It’s Silver’s Turn To Shine Bright!

July 13, 2020

*Currencies end the week on a strong note… 

* And Start the week on an even stronger note! 

Good Day… And a Marvelous Monday to you! What an absolute beauty of a day yesterday, here where I spend my summers and falls… The humidity dropped like a rock, and so did the temperature, and there was a nice pleasant breeze blowing all day! I was in heaven sitting outside…  Well, I hosted another driveway happy hour on Friday, and even Chris Gaffney stopped by to say hi!  I like these driveway happy hours better than the Zoom ones we did when it was still cold outside… Those seemed to be cold inside too!  We honor distancing standards, everyone brings their lawn chair, and a small cooler, and we always have a ton to talk about… We all seem to be on the same wavelength with our thoughts too! And so far no one has asked me a question about the economy, stocks, or Gold. I guess, by now, they all know better! HA!

The talk around town sure has shifted from a “stocks will rally forever”, to a “stocks won’t rally the rest of this year!”  Longtime readers know that I don’t spend much time talking about stocks, not because I don’t understand them, I held three licenses in the stock business…. But because for years, I was associated with a bank, and because I held those licenses I was unable to talk about specific stocks, so I thought it was sufficient to just say, stuff like the stocks are up are down… Everyone can get news on stocks… I prefer to bring you news that you can’t get that easily, that will have something to do with investments.

The Currencies late last week inched higher going into the weekend, with the euro rising back above 1.13, and all others falling in line behind the euro.  Gold didn’t end the week as strong as it started the week… A brief pause for the cause, which the cause would be all the procrastinating buyers of Gold that have finally gotten the message…  International yields are negative, and here in the U.S. when you factor in inflation they too, are negative…   Gold doesn’t pay a yield, but you do have to pay to have it stored, unless you have safe in your house! But with yields negative and you having to pay the Gov from which your bond was issued from, to hold the bond, those storage fees make holding Gold an even draw….  And remember those stocks we talked about above and how they’re rallying? Well, as I told you last week, since 1999 the Dow has lost 66% VS Gold… 

So, all you stock jockeys out there, why don’t you tell your clients that one? I know why… Because your bosses won’t let you! And because your brokerage outfit doesn’t have Gold offerings! And that’s why I keep telling you dear reader to call Tim Smith at 1-800-926-4922 and listen to what he has to offer you! Because as I read this weekend on Twitter, that “one day you’re going to wake up and find that Gold has gapped up $200 and then the next day it does the same thing, and at that point, you can call a Gold dealer, but he won’t have any Gold to sell you, and you’ll have missed out …. 

And don’t look now, but Silver is on a run to higher ground… finally!  I know I’ve quoted this info previously, but here I go again… in the last bull market for Gold & Silver, it was Silver that outperformed Gold, on a percentage move basis, 7 of the 10 years…  I’ve got more info on what Silver is doing in the FWIW section today, so don’t leave home without reading that! 

Ok, I’ve talked about this state representative from West Virginia, before, but in case you missed class that day let me introduce you to someone who’s on your side with regards to Gold & Silver… Surreptitious intervention in the gold market by the U.S. government is the target of legislation introduced in the House of Representatives by Rep. Alex X. Mooney, R-West Virginia.

Mr. Mooney has introduced a bill HR 2559, Mooney also has introduced legislation to protect Americans against the Federal Reserve’s steady devaluation of the dollar — legislation to forbid federal taxation on the sale of gold, silver, platinum, and palladium coins.

In a letter to colleagues seeking support for his Monetary Metals Tax Removal Act, H.R. 1089, Mooney writes: “The Internal Revenue Service does not let taxpayers deduct the staggering capital losses they suffer when holding Federal Reserve Notes over time, so it is unfair to assess a capital gains tax when citizens hold gold and silver to protect them from the Fed’s policy of currency devaluation.”

Chuck again…  Man, I sure wish that guy was from my state, so I could be proud of my state representative!

I don’t want to be the bearer of bad news, but come on, you’ve go to admit that things just aren’t as rosy as they used to be, and even though, as a country we would tightened out belts, and worked through a bad stretch, without the Fed’s money printing and checks from the Gov’t. We didn’t need the Gov’t interference this time, we didn’t need it previously, and we won’t ever need it… As President Reagan said, “the scariest words you’ll hear, is: I’m from the Government and I’m here to help”…

I don’t see how the financial system that we all know and has been in place since 1971, is going to be able to withstand this siege on it by the Feds and Treasury…  QE1, QE2, QE3, Operation Twist, zero interest rates, and now more QE, which has been going on since last September, and all the while the country’s debt continues to reach new record highs about every 6 months….  You will recall me telling you about a month or so ago, that one day all this debt in the world, will have to be written down, and off, and it’s then that the financial system that we know, will come crumbling down….  John Mellencamp has a song where he sings: “when the walls, come crumblin’, come crumbling down” It’ll be something like that!

And I say that just looking at history…. There are cycles for everything folks… Business, economies, financial systems, etc. And they especially cycle faster when you don’t take care of what’s in the cycle, and we haven’t taken good care of our economy or financial system for a long time now….

While we’re on this subject, do you wanna know what I believe was the beginning of the end for our economy and financial system?  Remember back in 1994, when then Fed Chairman Big Al Greenspan said that the stock market was brimming with “irrational Exuberance”?  But then did nothing to stop this “irrational exuberance”….  It was his job to administer Fed Margin rates…. And I wrote back in 1994, that I didn’t understand why he didn’t just increase the Fed Margin rate, to calm down the stock market?   Look, I’m so old that when I first started in a margin dept, the Fed Margin rate was 65%, but then was lowered to 50% in the early 70’s… The first test I took the questions centered around the 65% margin rate, not 50%…   

So, that’s when the Fed became fans of the stock market, thinking that as long as the stock market was going strong, the masses would think the economy was too….  And that was not true then, or now!

My friends always ask me, how do you know all this history?  I simply say, “Because I lived it!”

OK, enough of this, that and the other thing!  Let’s talk about something else….  Well, last Thursday, the Weekly Jobless Claims were printed for the previous week, and they showed that 1.31 Million filed for Unemployment benefits in last week’s holiday shortened week. So, given another day, and the total would have been 1.40 as expected.  

The continuing claims and total number of people receiving benefits is now nearly 33 Million…  That’s 23% of the workforce folks….   So, wouldn’t that be the Unemployment Rate? And not the bag of lies that BLS tries to give us each month, like last month when they said that the Unemployment Rate was 11%? 

I know the BLS is just doing their job and trying to make everyone think that things aren’t as bad as they really are….  The U.S. has seen over 1,200 bankruptcy filings in just the last two months, and the list keeps growing day after day, another big name corporation files for bankruptcy…  But don’t worry about those last two things I just pointed out, everything is going to be just peaches and cream…. NOT!

Well, it’s not all gloom and doom this morning…  I read this weekend that the Treasury Dept is looking into a new type of Treasury that’s Yield is equal to GDP… So if GDP rises so does your yield on this bond…  Now, if things are going as bad as I believe them to be going, then you would be paying the Gov’t 8% for the 8% drop in GDP in the 2nd QTR, that’s yet to be printed by the way, so I’m just using my usual logic to come up with that figure…. But you’ve got to figure that GDP won’t be negative forever, and it will rise again to average 2.1% like it has for the last 10 years!    So, not exactly great news, but not gloom and doom news, with a little satire on the side…

In my daily skip to my Lou through Twitter yesterday, I came across this from David Rosenberg on his Twitter feed: “ I saw a promoter on bubblevision saying we’re definitely in a new bull market. Industrial conglomerates: -23%. Autos: -31%. Advertising: -34%. Consumer finance: -37%. Regional banks: -37%. Energy: -36%. Casinos/gaming: -43%. Hotels: -52%. Airlines: -55%. Sure thing.” – David Rosenberg

The U.S. Data Cupboard this week builds to a crescendo this week, starting out very lacking, and by Wednesday and Thursday will be producing real economic data, like Industrial production, Capacity Utilization, and Retail Sales… But remember with all data prints these days, they have been massaged and cooked to look like what the Gov’t wants us to believe they are… 

To recap… The currencies finished last week on an up note, and have continued to rally in the overnight markets last night VS the dollar. Gold didn’t finish the week as strong as it started the week, but it’s back on the rally tracks this morning, no worries, and Silver is kicking tail and taking names later…. Lots of other things in today’s letter, better make sure you go back and reread it! HA! 

For What it’s Worth….  Well, I mentioned Silver above, but this article really paints a better picture of what’s coming for Silver than I ever could…  I want to thank Ed Steer at for highlighting this in his Saturday letter….  If you don’t subscribe to Ed’s letter, you should, there’s nobody that works as diligently as Ed does to bring you information about the precious metals! So, anyway…. Here’s the link to this article about Silver:

Or, here’s your snippet: “Silver’s role as a valued investment was broadly on display during the first half of 2020, as investors actively accumulated silver in the first six months of the year, leading to a 10 percent gain in investment demand. Paving the way was remarkably strong growth in silver-backed exchange-traded products (ETPs), which have posted successive all-time highs this year, together with solid silver coin and bar investment.

The silver price averaged US$16.65 through to the end of June. Having fallen sharply in mid-March, the silver price has since recovered strongly, rising by 56 percent to reach US$17.84 at end-June; it has since broken through the US$18 barrier. The gold:silver ratio – the quantity of silver ounces needed to buy an ounce of gold – fell since its multi-decade high of 127 in March, and at end-June stood at 97.8, which is still very high by historical standards, and may signal that silver is undervalued relative to gold.

Silver Investment

Retail and institutional inflows into silver ETPs have been impressive this year. As of June 30, global holdings reached a fresh all-time high of 925 million ounces (Moz), which is roughly 14 months of mine supply. The ETP growth in the first half 2020 of 196 Moz comfortably surpassed the highest annual inflow of 149 Moz set in 2009. North American listed funds accounted for some 90% of the ETP inflows since March.

Retail bullion coin sales jumped by an estimated 60 percent year-on-year. Silver bar and coin sales surged in response to a deteriorating economic outlook linked to the global COVID-19 pandemic, leading to some supply-chain disruptions. This saw dealer stocks for several silver investment products quickly depleted, resulting in extended delivery lead times and higher premiums.”

Chuck again….  Well, if you didn’t get the message above, in Chuck parlance… “Silver is on a run and going higher!”

Market Prices  7/13/20: American Style: A$.6975, kiwi .6676, C$ .7373, euro 1.1333, sterling 1.2600, Swiss $1.0614, European Style: rand 16.7365, krone 9.3986, SEK 9.1538, forint 312.01,   zloty 3.9478,    koruna 23.5023, RUB 70.69, yen 107.10, sing 1.3891, HKD 7.7505, INR 74.97, China 7.0003, peso 22.47, BRL 5.3217,   Dollar Index 96.50,  Oil $39.88,   10-year .64%, Silver $19.10, Platinum $840.00, Palladium $1,936.00, and Gold… $1,810.00

That’s it for today… I want to wish all my former colleagues good luck with their decisions due today…  Well, starting tomorrow night, we’ll finally get to see some baseball, albeit  intrasquad games, but at least it will like watching spring training on the back fields…  The return of Baseball in just 11 days away for Cardinals fans, and 10 days away for Baseball fans…  I can’t wait to see the young kids around the league, like Fernando Tatis Jr., Vlad Guerrero Jr., Pete Alonso, Tommy Edman, and more get to show that they are stars too…  Heartsfield takes us to the finish line today with their song: Racin’ The Sun…  And with that, I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler