- currencies & metals get sold late last week
- What’s going on in China with the renminbi?
Good Day… And a Marvelous Monday to you! Well, week one of the NCAA Basketball Tournament in the books and 64 teams is now the Sweet 16… How’d you do? I can tell you that Kentucky caused major problems for my bracket! Tsk! My beloved Cardinals left Florida over the weekend and headed west to play in Arizona ahead of the start of the season in L.A. Daughter Dawn and her family left on Saturday, and to replace them Kathy’s sister, and mom replaced them… Stevie Wonder greets me this morning with his song: My Cherie Amour…
Well, the dollar is kicking tail and taking names later these days… Shoot Rudy, it was up 9 index points last Thursday! The currencies are hanging by the thread of their teeth, to any values… And Gold is taking it on the chin too… After reaching $2,258.00 earlier last week, its’ been called a “correction” in Gold… I say, it’s been the short paper traders taking their liberties with Gold & Silver… On Thursday, last week, Gold gained $16, and then the trap door was sprung. Gold ended the week at $2,164.00… Silver ended the week at $24.63…
The price of Oil ended the week trading with an $80 handle… After rising up to $82 earlier last week, the price of Oil saw some profit taking in Oil contracts. And Bonds kept getting bought, again… The 10-year’s yield ended the week at 4.20%
In the overnight markets last night… There was a little slippage in the dollar’s momentum as the BBDXY lost 2 index points, and sits at 1,244 to start the day and week today. Gold is up $4 in the early trading today, and Silver is up 12-cents to start the day/ week. Must be plain profit taking in dollar contracts overnight to stop the dollar’s run. Those don’t last, usually, and we go back to what the underlying trend was without delay.
The price of Oil bumped up 50-cents overnight, but that brought the price of Oil’s handle to over $81 to start the day/ week today. And bonds saw some slippage overnight, with the 10-year’s yield rising to 4.23% to start the day/ week. See below for a comment from Lola regarding commodities, to get a picture of where the price of Oil is going this year…
Oh, my goodness, dear Lord, please help us… Congressional lawmakers have avoided a partial government shutdown after passing a $1.2T package of six spending bills to fund a group of federal agencies through the end of the fiscal year on Sept. 30. And guess who got the majority of the funding? That’s right, defense got 70% of the $1.2 Trillion… So, the leaders of the defense companies, called their wives and told them to get the red dress out, and high heeled sneakers, for they were going out on the town! I shake my head in disbelief that we continue to go down the path of a failed Empire…
My good friend Rick B. sent me an email on Saturday, and said, “this might get you fuming”, and he was right! The article was some uneducated person on the subject… This fellow said that Gold was NOT a “Store of Value”… Wait, What? I couldn’t believe my eye, of what I was reading… And I responded to Rick that “What a bunch of crap! Gold has always been a store f wealth and will always be!” So, Rick was right, I was fuming after reading it!
Central Banks around the world, sans the Federal Reserve, are building their reserves with physical Gold, they aren’t just doing that for the fun of it… They are doing it, because they need stores of value, and they are ridding themselves of dollars, because 1. they see the writing on the wall for the dollar, and 2. they saw how the U.S. froze Russia’s assets in the U.S., and they keep telling themselves that the U.S. could do that to them too, so why not exchange their dollar reserves for Gold, and store it themselves so that the U.S. never can get their hands in the cookie jar!
And furthermore with regards to Gold… Sponsored by Rep. Ken Ivory, House Bill 348 permits the Treasurer to hold up to 10% of certain state reserve accounts in precious metals to help secure state assets against the risks of inflation and financial turmoil and/or to achieve capital gains as measured in Federal Reserve Notes.
So, states are changing their respective state laws to include Gold & Silver, and also to remove taxation of the metals in sales…
I’ve seen some reports calling for Gold to reach $2,300 this year, especially easily gained if the Fed Heads do cut interest rates 3 times in 2024….
Leaving metals for now… The Aussie dollar (A$) has run into a lot of short selling lately, after reaching .66-cents early last week. The short sales are building because of China’s problems, being that if China slows down, then vis-a-vi Aussie raw material shipments to China would slow down, thus slowing the Aussie economy… And most likely pushing the Reserve Bank of Australia (RBA) to cut rates before they really wanted to…
The European Central Bank (ECB ) left rates unchanged at their last meeting, and that helped the euro keep its head above the 1.08 level, ending last week at 1.0808… With all this dollar strength going on now, it is interesting to see the euro hold on to its level of 1.08… this after hitting 1.09 early last week… Like I always point out is that the euro is the offset currency to the dollar… So, dollar strength equals euro weakness, and vice versa… the investopedia.com description of dollar strength is when interest rates are rising…
Hmmm… well, interest rates are no longer rising, and the thoughts in the markets right now is that interest rates will be reduced this year… So, if investopedia.com is correct, then the dollar doesn’t have a leg to stand on, and all this dollar strength is fabricated… I’m just saying…
And I guess I had better talk about the weakness in the Chinese renminbi… You see, the Chinese have been doing this currency thing for longer than any other country, and they have figured out that when the economy weakens, they need to do something to simulate the economy, and in an export driven economy, the way to do that is to weaken the currency, thus making its exports cheaper, and easier to sell… So, for now, the renminbi is weaker… it remains to be seen whether or not it remains that way for very long…
And before we go to the Big Finish today, I have this little ditty from Bloomberg.com regarding what Lola wants… here it is: “Commodities will advance this year as central banks in the US and Europe move to reduce interest rates, helping to support industrial and consumer demand, according to Goldman Sachs Group Inc.
Raw materials may return 15% over 2024 as borrowing costs come down, manufacturing recovers, and geopolitical risks persist.”
Chuck again… I’ve explained this Lola thing many times, but I haven’t for awhile now, so here goes: I call Goldman Sachs, Lola… You know what Lola wants, Lola gets? So, when Lola says that “commodities will advance this year”, that means that commodities WILL advance this year! No two ways about it, folks… So, back up the truck…
The U.S. Data Cupboard late last week saw the first positive (.1%) print in the Leading Indicators (for Feb) in over a year and a half… Last week’s Data Cupboard was lacking quite a bit, and this week’s Data Cupboard isn’t that much of an improvement but it does had more on the docket than last week…
To recap… It was all dollar buying to end the week last week… On Thursday the BBDXY gained 9 index points! Why is this going on now, after the chief Fed Head said last week he’s looking to cut rates 3 times this year, so what gives? Chuck does a lot of talk about Gold today, so hopefully you didn’t skip over that…
For What It’s Worth… Jan Nieuwenhuijs is someone that I trust when it comes to what he says about Gold… And so this is an article he wrote for his new firm about Gold pricing and it can be found here: China Has Taken Over Gold Price Control from the West (gainesvillecoins.com)
Or, here’s your snippet: “Exceptional strong gold demand from both the Chinese central bank and private sector has been driving up the gold price over the past two years, by which they have taken over control over the gold price from the West. The People’s Bank of China (PBoC) bought a record 735 tonnes of gold in 2023, of which about two thirds were purchased covertly. In addition, the private sector net imported 1,411 tonnes in 2023, and a whopping 228 tonnes just in January of 2024. If the West joins the Chinese gold buying craze, in fear of rate cuts and currency debasement, it will be a perfect storm for gold.
As most readers will be aware of by now, since the war in Ukraine, which led Western authorities to freeze dollar assets of the Russian central bank, estimated gold purchases by central banks as disclosed by the World Gold Council (WGC) have exploded. Covert PBoC gold purchases can be computed by comparing the WGC’s data with what is officially reported by central banks.
The difference between WGC’s estimated buying and reported buying, arising from the fact that the WGC’s numbers are based on field research, is “largely” created by the PBoC, two industry insiders shared with me.
To compute what the PBoC secretly acquires every quarter I take eighty percent of total unreported purchases. Then, I add what the Chinese central bank reports to have bought. In total, over 2023, the PBoC bought a record 735 tonnes, up 23% from the previous record in 2022 at 597 tonnes.
My estimate is that the PBoC now holds 5,358 tonnes, which is 3,108 tonnes north of what’s officially disclosed at 2,250 tonnes.”
Chinese massive gold buying over the past two years have fundamentally changed the gold market. Whereas before 2022 Western institutional supply and demand was driving the price of gold and the price was more or less stuck to the “real yield” (10-year US TIPS interest rate), ever since the war gold has been less sensitive to real yields and follows its own path. This divergence, according to my analysis, has been created by China that has become one of the main driving forces of the gold price.”
Chuck again… I thank the good folks at GATA for sending me this article…
Market Prices 3/25/2024: American Style: A$ .6530, kiwi .6005, C$ .7356, euro 1.0816, sterling 1.2621, Swiss $1.1155, European Style: rand 18.9557, krone 10.7380, SEK 10.5855, forint 366.92, zloty 3.9836, koruna 23.3788, RUB 92.81, yen 151.30, sing 1.3459, HKD 7.8215, INR 83.42, China 7.2135, peso 16.75, BRL 5.0012, BBDXY 1,244.44, Dollar Index 104.34, Oil $81.13, 10-year 4.23%, Silver $24.75, Platinum $917.00, Palladium $1,031.00, Copper $4.01, and Gold… $2,168.90
That’s it for today… Well, on Wednesday this week, there will be no Pfennig, as it will be a travel day for me, closing up the place here, and getting it ready for our next visit. I’ll be back from my writing desk at home on Thursday… It was a good winter being down here… Not a great one like it usually is, but good… I’m really not ready to go home yet, but with Easter coming this next weekend, it’s time to go… The Jefferson Starship takes us to the finish line today with their song: With Your Love… I hope you have a Marvelous Monday today, and I hope you’ll Be Good To Yourself!
Chuck Butler