More Dollar Buying Amid Fears Of A Slowdown

August 16, 2022

* dollar continues to push higher vs the currencies and metals

* Price manipulators aren’t scared of the law… 

Good day… And a Tom Terrific Tuesday to you! A beautiful day here in my river town, with a light breeze blowing as good friends, Duane and Mike sat outside . with me, and enjoyed the evening! No baseball for me last night, UGH, but my night wasn’t wasted! I got a call from a former colleague, at Mark Twain Bank, and EverBank. Ann Hopkins called me and we had a great conversation for an hour! We made plans to meet later this week! I’m so excited to see her again! I’m always free to meet my former colleagues whenever they decide they want to see me again! Paul McCartney and Wings greet me this morning with their song: Band On The Run…

Well, the PPT must have made a strong impression on traders in the overnight markets the night before, and the dollar continued to gain yesterday albeit at a slower pace than in the previous nights trading. The BBDXY gained 1 index point yesterday, but the pressure on the currencies remained in tact, and there’s going to have to be something happen to change this direction that the dollar is heading right now. And even then, I question if the dollar will be knocked off it pedestal right now… The pundits all are claiming that China’s reported slowdown (they cut rates) is the cause of the dollar strength right now, but I say that’s hogwash! The dollar was brought out of its doldrums by the PPT, and it will take a few days for the fear of more PPT intervention before the currencies and metals get back on the rally tracks…

Gold lost $23.90 yesterday, thus wiping out most of its gains the last week. Silver lost 60-cents and it also lost most of its gains last week. Gold close the day at $1,781.10, and Silver closed at $20.37… I shake my head in disgust over the way the metals were traded yesterday… What on earth had changed in the world, from last Friday, when it appeared that Gold & Silver were on their ways to higher ground? Oh, China cut their interest rate, but isn’t that a reason to buy the metals? The PPT really did a number on the currencies and metals, and I have nothing more to say about that!

In my opinion, the 10-year Treasury’s yield has been lower than it was a month ago, and yesterday the yield dropped 5 basis points to 2.78%, so what’s the allure of the dollar? I’m just saying… The price of Oil bumped higher to an $88 handle yesterday, but that’s small potatoes, and I doubt that the price of Oil will remain so low, given that OPEC is about to meet and discuss production… It’s my view that our friends at OPEC (NOT!) will see the lack of demand and cut production, which should turn the price of Oil around once again..

In the overnight markets… there was more dollar buying, and the currencies all look sickly once again. The BBDXY gained 5 index points overnight, and the euro has fallen below the 1.02 figure once again. The Aussie dollar, which at the close of last week, looked unbeatable, is staggering after taking a shot from the dollar in the midsection…  I saw a headline on an article that said” The dollar reigns amid fears of a slowdown”…  Yeah, it’s like that and it has me turned inside out, and upside down! 

Gold starts today down $5 and Silver starts the day down 17-cents… All the metals have been subjected to price manipulation, and management of the metals… That’s Gold, Silver, Copper, Platinum, Palladium, all getting managed by the price manipulators… I would have thought that seeing the leader of the biggest casino bank, JP Morgan, get caught red=handed price manipulating Gold, that it might put the kyboshes on price manipulation, at least until this all cools down, but nooooooooo!  

The price of Oil continues to act like a kid on a pogo stick, up and down, up and down, with today it being an up day, with the price trading with a $90 handle.  Bonds are steady Eddie, with the 10-year yielding 2.80% this morning… 

Yesterday, a long time reader, Bob. Sent me a link, that I’ll share with you, to a walk around tour that took place in Boston.. Yes, Boston in the U.S.A. The next time someone in the Gov’t says the U.S. economy is strong, tell them to look at this: Streets of Boston, Mass Ave, Albany Street and Southampton Street Documentary August 03, 2022 – YouTube

I do not like to have to include videos like that to make my point, but when it come to push and shove, I’ll do it because… I want people to see what the real America is like, when you don’t have millions in savings… C’mon watch it, it’s only 6 minutes long!

OK, now that your thoroughly depressed… Speaking of being depressed, I burned my finger on a pan of bacon I was taking out the oven last night… Darn, that hurts! I applied ice to it immediately, but I’m sure it’s going to bother me for days… So… how was that for a diversion away from the depressing video? My old PR guy, would be happy as a lark, right now!

Yesterday in Dave Gonigam’s 5 Minute Forecast, he highlighted some of James Rickards thoughts on Gold, so here’s Rickards in the 5 Minute Forecast: “While the Federal Reserve is scrambling to raise short-term rates — the rates they have control over — longer-term rates are climbing down. The yield on a 10-year Treasury note peaked in mid-June at 3.48%. As we write this morning, it’s 2.77%. That drop is confirmation “that the economy is slowing down and rates are in a downward trend,” says Jim.

Too, the yield on the 2-year T-note remains higher than the 10-year at 3.2%. That’s an unnatural condition known as an “inverted yield curve,” almost always a precursor to recession.

“This combination of declining yields and an inverted yield curve signaling even lower rates in the future is an impetus for higher gold prices,” Jim says. “Gold competes with Treasury notes and stocks for investor allocations. When rates are coming down and stocks are on a downward trend also, that’s a tailwind for the dollar price of gold.”

Chuck again… and to that note… the yield on the 10-year fell more yesterday, down to 2.78% from Monday morning when it was 2.82%…

Well, what have we here? I found this on Reuters last night, and copied it so I could include it in today’s letter… I’ll let you read this without comment up front: “Several major Wall Street banks have begun offering to facilitate trades in Russian debt in recent days, according to bank documents seen by Reuters, giving investors another chance to dispose of assets widely seen in the West as toxic.

Most U.S. and European banks had pulled back from the market in June after the Treasury Department banned U.S. investors from purchasing any Russian security as part of economic sanctions to punish Moscow for invading Ukraine, according to an investor who holds Russian securities and two banking sources.

Following subsequent guidelines from the Treasury in July that allowed U.S. holders to wind down their positions, the largest Wall Street firms have cautiously returned to the market for Russian government and corporate bonds, according to emails, client notes and other communications from six banks as well as interviews with the sources.”

Chuck again, does that sound like a weakening of the sanctions on Russia? It sure does to me…

The U.S. Data Cupboard has the July prints of Industrial Production, and Capacity Utilization for us today… I’m not expecting any great shakes from these two prints… Yesterday the NY Empire regional Manufacturing Index lost 31.3 points last month! This is a pulse of the manufacturing in the NY state area, and it was down 31 points last month! That can’t be good, folks…

To recap… Sunday night into Monday morning’s rout on the currencies and metals didn’t let up on Monday, albeit at a much slower pace. The BBDXY gained 7 points overnight and 1 more during the day yesterday. Gold & Silver got the $%$# kicked out them yesterday, giving back most of their gains from last week. Chuck is at a loss in regards to why the dollar rallied so strongly, unless the PPT is the answer…

Before we head to the Big Finish today, I want to talk about how on this day in 1969, the rock festival known as Woodstock, got under way… this was the greatest rock festival of our time, and as a young musician, at the time, I so wanted to be there. But the state of NY was so far from St. Louis Mo, that it was impossible for me to do so. The movie that was made from the festival, became famous, and got played at the Butler house over and over again. Long ago, at Mark Twain Bank, I ran the operations of the Bond Dept, and when a new hire would start, I would hand them the VHS of the movie Woodstock, and tell them they needed to watch the movie before coming back to work. I’m sure that wouldn’t be allowed in today’s environment, because I’m sure I would hurt someone’s feelings! Nevertheless, today marks the observance of Woodstock, August 16, 1969… I still get chills when I see the Alvin Lee and 10 years after performance, and Sly Stone…

For What It’s Worth… This is an interesting article that I found on, that talks about alternative currencies taking the place of the dollar in the Russian Wealth Fund, and it can be found here: Yuan, Rupee, Lira May Replace Dollar, Euro in Russia Wealth Fund – Bloomberg

Or, here’s your snippet: “Russia is considering purchases of China’s yuan, India’s rupee and Turkey’s lira for its wealth fund under a budget mechanism that uses excess income from energy sales.

The central bank disclosed a possible mix of currencies for the first time in a report on the policy outlook for the next three years on Friday. It said others can also be included, without giving more specifics.

“A considerable amount of investments” from the Wellbeing Fund will also go into domestic projects from 2022-2025 since they are necessary to help the economy adapt to changed circumstances as a result of sanctions, according to the report.

With euro and dollar purchases blocked by international sanctions over Russia’s war in Ukraine, Finance Minister Anton Siluanov has previously indicated that Russia may turn to other currencies to top up the Wellbeing Fund and possibly invest in the yuan as it expands trade with Asia.

Bank of Russia Governor Elvira Nabiullina has warned against using volatile currencies, while supporting a return to saving windfall income from oil and gas sales. The central bank had earlier urged the government to order state companies to convert their foreign-exchange holdings into the currencies of the nations that haven’t joined in sanctions against Russia.”

Chuck again… Remember what a boost it was to the Chinese renminbi to be included in the Special Drawing Rights? Well, if the Russian Central Bank goes ahead with these changes it could be a big boost to the currencies above…

Market Prices 8/16/2022: American Style A$ .7005,  kiwi .6327,  C$ .7746, euro 1.0124, sterling 1.2020, Swiss $1.0521, European Style: rand 16.4366, krone 9.7255, SEK 10.4048,  forint 400.30,  zloty 4.6405,  koruna 24.2381, RUB 61.32, yen 134.40, sing 1.3804, HKD 7.8415, INR 79.39, China 6.7884, peso 19.90, BRL 5.0965,  BBDXY 1,272.56,  Dollar Index 106.53, Oil $90.18, 10-year 2.80%, Silver $20.11, Platinum $931.00, Palladium $2,129.00, Copper 3.59, and Gold… $1,776.52

That’s it for today… I got chased from the backyard yesterday, when grandson Everett showed up with a few of his friends to swim… I went inside, and twiddled my thumbs, wondering what could I do? I finally texted my good friend, Duane, and asked him if he was doing anything exciting? No was his answer, so we decided to do nothing together! HA! My beloved Cardinals get back on the field tonight for the first of 3 games with the Rockies… We need to turn the table on the Rockies, who took 2 of 3 from us in Denver last week. The Butler Labor Day BBQ & Pool Party is back on for this year! We had to take two years off because of Covid, but as far as I’m concerned that’s history! And that means I’ll be putting the Big Green Egg to work all weekend leading up to the party! I’m so excited that we’ll be hosting this event once again, and hopefully for years to come without breaks! The Guess Who takes us to the finish line today with their song: Share The Land… “Maybe I’ll be there to take your hand, maybe I’ll be there to share the land that they’ll be giving away, when we don’t’ live together”… yeah that song… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler