Gold Reaches A New All-Time High!

  • currencies & metals rally on Friday last week…
  • Why don’t the markets listen to poor Jay Powell?

Good Day… And a Marvelous Monday… And welcome to December! One of my fave months of the year! The only thing that I don’t like about December is the Cold weather! But at least houses get dressed up inside and out, and there’s just something about the “air” of December, it’s filled with anticipation… I love that! Saturday night, we had our subdivision’s Progressive Dinner Party, which is always a good time. We all must be getting old in our subdivision, as we were home by 10:30 PM. We used to party till the cows came home, but no more… Man, I don’t like getting Old, but I guess it beats the alternative!  It’s now Bowl Season… Our Blues just keep digging a deeper hole for themselves… UGH!  The Stephen Kummer Trio greets me this morning with their version of the song: Have Yourself A Merry Christmas… 

Well… Gold hit a new all-time high on Friday, after gaining $35.30 on the day, it ended the day at $2,072,60, surpassing the previous high of $2,070.00… $2,050.00 had represented a line of resistance, but that proved to be a lax as Saddam Hussein’s line in the sand, and it was taken out, and flown through… And all the while, Fed/ Cabal/ Cartel chairman, Powell, was talking hawkish… Let’s listen to some of his words: “It would be premature to conclude with confidence that we have achieved a sufficiently restrictive stance, or to speculate on when policy might ease. We are prepared to tighten policy further if it becomes appropriate to do so,” Powell added.”

Chuck again… I’m only going to say this one more time…. Why won’t the markets listen to Mr. Powell? They have it in their minds that interest rates will be cut soon, and swiftly… They refuse to listen to him (Powell), and make a mockery of his words… Now, maybe they are on to something, that his words are nothing but a ruse… But, I just don’t see someone like Powell, saying something that he would be ridiculed about later, if he truly believed what he was saying. 

So, Gold gained $35.30 on Friday, and set a new all-time high price… Silver was tamer in its rally, and gained 16-cents, to end the week at $25.53… The dollar got sold, after a strong rally on Thursday, the dollar reversed those gains on Friday, and ended the week with the BBDXY at $1,234… So, stock jockeys, bond traders, currency traders, commodity traders, all don’t believe Powell… Now, don’t get me wrong here, I’m not complaining about this non-belief, for it’s fueling this strong run in metals… But that has me worried that it’s all too tenuous… and the gains could be wiped out in a New York Minute… (Don Henley) by the shot paper traders… UGH! 

Well, as I suspected, our friends (NOT!) at Opec announced their output reduction on Thursday, and the price of Oil responded accordingly… Gaining $3 on Thursday, only to see it get reversed on Friday! What? Yes, the folks that make these decisions about the price of Oil, didn’t see the output reduction as significant enough, to offset the lack of demand for Oil these days… And Oil ended the week trading with a $74 handle… 

In the overnight markets last night… Well, I read this morning that Gold soared right out of the starter’s blocks last night, trading all the way up to $2,148.00, but that was met with an array of 1. profit taking, and 2. short selling, and Gold this morning in trading at $2.067… So, $4 off its Friday close, but a whole lot off its overnight night high… The dollar got bought in the overnight markets last night, as witnessed by the BBDXY gaining 1.56 index points… The euro has dropped back below 1.09, which is disheartening, as I really thought that after last weeks gains, the euro would be trading with a 1.10 handle this morning… So much for the plans of mice and men, eh? 

Silver too, is down this morning, but only 21-cents, so that can be reversed with no effort… C’Mon Silver get with the program! The price of Oil has really fallen since the initial run up in price after the output production cuts announcement. I guess lack of demand is what’s pushing the lever for Oil… And Oil trades with a $73 handle this morning…  And the Bond boys might be hearing what Powell is saying, but they’re not listening… The 10-year trades with a 4.24% yield this morning… That’s a long way from 5.00% it traded in Rocktober… 

I did a lot of reading this past weekend, and one of the articles I came across, delighted the hell out of me, as the guy (Michael Hudson) took Paul Krugman to the cleaners! It’s a very long article, so I’ll give you the link to it in case you have the time to read it… here it is: NY Times is wrong on dedollarization: Economist Michael Hudson debunks Paul Krugman’s dollar defense – Geopolitical Economy Report

Ok… Well, it seems we are once again at this fork in the road with Gold… one road sees danger of short selling, and yet another pullback in the metal… The other road sees nothing but green lights ahead… Which one will Gold take this time? 

There are still 70 days of Gold production that is represented in short trades, so there’s that… You know how I used to talk about how there were 185 days of Silver production in short trades? Well, as time has gone on… that number has whittled down to 137 days… Still way tooooooooo many, but, the trend is downward, and that’s a good thing!  I’m just saying… 

You know how I end each day’s letter with the “Be Good To Yourself”? Well, bust my buttons, I saw a quote by the great Dale Carnegie this past weekend, and so let’s see what he has to say: ““If we can’t have all we want, let’s not poison our days with worry and resentment. Let’s be good to ourselves. Let’s be philosophical.”

I find that to be a rule in life… We can’t have everything, so why worry about what we don’t have? Be Good Yourself, and you’ll find that you get everything you need…  I’m just saying.. 

Ok, now my time on the soapbox has come to an end, it’s time to get back to the markets, economies and dolts… But I betcha didn’t think that I could be so philosophical!  

 I received a note to a link for an article by Lola… aka Goldman Sachs, this past weekend that was titled: “Why the dollar can remain strong through 2024″…  Geez Louise, what are they selling us now? I just don’t get it… Lola always comes out and talks her book… and the sheeple all follow what she has to say… I’m willing to bet a shiny quarter that Lola is absolutely wrong about her claim, and that all the sheeple that follow her will be too….  

Moving on… this morning I was taken aback from a headline on YAHOO Finance, and it’s from someone that I hold in high regards, Ray Dalio… here it is: “‘We are near that inflection point’: Billionaire Ray Dalio warns that America is now ‘borrowing money to pay debt service’ — cautions that debt will accelerate just to maintain spending.”

Well, I’m glad that someone in the mainstream of business sees this debt problem like I do… And people like Bill Bonner, Doug Casey, Micael Hudson, and so on… But Dalio is a Times Best Selling Author, and the head of the largest hedge fund in the world… So, sort of like those old E.F. Hutton commercials… When Ray Dalio speaks, everyone listens!  

A dear reader sent me a note from down under, it was an article that talked about how the Aussie dollar was trending higher toward 70-cents… But the gist of the article is that it’s not so much that the A$ is gaining ground, it’s more about how the U.S. dollar is losing ground… The dollar was off 3% in November, and that’s just the start, in my humble opinion…

But I would point out that the A$ & kiwi were the best performing currencies in the last weak dollar trend, as they had both gained over 100%… I had a couple, that told me once that they bought a yacht and sailed around the world on the money they made on those two currencies…. So… there’s that…

So, what will you do? Will you side with the Paul Krugmans of the world? Or, will you take my point of view that the dollar is in deep dookie going forward, and that you need to be diversified with foreign currencies and metals to offset the dollar losses?   I guess we’ll see, eh?

The U.S. Data Cupboard had the ISM (manufacturing ) Index for Nov. and it was still below the 50 mark and in fact fell from Rocktober’s 47.5 to 46.5… This data is true data and it reflects that manufacturing in the U.S. is still contracting, and that’s not a good thing for the economy, folks…  On Thursday we saw Personal Income & Spending and both came in at +.2%, which isn’t anything to write home about… And finally, the Fed/ Cabal/ Cartel’s inflation gauge the PCE was at 3.5% in Rocktober, so…. we’re still not below the 2% mark, even using trumped up data points…  

To recap… The dollar got bought on Thursday last week, and then sold on Friday, to end the week… Fed/ Cabal/ Cartel Chairman, Powell, spoke and tried to get his thoughts across to the markets, who still don’t believe a word he says, and Chuck is scratching his bald head wondering why? Ray Dalio says we are at an “inflection point” with our debt… Uh-oh! Gol gained a whopping $35.30 on Friday, and reached an all-time high of $2,072.00… Chuck wonders who you will side with, Paul Krugman, or him? 

For What It’s Worth… I found this on Ed Steer’s letter from Friday last week, and thought, now, that’s surely FWIW worthy! And so now it appears here this morning… It’s about the Banks unrealized losses, and why that could spell major difficulties going forward, and it can be found here: Unrealized Losses At US Banks Exploded In Q3 | ZeroHedge

Or, here’s Your snippet: “Unrealized losses on securities held by U.S. banks exploded by 22% in the third quarter.

Of course, unrealized losses don’t really matter — until they do.

This is yet more evidence that the financial crisis that kicked off last March continues to bubble under the surface.

Unrealized losses, primarily on U.S. Treasuries and mortgage-backed securities rose by $126 billion in Q3 and now total $684 billion, according to the FDIC’s quarterly bank data release.  

It’s important to understand these are only paper losses. Ostensibly, the banks will hold these bonds until maturity and then will be paid their face value. If it plays out this way, there won’t be any real losses.

The problem is that these unrealized losses drastically decrease a bank’s liquidity. If it has to sell bonds in order to raise capital, the bank will experience significant losses. This is exactly what took down Silicon Valley Bank last March.:”

Chuck again… you know it’s like a wise man once told me… Lack of liquidity isn’t a problem until… it is…  And with that I end this FWIW this morning… It’s like the Sword of Damocles hanging over Banks right now…  will it continue to dangle over the heads, or will it drop and pierce them to death? 

Market Prices 12/4/2023: American Style: A$ .6649, kiwi .6192, C$ .7386, euro 1.0870, sterling 1.2674, Swiss $1.1377, European Style: rand 18.7271, krone 10.7410, SEK 10.4059, forint 348.63, zloty 3.986, koruna 22.4249, RUB 90.88, yen 146.50, sing 1.3351, HKD 7.8146, INR 83.36, China 7.1384, peso 17.25, BRL 4.8943, BBDXY 1,235.67, Dollar Index 103.36, Oil $73.35, 10-year 4.24%, Silver $25.32, Platinum $939.00, Palladium $1,004.00, Copper $3.79, and Gold… $1,2067.90

That’s it for today… Well, the college football Playoff teams were announced yesterday… this is the last year that only 4 teams are in the playoffs, next year it goes to 12 teams… Congrats to:  Michigan, Washington, Texas, and Alabama… My beloved Mizzou Tigers will play The Ohio State Buckeyes in the Cotton Bowl on December 29th… That’ll be a tough match-up for my Tigers, but they’ll come to play! My beloved Cardinals have signed 3 pitchers, but I have to think that there has to be more, because we can’t go into the season with this Old of a starting staff, one that has a history of injuries… UGH! Well, it’s that time of year again, when I start to make my plans to be on my annual winter vacation… This year it will start on 12/18 and end on 12/27… and of course, there will be the traditional Christmas Pfennig… you never know, I just might Tweet something while on Vacation, if it’s of importance… But usually, at that time of year, there’s nothing much happening in the markets… And with that the great Beggie Adams plays her version of one of my fave holiday songs: Winter Romance…  The first time I ever heard that song, it was sung by Dean Martin, and I was hooked! I hope you have a Marvelous Monday today, and please remember to Be Good To Yourself! 

Chuck Butler