If Negative Rates Were The End All, Then Why Isn’t Japan On Top Of The World?

November 14, 2019

* Currencies slide further, Gold nets out a $7 gain

* Eddie George talks Gold price manipulation… Seriously! 

Good Day… And a Tub Thumpin’ Thursday to you! I’m still feeling the queasy stomach but I’m better… I’ve just been so darn cold… I put layers on, including a sweatshirt/ hoodie, throw a blanket over me while I watch TV, and my hands are still like ice, and I’ve got the chills all the time… If I don’t get out of this Cold area soon, I’m going to turn to a pop-cycle! Man, have I got a doozy of a piece of a quote on Gold manipulation from the Gov. of the Bank of England today… All the naysayers will be needed to find to get some salt on the crow they’re going to have eat! The Moody Blues greet me this morning with their song: The Voice…

Well, I contemplated opening with the major story I have for you today regarding Gold manipulation, but then thought, it would be better to have you wanting to get to it… I learned something back when I was in the show business if you will, playing on stages with the band, “Leave them wanting”… So… with no further adieu, here we go….

The currencies and metals barely moved on Wednesday, as the markets focused on the Impeachment proceedings, and looking for any word on the Trade Negotiations… The dollar bugs still have the conn, and Gold couldn’t hold to its early gains over $9 but still closed better on Wednesday at $1,463 than on Tuesday at $1,455. When you add in the pennies that was a net $7 gain on the day… But like I said, since the bulk of Gold’s gain on teh day was in the early trading, it didn’t move much while we were all awake!  I get emails from readers that remind me to put the closing price of Gold in when I’m talking about the shiny metal… And I’m happy to do it… but I do print the current price of Gold in the currency roundup each day… I’m just saying…

Yesterday in the Eurozone, they printed their September Industrial Production and while it was negative it was far better than anticipated and the print from August… September’s IP was -1.7%, VS -2.8% in August… Things must really be slowing down here, as even Germany can’t pull the rest of the laggards out of the red like they used to each month… If I’ve said this one I’ve said it 100 times in the past, and that is that it would nice if we could just buy Germany right? And not have the German numbers pulled down by the likes of Italy, Spain, Greece and so on…

But we can’t, so you have to take the bad with the good, with the euro… And right now the European Central Bank (ECB) is under the belief that negative rates will spur spending and economic growth… I ask, when will they ever learn, when will they ever learn?

Today in Canada, we’ll see the latest Jobs report… Last month’s surprise to the upside was well taken by the currency guys, and they rewarded the loonie… The forecast for today’s print is for an even strong number than last month’s print… And if that happens, that certainly would be a feather in the cap of the loonie, eh?

And Russia printed their 3rd QTR GDP which was double the 2nd QTR print at 1.7%…  The Central Bank of Russia (CBR) has a target for GDP for the year at 1.9%, but unless the 4th QTR GDP going gangbusters they won’t make it, as that 2nd QTR poor performance did them in…  You must remember here that Russia has a boatload of economic sanctions placed on them by the U.S. and Eurozone, so look at the 1.7% GDP as really like 2.5 or 3%…  

OK, before I get into this comment by Eddie George, former Gov. of the Bank of England, I’ve got another special treat for you today… When you have time, and can carve out 30 minutes to watch and listen to a presentation, I have Grant Williams speaking on Gold in Switzerland, and you can get to that by clicking here: https://www.gowebcasting.com/events/precious-metals-summit-conferences-l…

Alright… hold tight… fasten your seatbelt and keep all arms and legs inside the vehicle while reading this next piece…. May the force be with you!
Regarding Gold and price manipulators… My good friend, the Retirementor, Dennis Miller, is back to writing and today, he sent out his letter, that includes an interview with yours truly! Check it out at www.milleronthemoney.com Dennis also sent me a quote that appeared on the Burning Platform site… read this first and then we’ll discuss, ok?

“We looked into the abyss if the gold price rose further. A further rise would have taken down one or several trading houses, which might have taken down all the rest in their wake. Therefore at any price, at any cost, the central banks had to quell the gold price, manage it. It was very difficult to get the gold price under control but we have now succeeded. The US Fed was very active in getting the gold price down. So was the U.K.”
Eddie George, Governor Bank of England, in a conversation with the CEO of Lonmin, September 1999

OK, now I want to have a discussion with all those naysayers through the years that said the U.S. Gov’t had nothing to do with Gold price manipulation…. Are they going to say that Eddie George, BOE Gov. was lying back in 1999? This is like the icing on the proverbial cake to me folks… All those years researching and following the Gold movements, and what have you, finding the wiki link with the conversation between Greenspan and a noted Senator about keeping the price of Gold down so that investors don’t shun the dollar and other things, and now this… I feel like I should be rubbing noses in this… But I won’t… I carry on despite their shortcomings in seeing the writing on the wall…

Back to our regularly scheduled programming… The Good folks at GATA sent me this note yesterday regarding China and I thought that since I’ve been telling you this was going on in China now for years, that it would be good to see the China newspaper reporting it….

“Beijing sends corporate China a €4 billion message: diversify away from US dollar debt

• China has capitalized on a low-yield environment in Europe to issue euro-denominated government bonds cheaply. It is also setting an example to Chinese companies, in the hope of weaning them off dollar-denominated debt dependency.”

That’s something that’s been going on since 2007, whcn China first started signing up countries to their currency swap agreements. I’m not applauding this, I’m simply saying that when you as a country (U.S.) go about building debt like they have with no regard for the dollar’s value, why then should other countries hold dollars with losing values? 

Speaking of Debt…The U.S. Budget office printed the Rocktober Budget last night… The Budget Deficit for the first month of the U.S.’s fiscal year was a deficit of $134 Billion!!!!!   Annualized that would be an annual deficit of $1.6 Trillion!!!!  That would see us going past $24 Trillion in July…  Got Gold? 

The U.S. Data Cupboard yesterday had the stupid CPI, and the Rocktober print saw an increase in consumer inflation by 0.4%, VS September’s 0.0%… I guess, as long as you hang your hat on the CPI being the correct figure, then you would question the Fed’s rate cuts, right? I’m just saying…

The U.S. Data Cupboard still doesn’t really have anything for us to take a bite out of, but that will change tomorrow when Retail sales, Industrial Production and Capacity Utilization prints… But that’s tomorrow, and today all that’s there for us is PPI (wholesale inflation) and a roster full of Fed heads on the speaker’s circuit.

Before I head to the Big Finish today I wanted to share with you a quote from one of my fave economists, Dave Rosenberg, who like me is scratching his head over what the Fed is telling us these days… This is from Dave’s Twitter feed: “Chicago PMI comes in at 43.2 and the business sector is in recession but the Fed keeps talking about the economy and the state of monetary policy as being in “a good place”. Surely this is some sort of dark comedy routine.”

Chuck again… And the dollar bugs keep swallowing that bait, hook, line and sinker, folks…

To recap… not much movement in the currencies and metals yesterday… The dollar  continued to slip but not by much, and Gold was up a net $7 on the day… German Industrial production printed negative, but beat last month’s -2.8%, so that something, eh? China tells Corporations to ditch the dollar… Chuck knew this day was coming… And David Rosenberg treats us today …

For What It’s Worth… OK, lots of stuff to go through these days, but this is something I’ve talked about for some time now, and that is how the President keeps dissing the Fed and demanding lower rates… And it can be found here: https://www.cnbc.com/2019/11/12/trump-rails-on-fed-says-market-and-economy-would-be-doing-even-better-without-powell-mistakes.html

Or, here’s your snippet: “Instead of highlighting warmer relations with Beijing, Trump criticized the Fed for what he sees as its hesitation to lower interest rates and blamed the central bank for capping gains in the U.S. economy and stock market.

The president noted that since his election, the S&P 500 is up more than 45%, the Dow Jones Industrial Average is up over 50% and the Nasdaq Composite is up 60%. But those numbers could be way higher, Trump said, if it weren’t for the reluctance of the Fed.

“And if we had a Federal Reserve that worked with us, you could have added another 25% to each of those numbers, I guarantee you that,” Trump said.

“But we all make mistakes, don’t we?” the president added. “Not too often. We do make them on occasion.”

It wasn’t immediately clear which “mistake” Trump was referencing: His choice to nominate Fed Chair Jerome Powell to lead the central bank or Powell’s preferred course of monetary policy.”

Chuck Again… You know… Like I told Dennis Miller for his article that printed yesterday… if negative interest rates worked so well, then why isn’t Japan leading the world? They’ve had negative rates longer than any of the other countries, but still their economy is a basketcase… I’m just saying!

That’s it for today… and tomorrow… I go to the wound center again tomorrow morning bright and early… I’m thinking that when they cut the una-boot off me that I’ll see major improvement in my open wound… fingers crossed! In looking for something to watch last night, I came across our St. Louis University Billikens basketball game, so I settled in to watch them win by 22… Good game… Next Saturday, I’ll be in attendance for the St. Louis Gateway’s production of Madeline… My darling granddaughter, Delaney has a part in the production, and is the “stand in” for the lead of Madeline… So, that’s next week… On Saturday, my beloved, and dragging Missouri Tigers will face Florida, a highly ranked team comes to Columbia, MO. Should be a good game! Time to hit send… The Counting Crows take us to the finish line today with their song: Round Here… I saw the Counting Crows back in the 90’s… as they came through St. Louis on tour… I hope you have a Tub Thumpin’ Thursday and Fantastico Friday tomorrow, and will Be Good To Yourself!

Chuck Butler