No Need For A Safe Haven? Hogwash!

November 26, 2019

* Currencies go back to drifting on Monday… 

* You really need to read the FWIW article today! 

Good Day… And a Tom Terrific Tuesday to you! Since this is the last Pfennig before the Thanksgiving holiday, I have a special treat for you… Well, the same treat as I have every year! And we’ll start the letter off with it to put everyone in a good mood! (I’m sure to change that later! HA!) Our Blues were on the ice last night, and my Missouri Tigers Basketball team was too… And both teams lost… UGH!  I’ve really taken to listening to Pandora’s Smooth Jazz Christmas… Something different for yours truly! I started early this year listening to the season’s music. I really need to be pushed and prodded to get me in the spirit of the season this year, as so much has gone wrong this past year… But I’ll come around, and then be just like a kid at Christmas! The Rolling Stones greet me this morning with their song: Can’t You Hear Me Knocking…

OK, Pfennig Tradition calls for this… It’s a snippet of Adam Sandler’s: Turkey Song…

Turkey for me
Turkey for you
Let’s eat the turkey
In my big brown shoe
Love to eat the turkey
At the table
I once saw a movie
With Betty Grable
Eat that turkey
All night long
Fifty million Elvis fans
Can’t be wrong
Turkey lurkey doo and
Turkey lurkey dap
I eat that turkey
Then I take a nap

OK… well if that doesn’t put you in a good mood, I don’t know what will! HA! Alrighty then, you may want to exit out, or walk away from your computer at this point, because the good mood feeling end there! I have a lot to say today, so buckle up, keep the arms and legs inside at all times during the letter, and let’s go!

Well, the stock jockeys are beginning to remind me a Star… it seems that the stock jockeys only want to hear about the good stuff from the Trade Negotiations… But I’ve got news for them.. The actual Trade Negotiations, per se, aren’t going anywhere! Sure, they’ll come to an agreement on Tariffs, and some trade entry stuff… But as far as the real meat of the Trade War is concerned, includes: subsidies, theft of intellectual property, forced transfer of technology, closed markets, unfair competition, cyber-espionage and more. Do you know what kind of follow up is going to be required to make certain the Chinese follow through on these things if they agree to them? The Chinese have basically told fibs about their Trade for years, and to be able to get into the Chinese books and really look into them, is going to be impossible… so…

All this buying of stocks because investors are sure the Trade War is going to be over soon, really is like a Star that burns the brightest right before it burns out! I’m just saying… make sure you have adjusted your stop losses higher! We don’t want retirees or near to be retirees losing a large portion of their investment portfolio like they did in 2007/08…

OK… the currencies drifted again yesterday, and besides the selling of Friday and Sunday night, this has been the MO for the currencies… Gold, on the other hand saw more selling yesterday and closed down $6.80 to $1.455…  I hope you got an opportunity to read yesterday’s FWIW, on the Gold price being subjected to selling this time of year…  

Those darn Trade Talks have been playing hell with the price of Gold, folks… Don’t be confused… This selling is all tied to the fact that traders believe we don’t need a safe haven right now…  And that’s where I begin to lose it! If there was ever a time for the need of a Save Haven, like Gold, it’s now…   I just had that song… It’s now or never, run through my mind… 

Here’s a little ditty on Gold from the good folks at GATA… “Poland brought about 100 tons of gold home from the Bank of England in a bid to demonstrate the strength of nation’s $586 billion economy, central bank Governor Adam Glapinski said today.

The institution bought about 126 tons in 2018 and 2019 to increase its gold reserves to 228.6 tons. As a result, the country has become the 22nd-biggest bullion holder in the world and has the biggest reserves of the metal in the European Union’s east, the central bank said.”

Longtime readers will recall me using the research of a guy named Koos Jansen… Then it seemed that Koos went into hiding… And I couldn’t find him anywhere… Now it seems he’s gone back to his real name of   Jan Nieuwenhuijs   and he had this to say about Gold and a safe haven… 

“”After the global financial crisis, not only have Western central banks changed the way they talk about gold — that is, they have become more honest regarding gold’s function as a safe haven — but, as a sector, central banks have also become net buyers. Many central banks have redistributed their gold, carefully considering all possible future risks and developments. ”   

I know where to find him now as he’s with the firm Voima Gold  of Finland…  Good to see him writing again! 

But things all seem to be upside down in my opinion… 

I think I’ve mentioned before that I always enjoy reading Simon Black’s Sovereign Man letter… Well, last week’s letter Simon talked about how things are upside down these days… Good is bad, and bad is good and so on… I’ve lamented several times in the past that things just aren’t right any longer regarding trading of currencies and metals… But Simon said something at the end of his letter that made abundant sense to me, and so I’ve copied them here:

These are the new rules of upside-down capitalism:
– Debt is wealth
– Loss is the new profit
– ‘Wokeness’ above all else
– Rich people are evil
– Socialism makes sense

It’s amazing how quickly this new reality took over… and I shudder to think how much more absurd it will become over the next few years.”

Chuck Again… yes, he points out that the current candidates for election to lead their party thinks that the Gov’t, who spent $2 Billion dollars created a web site, can do better things with people’s money… And that leads me to the famous Margaret Thatcher quote, “The problem with socialism is that eventually you run out of other people’s money”… And I’ll leave that there!

I’ve got a real doozy for you in the FWIW section today, and if you’re not scared out of your PJ’s then you’ve been drinking too much of the Kool-Aid the Government’s serving up to everyone these days…  And it’s just not the gov’t… the darn media is just as much to blame… this morning, for instance, on the site, they have an article titled: “The Inverted yield curve is so last year”…    They should be ashamed of themselves!  I’m just saying…

I had a dear reader send me a note yesterday, and asked me why I call Morgan Stanley, Lola…  I thought, you dolt Chuck, you just assumed that the readers know you’re talking about Goldman Sachs!  So, to straighten every that was confused about that yesterday, I call Goldman Sachs, Lola… because it sure seems through the years now, that whenever Goldman Sachs says something about an asset class, their words eventually come to pass…  And so, I changed their name to Lola, because as the song goes, What Lola wants, Lola gets…   OK, clear?  

The U.S. Data Cupboard continues today to be void of any real economic data. But Tomorrow that all changes, as Consumer Spending and Income will print along with the Durable & Capital Goods Orders…  These data prints will, in my opinion, show the rot on the economy’s vine in plain view, so even Fed Heads like Neal Kashkari can see that there is a recession in our near future!  

To recap… The currencies went back to drifting on Monday, and didn’t move much at all, the Dollar Index yesterday morning was 98.30, and today it’s 98.28…  Gold on the other hand can’t find a bid these days, and lost another $6.80 yesterday…  Chuck goes all Alamo on the folks that think we don’t need a safe haven…   And he hypes the FWIW section today, so with no further delay, I give you the FWIW section that you’ve all been waiting for! 

For What It’s Worth…. There’s something happening here… What it is, ain’t exactly clear… There’s a bank with a gun over there… and I’m telling people that they had better beware… Two of my fave reads Russ and Pam Martens of wall street Recently did a bang up job finding the amount of derivatives that JPMorgan holds… And you can read it all here:

Or, here’s your snippet: “Another scary category is OTC Derivatives. OTC (over-the-counter) means derivatives that are not traded on an exchange and are not being cleared by a central clearing house. In effect, it means a private contract between your bank and some potentially non-credit worthy financial institution. (Recall how the giant life insurer, AIG, blew itself up in 2008 because it was holding tens of billions of dollars in derivative contracts for the biggest banks on Wall Street that it could not make good on. The situation was so dire that the Federal Reserve actually allowed AIG to secretly borrow billions of dollars from its Discount Window, even though it was an insurance company, not a bank. AIG had to be eventually nationalized by the U.S. government for a time during the financial crisis – all because it got involved with Wall Street’s derivatives.)

Among the biggest banks on Wall Street, JPMorgan Chase has the largest exposure to derivatives, with $45.2 trillion exposure, according to the National Information Center graphic. Yes, we said “trillion.” The Office of the Comptroller of the Currency, however, which is the federal regulator of national banks and reports the derivative exposures of the biggest banks on a quarterly basis, shows that as of June 30 of this year, JPMorgan Chase’s notional derivatives (face amount) stood at an even larger $55.7 trillion. (See Table 1 in the Appendix here.) In other words, while JPMorgan Chase is backing away from lending in the repo market, forcing the Federal Reserve to effectively bail out Wall Street’s lack of liquidity in overnight lending, that hasn’t stopped JPMorgan Chase from increasing its systemic risk footprint in other areas.”

Chuck Again…. I know, I know it’s Thanksgiving in a couple of days, and I shouldn’t be so hard on the Beaver… But These guys (JPMorgan)  are 3 times felons, and the regulators are still looking into their misbehavin’ … I just couldn’t pass up this article to give to you today. The whole article should be read, and then reread to make certain you understand what they are telling us… It’s scary folks… very scary…

Currencies today 11/26/19 American Style: A$.6780, kiwi .6415, C$ .7512, euro 1.1017, sterling 1.2868, Swiss $1.0031, European Style: rand 14.7880, krone 9.1570, SEK 9.6022, forint 305.08, zloty 3.9202,   koruna 23.1501, RUB 63.87, yen 108.95, sing 1.3663, HKD 7.8264, INR 71.34, China 7.0347, peso 19.43, BRL 4.2044, Dollar Index 98.28, Oil $58.10, 10-year 1.75%, Silver $16.92, Platinum $899.71, Palladium $1,793.14, and Gold… $1,457.10

That’s it for today….  Tomorrow I’ll go see the wound treatment center again… And it will be my little buddy’s birthday! Everett, turns 9 tomorrow! I think back to when he was born, it was during a Mizzou / Kansas football game…  A couple time during his 9 years his birthday has fallen on Thanksgiving…  I guess that’s not as bad as having your birthday on Christmas or the day after!  So, Happy Birthday E!  I keep getting the days of the week mixed up. I guess that’s what happens when you’re retired!  All the grandkids will be here on Thanksgiving…  I’ll be thankful for that! Including miss Evie! Bad rain storms are supposed to be moving in and last all Thanksgiving weekend. UGH! Oh well, it could snow…  Years ago, when we lived in Des Moines, Iowa, we traveled back to Missouri for Thanksgiving, and on our return home at the Missouri/ Iowa border the rain turned to snow, and there was a foot of snow on the ground! Talk about making the trip longer!  So, I guess as far as families trying to get together, I’m thankful that it won’t be snowing!  At least here that is! Three Dog Night takes us to the finish line today with a song from their Live  At the Forum Album: Eli’s Coming…   I hope you have a Tom Terrific Tuesday, and Wonderful Wednesday tomorrow, and a most Blessed Thanksgiving…   Hug someone and tell them you love them… 

Chuck Butler