, China 6.3539, peso 20.43, BRL 5.6797,  BBDXY 1,177.60, Dollar Index 96.14,  Oil $77.19, 10-year 1.65%, Silver $23.16, Platinum $987.00, Palladium $1,997.00, Copper $4.40, and Gold… $1,819.00

That’s it for today… Well the outcomes of the CFP games this past weekend were no surprise to me or should have been to anyone else that actually follows the teams and their games. So now we get a rematch of the SEC Championship game, for the National Title. Alabama VS Georgia… Alabama handled Georgia easily in their first matchup, but I’ve always held the thought that it’s tough to beat a team twice in a short period of time (in football that is) Should be a hart hitting, high scoring game… There’s still no progress in the baseball talks… They had better get off their high horses fast, and get to work on this new agreement, before it becomes a real problem for the sport… My St. Louis U. Billikens won their A-10 opener on Sunday VS Richmond… The Billikens lost their leading scorer before the season started to injury, and now they’re learning to play without his scoring prowess… And it’s the final week of the NFL regular season, there are still a couple of playoff spots to be determined. Johnathan Edwards takes us to the finish line today with his song: Shanty… “Cause we’re going to lay around the Shanty, mama, and put a good buzz on”…  I hope you have a Wonderful Wednesday today, and please Be Good To Yourself, and don’t forget Be Positive, test negative!

Chuck Butler