January 20, 2021
* Currencies rally then fall back…
* Debt, is everywhere…
Good Day… And a Wonderful Wednesday to you! How about my Mizzou Tigers basketball team! After winning on the road at Texas A&M on Saturday, they came home and beat S. Carolina last night handily… Their Big man Jeremiah Tilmon, is really playing his best basketball in his 4th season… I was able to watch the game last night since it was on the SEC network. It was a beautiful day here yesterday, with full sun, and mid 70’s… Very warm in the sun, for sure! I didn’t stray too far from home base yesterday, not knowing how my stomach was going to react, but it was fine, and I’m looking forward to going back out to the deck again today to read in the sun! The Moody Blues greet me this morning with their song: Lost In A Lost World…
A lost world is where we find ourselves these days… not knowing what and to whom we can talk to and say what’s on our minds… I said it last week that I felt like I was in the Twilight Zone… And I really think that’s the case. This whole shootin’ match seems like the Twilight Zone to me, and that’s how we’ll start it off today… with a report from the Twilight Zone…
Imagine if you will… A country that is no more… A republic that is no more… Civil liberties? Gone! Freedom of speech? Gone! Markets that trade on fundamentals? Gone! Gold rising on geopolitical problems, inflation rising, and currency printing? Gone! Lies and Corruption get dealt with legally? Gone! I could keep going, but I think you get the gist of what I’m talking about here…
Let’s talk markets… The currencies held on to their overnight gains on Tuesday, and added just a bit more to their values during the day… The Dollar Index traded at 90.46 yesterday morning and at day’s end it was trading at 90.33… So, as you can see there was little upward movement, but for currency holders it was at least an upward movement…. Gold & Silver on the other hand weren’t able to hold on to their early morning gains, and only ended up $2.30 in Gold to close at $1,840.70, and 25-cents in Silver to close at $25.28…
In the Overnight Markets last night… the dollar bugs have taken back some of the ground they lost yesterday.. The Dollar Index this morning is trading at 90.55… Gold & Silver, however, are trying to flex their muscles this morning, with Gold up $8.40, and Silver up 14-cents… I really don’t see much room for the non-dollar assets to move today, as all eyes will be on Washington D.C.
Debt, Debt, everywhere I look, I see Debt, and more debt…. For instance did you know that the U.S. Gov’t spent $1,376, 269,000,000 in the first 3 months of this year? That’s a record for 3 months, by the way… Also New York City Renters (I use that term loosely) owe more than $1 Billion in unpaid rent, according to the WSJ… The U.S. National Debt is $27.8 Trillion and will soon be over $30 Trillion, with Unfunded Liabilities at $158 Trillion… Gold please help us, we are lost and can’t be found… And then there’s this from the World Bank Chief Economist…
“I’m warning you of persisting issues inevitably bringing a full blown Financial Crisis… Many individuals are buying stocks, more real estate, and all other assets. At the same time, we are seeing countless who are behind on their rent payments. Money, debt, cash, all being an issue today. Not enough money, while debt is adding up. Student debt is at record levels. Credit Card debt increases. Many can’t pay their rent right now.”
Chuck Again… But you have those in Congress that believe that the way to address this problem is with more debt, more currency printing, more, more, more… And each time they go back to the well for more, more, more… Matthew Piepenberg, recently wrote an article for his company Goldswitzerland.com where he compared the meltdown of society, finances, and the country in France in the 1800’s to what’s going on today… This was very well done, and I thank the dear reader that sent it to me. I’ll give you just a snippet of what he’s saying in the article: “ But with public debt soon passing $30T and climbing, we all know the Fed will never raise rates this generation, for the simple reason that they can’t afford to.
So long as the cost of debt (rates) are stapled to the floor of history, debt levels can equally surpass the record books of history.
But here’s the rub: What happens when rates go up?
The soothsayers behind MMT (Magical Monetary Theory) will tell you inflation and rates won’t go up, as the central banks won’t let them.
Like Santa Claus, that’s a very comforting thought.
Unfortunately, natural bond market forces rather than unnatural central bankers ultimately get the last say (and dark laugh) when it comes to rising rates.
With over $18T worth of negative-yielding bonds in circulation, it’s only a matter of time and headlines before someone yells “fire” in a crowded bond theater whose exit door (i.e. liquidity) is the size of a mouse hole.
With little to no yield for over-bought risk, bond holders will eventually become bond sellers, and when bonds sell off, their prices tank and hence their yields skyrocket.
Of course, when yields sky rocket, rates spike.
And when rates spike: Party over.”
Chuck Again.. I suggest you go to Goldswitzerland.com and search for the article I think you’ll find that he compares France 1800’s to the U.S. today, and you’ll be amazed at how similar the two countries are… In fact, it’s frightening… he even has a picture of people storming the capital in France and then compares it to the picture of the people storming the capital here…
But I do want to circle back to the rent payments that aren’t being made, and probably won’t for most of this year… The unintended consequences of these lost rent payments on the bond, and the banks, and the landowners is really nasty folks… Bond will default, banks will have to write off large loans, and the landowners will see large numbers of them filing bankruptcy… And for what? In NYC the total is $1 Billion in rent payments not made… Think about that for a minute, and then tell me this is all going to work out…
But Deficits don’t matter do they… Until they do… Just like liquidity isn’t a problem until there’s a shortage, and so on… And Gold can’t get firmly on the rally tracks to save its life right now… But as I told a reader yesterday, I do believe Gold will rise again, from the ashes, like the Phoenix….
Find a safe harbor in all this rot, is going to be difficult… Got Gold?
Another reader asked me the other day if I could talk about the new Fedcoin… I said, all this talk of Fed coin reminds me of all the fiasco regarding the Amero… Remember that one? Oh, the calls we used to take on the trading desk asking about when we would offer the Amero… Crazy, simply crazy… But, the Cartel, I mean Fed has to do something to take some the shine off Bitcoin, or else… no one except the shop keeper in rural Montana will be handling dollars/ folding currency any longer… I’m just saying…
Writing about the Amero, got me thinking of all the crazy currency rumors that were out there back in the day that we had to deal with daily on the Trading Desk… Shoot Rudy, I even remember someone sending us a picture of what the Amero looked like! You know, you don’t hear any more talk about the currency that was going to unite the U.S. with Canada and Mexico… And then there was the Iraqi dinar, and how it was going to be revalued upward and make holders of the currency rich beyond their dreams… Well, neither of these two ever came to fruition… And after all the bad things I had to say about them, I was glad they didn’t come to being!
OK… the price of Oil rallied again bringing it back from the $52 handle to the $53 handle in the past 24 hours… You just can’t say that the price of Oil is going to ho higher, because there’s little demand globally, because people don’t have jobs to go to, or disposable money to spend on gas… But I’ve been surprised by the Oil traders before, and I doubt they’re finished surprising me!
I’ve got two guys talking to me, one on my left shoulder, and one on my right shoulder… One is telling me to sign up for the vaccine, and the other is telling me to wait… Not that I’m asking your opinion on this, I was just saying that this is a real dilemma for me… So far so good, but… The wolf is always at the door… And I simply can’t get my arms around the idea of receiving a vaccine for a disease where there’s a better than 99% chance of survival… Now let that though swish around in your head a bit…
OK… Today is inauguration day… A lot of people didn’t think that Trump would step away, but he has, and given his farewell speech, and said he would pray for the success of the new administration… So, did you know that we have more military people on the ground in DC than we do in Afghanistan and Iraq combined? I find that to be just a tad overdone, don’t you? So, needless to say I don’t think the markets will make any strong moves until this whole shootin’ match is over… Too much tension…
To recap… The currencies held their overnight gains and traded up a bit more on Tuesday, but Gold & Silver couldn’t hold their early gains, but did retain a small bit of their early gains… Chuck believes he’s in the Twilight Zone… Help I’m slipping into the Twilight Zone, place is a madhouse fells like being cloned…. (Golden Earring) And Chuck talks about Debt, and how what we’re going through now in the U.S. is very similar to the goings on in France in the 1800’s.. Spoiler alert, it didn’t turn out good for France!… And just for good old times sake, Chuck takes us back to when the discussions on the Trading desk were about the Amero, and the dinar!
For What It’s Worth… Well, I’ve quoted Hugo Salinas Price previously so he’s not new to our FWIW section… This is a good article about how he believes Gold is ready for takeoff… And it can be found here: plata.com.mx/enUS/More/406?idioma=2
Or, here’s your snippet: “At the present time, it is clear that there is only a minimal interest in owning gold, on the part of the mass of investors, who are focused on maximizing their ownership of Dollars, or Euros, or Pounds, etc.
However, when the King of Fiat – the Dollar – suffers a sudden loss of value in terms of other currencies, or evinces a persistent tendency to fall in value, at some point, it will dawn upon investors that owning Dollars (and other fiat currencies) is a losing proposition, and they will rush, in mass, to acquire whatever they can of the yellow metal. Official selling to break the price will, at best, only slow down its rise and present a momentary opportunity for panicked investors, to acquire some gold – far less than they might have acquired, had they not been so blind to the danger.
At this point, the price of gold will be rising by hundreds of Dollars an hour.
After the dust settles on this episode of World History – that will be another story.”
Chuck again… I got a kick out of him saying that when the dollar falls, and the rush to buy Gold is strong, all those people that haven’t bought enough Gold will wish they had bought more…
Market Prices 1/20/21: American Style: A$ .7722, kiwi .7130, C$ .7865, euro 1.2110, sterling 1.3671, Swiss $ 1.1239, European Style: rand 14.9560, krone 8.5344, SEK 8.3812, forint 295.24, zloty 3.7395, koruna 21.5937, RUB 73.76, yen 103.82, sing 1.3263, HKD 7.7512, INR 72.98, China 6.4814, peso 19.64, BRL 5.3098, Dollar Index 90.55, Oil $53.48, 10-year 1.10%, Silver $25.42, Platinum $1,090.00, Palladium $2,405.00, Copper $3.62, and Gold… $1,849.30
That’s if tor today… Well, well, well… Did you check out the interview I did with Dennis Miller? If not, on second thought it’s probably nothing you haven’t read here first! HA! I still feel as though I’m stuck in the Twilight Zone… I don’t know what will break this spell I’m under… Some baseball would most likely do the trick! I talked to the folks at Roger Dean Stadium about my Spring Training Season Tickets yesterday… They still don’t know much, but are waiting word from Major League Baseball on how many people they can let in the stadium… I’m just hoping they do let people in to watch games! Because that’s when I’ll be a happy camper! I absolutely adore day baseball games! And with that… the great Marty Balin takes us to the finish line today with his song: Hearts… Marty was the lead singer in Jefferson Airplane and then went solo… I hope you have a Wonderful Wednesday, and please Be Good To Yourself!
Chuck Butler