New Zealand Hikes Rates 50 Basis Points

April 5, 2023

* Gold & Silver soar on Tuesday!

* The dollar continues to get sold… 

Good Day… And a Wonderful Wednesday to you! A very strange and eerie night here in my little river town, as storms blew through, and carried on through to morning… More storms are on the way this morning. My beloved Cardinals got their game in uninterrupted, and lost to the Braves…. Again!  Day game today at Busch, and I have tickets to the game, but… I just can’t answer the bell! I was up most of the night with that dang foot pain, and when it was time to get up and write, I said to hell with it!  Now, I know for the first time that I am actually retired! I would have never done that when I was working!  So, the letter is tardy today…  sorry…  Jimmy Cliff greets me this morning with his song: Hello Sunshine 

Well I guess were going to see if my take on Gold is going to play out, as Gold rallied $35 yesterday, and closed above $2,000 at $2,020.00… Silver… wait for it, wait for it… OK, Silver gained $1.04 on the day to close above $25! WOW! Gold’s next challenge will be to take out its all time high of $2.078… But first things first… it was NOT simply a case of the dollar losing ground, it did lose ground in the form of 3 Index points in the BBDXY, it was also a case of cash buyers piling into the metals, because…. Sounding like Alicia Silverstone, Because… Everyone has to access blame on something/ somebody, right? Well, yesterday’s culprit was the bad data in March Factory Orders, which followed up January’s print of -2.1%, with another negative print of .7%… Add them up and you get an average for the two months of -1.4%… And the people in Washington D.C. still believe this is going to be a soft landing?

The price of Oil slipped a bit yesterday after climbing above $81, it settled back in trading with an $80 handle to close the day… And talk about the safe haven buying in Gold & Silver, it was also seen in the 10-year Treasury’s yield, which dropped to 3.34%…  I want to circle back to Gold… Now is the witching hour/ day, when we find out if the price manipulators are going to take Gold down again, or if the buying momentum is so great that they can’t get a foot hold on the price, and Gold keeps climbing… If it’s the latter of the two, then I think Gold is off to the races, and not looking over its shoulder any longer… The same goes for Silver, as it has finally gotten back to $25…

I didn’t see Gold’s rally yesterday in real time, as I became quite sick to my stomach (no biggie, chemo reaction) and had to go sit down and rest, which led to a very long nap!  So, you can only imagine how pleased I was to see Gold close above $2,000… And Silver above $25…  I used to tell the folks on the trading desk at EverBank World Markets, that I had bought some Silver coins around $22 back in the 80’s, and that if Silver ever got to $25 I was going to sell them to break even after commissions…  But then when Silver went on its run in the 2000’s and it climbed to $50, I still didn’t sell, because I believed that Silver had become the “new Gold”…..   if only!

I wrote about how there were shortages of physical Silver and that to make the new Solar Panels, Silver would be needed, and then listed several other reasons for Silver to continue to rise…   If only!  My article, titled: Is Silver The New Gold? Was featured in a national publication, that for the life of me I can not recall the name… Shame, Shame, Shame… (best Gomer Pyle voice)

Our marketing group at EverBank used to keep copies of all the publications, news papers, magazines, etc. that I appeared in… But those folks have all move on to higher ground… So, I doubt contacting the new marketing people would do me much good!

In the overnight markets last night… The dollar was not the toast of the town, but it also wasn’t treated like Dr. Frankenstein’s monster! That’s a lot of words to say, there was not movement overnight in the dollar… Gold has added $6 to its value this morning in the early trading, while Silver is seeing some profit taking and is down 10-cents to start the day…  The price of Oil remains in the $80 handle, and the 10-year’s yield had dropped more to 3.30%…  Stranger than fiction, unless the bond boys know something about the next FOMC meeting that we don’t…

I’m still of the opinion that the FOMC will continue to throw peas at inflation, to show that they are true to their words… 25 Basis points  until something breaks… The Fed Heads are hoping that inflation I what breaks before something else does…  Now, there are a ton of writers and economists out there that believe the Fed Heads have hiked their last rate at the last meeting… And if that’s the case, then the bond boys are bang on… But let me remind everyone that the job of beating back inflation wasn’t completed, and that’s just going to allow inflation to run up once again, if all these people are correct that the last rate hike has been made…

The Big News last night came from the Reserve Bank of New Zealand (RBNZ), who hiked their Official Cash Rate 50 Basis Points to reach 5.25%!!!  That’s HUGE folks! And puts kiwi right up there with countries that boast higher interest rates, like the U.S. The rate hike news quickly got kiwi up and running higher, and within 1 hour after the announcement kiwi had gained 43 ticks… Look for kiwi to become the investment part of any carry trades…. I like it for that, and you should too!

Longtime readers may recall me making a BIG Deal out of the formation of the BRICS a trading pact among members: Brazil, Russia, India, China, South Africa, and said that one day they would make the calls in the world, as they had the largest populations… Well, that one day, appears to be coming very soon… The BRICS held a meeting among leaders of the respective countries, and they have decided to form a common currency… (A euro, if you will) One that could be used in trading amongst themselves, thus eliminating the use of dollars in the terms of transaction… 

I used to tell my audiences, that once Saudi Arabia drops the dollar for Oil transactions, the dollar would lose so much value that it’ll have to dig itself out of the hole it just dug for itself, with sanctions, shutting down SWIFT, and pushing its weight around… These countries see what the U.S. has done to Russia, and they know that it wouldn’t take much provocation to get their country on the “list”….  So, weaning themselves away from the dollar behooves them greatly, in my humble country boy opinion!

And we’ll be the ones, the common man/ woman (don’t start on me with pronouns, I’m not playing that game!) that has to suffer for our leaders mistakes, with high inflation that we can no longer export to other countries, and higher prices for commodities, like Oil, and higher prices for everything!  Thanks, remind me to send ya’ll a nice note thanking our numbskull leaders for putting us in this mess! At that point, it will be too late to say your sorry, and try to take back all the bad things you did to countries in the past…

So, yes, I think the BRICS new common currency, whatever it’s called, will quickly rival the yen, sterling, and eventually the euro, before taking over the dollar’s reserve currency status… For years, people kept saying, the dollar doesn’t have any challengers to its reserve status… The euro was created TO compete with the dollar, but after 10 year of its existence, the debts of the PIGS (Portugal, Italy, Greece and Spain were uncovered, and all hell broke loose for the euro… I called these countries: Club Med Back in the day, and whenever someone talks about any of the PIGS, I think ahhh… Club Med…

I know that a lot of people think that the Banking Crisis is over… Shoot Rudy, the stock jockeys act like it never happened!  I just think we’ve seen the tip of the iceberg… And remember what an iceberg did to the Titanic? Imagine what it will do to the U.S. economy? If the withdrawals continue out of banks, then banks will do what they always do when times get rough… They batten down the hatches, and hunker down, not giving out loans, not creating new financing for projects, nada, nothing, nil, zero, a big fat Goose Egg, of loan production, and that will bring pain and suffering to the U.S. economy…  I told you earlier this week that last week, ending March 22 (a great day indeed! HA) significant amount of withdrawals had been made from banks, so there’s no reason to believe they withdrawals will just stop on a dime!

The U.S. economy is heading to the stage to be the star performer of the Sh%^ Show!

I know, I know, I really sound jaded these days don’t’ I? Well after all the debt, the numbskulls unable to agree on a budget (read spending cuts) after all the manipulations, all the derivatives, and after a decade of zero interest rates, and people buying willy nilly stuff like cryptos, and NFD’s or whatever  they call them, and the everything bubble, how else am I supped to look at the markets?

The U.S. Data Cupboard yesterday had the aforementioned Factory Orders for Feb, and another price worth mentioning… For the first time in over 3 years, the number of Job Openings in the U.S. dropped below 10 Million… Today’s Data Cupboard has the ADP Employment Report for March. ADP the payroll company for nearly every company in the U.S. thinks that March’s payrolls increased by 210,000… This report is supposed to be a harbinger for the BLS Jobs Jamboree, but that never happens, as the BLS has the last say on what gets printed, and they like to massage and cook the books quite a bit each month before the print that is due this Friday, is produced… 

But being tardy, allows me to get the early economic prints from the Data Cupboard, and this morning, the ADP Employment Report really disappointed the markets, with a print of only 145,000 jobs added in March… That leaves the BLS with a real problem come Friday… What to do, what to do? I think they’ll side with the folks that provide their paychecks… And add plenty of jobs out of thin air to make ADP look stupid…  But in my opinion, the BLS are the ones that are stupid… I’m just saying…

To recap… What a day for Gold & Silver! WOW! And what a day for the 10-year Treasury! WOW! I guess we know now where all those bank withdrawals that were made last week they went! The dollar lost ground all day yesterday, and once again looks like its ready to jump off a cliff, and any time in the past 10 years that we’ve seen the dollar have that look, the PPT and their treasure chest full of ESF’s funds come in to save the dollar… I just keep wondering how much of those ESF’s monies they have left ? I just want asset classes to trade on their own merits, and not be influenced by price manipulators!

For What It’s Worth… Ok, I’ve said this before, but for those of you new to class, Ted Butler (no relation that I know of) is a metals guru, he watches, he calculates, he sees what’s going on with the paper traders, and writes about it, and whenever his stuff is out there for me to grab for free, well you can bet your bottom dollar that I’m going to use it in the FWIW section! This article is about how JPMorgan has accumulated so much Gold & Silver and they still manipulate the prices, and it can be found here: JPM Again | SilverSeek

Or, here’s your snippet: “A major development last week was the large amount of gold issued by JPMorgan over the first two days of the COMEX April contract. Total gold deliveries by JPMorgan of 14,326 contracts, including 10,682 contracts (1.07 million ounces) by JPM from its proprietary house account were the largest by JPM in history. This is big news because it demonstrates clear and blatant price manipulation by JPMorgan. With more than 19,000 contracts of gold standing for delivery, what would have been the price of gold, had JPM not delivered more than 10,000 contracts from its house account? Even the dimmest of wits (say at the Justice Department or the CFTC) should be able to conclude that without JPMorgan delivering this many gold contracts, gold prices would have had to increase enough to attract others to take JPM’s place.

Price manipulation cannot occur without a concentrated position. That’s what we witnessed, in full view, by JPMorgan over the first two days of the COMEX April gold deliveries. Back in 2020, JPMorgan entered into a deferred criminal prosecution agreement (DPA) with the Justice Department for manipulating precious metals on the COMEX (and other infractions) and agreed to pay a headline-grabbing $920 million (a pittance for JPM). The fine and the DPA only scratched the surface of JPMorgan’s long-term manipulation of silver and gold, because the case focused solely on spoofing and the short-term manipulation of prices. It ignored the much more serious price suppression of silver (and gold) and JPM’s accumulation of massive quantities of physical silver (more than a billion ounces, plus more than 30 million ounces of physical gold) over a decade. They did this while functioning as the biggest COMEX short seller (in order to keep the price down). Spoofing was peanuts compared to what JPMorgan was actually guilty of.

I always acknowledged that should JPM choose to do so, it could depress prices by releasing a portion of its physical holdings. I argued that because of the massive amount of physical silver and gold it had accumulated over the years at dirt cheap prices, JPM would choose to let prices fly upward. The recent large gold deliveries may suggest otherwise. But all may not be lost. I did suspect that if JPMorgan decided to unload some of its massive stockpile of physical silver and gold for the purpose of containing prices, that fact would quickly become obvious. That is precisely what just occurred in the COMEX April gold deliveries. A new dynamic is in play; just how blatant and obvious can it get that JPMorgan is still manipulating gold and silver prices, in complete violation of the law and its own deferred criminal prosecution agreement (whether active or recently expired), before the DoJ or CFTC is forced to react in some way?”

Chuck again… thanks to Ed Steer for highlighting this article on… To me, this is so obvious, and should be the writing on the wall to shut JPMorgan’s metals business down… But then, if I were the king, that’s what I would do… And the line of metals traders in orange suits lined up to go to jail would be quite long!

Market Prices 4/5/2023:  American Style :A$ .6707, kiwi .6317, C$ .7436, euro 1.0943, sterling 1.2473, Swiss 1.1061, European Style: rand 17.9213, krone 10.3917, SEK 10.3420, forint 343.31, zloty 4.2802, koruna 21.4051, RUB 79.79, yen 131.04, sing 1.3288, HKD 7.8499, INR 82.00, China 6.8793, peso 18.17, BRL 5.0497, BBDXY 1,222.59, Dollar Index 101.65, Oil $80.48, 10-year 3.30%, Silver $25.00, Platinum $1,023.00, Palladium $1,536.00, Copper $4.00, and Gold… $2,026.60

That’s it for today… Well, the end of Lent is coming… this Friday, is Good Friday… I used to take that day and the day after Easter off… It’s time to be with family… Again, sorry for the tardiness today, but I need my sleep!  Well, college basketball is over, the hocky playoffs begin soon, the NBA playoffs begin soon, and then all that will be left is BASEBALL! It’s going to be a tough, grind it out year for my beloved Cardinals, their pitching isn’t what Championship teams have… But their hitting will win them a lot of games, at least that’s how I see the year playing out… Stevie Guitar Miller aka Steve Miller and his band take us to the finish line today with their song: Serenade…   Good friend, Kevin, aka Webbs, always wants me to play that song on the iPod…  I hope you have a Wonderful Wednesday today, and will Be Good To Yourself!

Chuck Butler