August 28, 2023
* dollar gets bought after Powell speech
* Saudi Arabia joins the BRICS… Soon there will be changes…
Good Day… And a Marvelous Monday to you! What an awful weekend for St. Louis teams fans… The Cardinals continued to lose, and our StL City team lost in Orlando… Road games in the MLS are difficut to navigate, and that was proved Saturday night… The hot weather finally broke this weekend, and the cooler weather, while still warm, felt good to get outside again… Little Evie stayed with us Saturday night… She insists that she’s a “big girl” now, and she’s only 3… YIKES! I told her dad, Andrew, that he’s got a lot of “fun” days ahead of him… And I finally turned the corner on my being sick… But guess what? I Get to start my new Chemo now… So much for being on top of the world, eh? Oh well, it is, what it is… Little Feat greet me this morning with their song: Fat Man In A Bathtub…
Well, Friday, was all about what did Jerome Powell say… WDJPS… The markets were waiting with bated breath for his words, and announcement of what the Fed Might be doing going forward… This from CNBC: “Federal Reserve Chair Jerome Powell on Friday called for more vigilance in the fight against inflation, warning that additional interest rate increases could be yet to come.
While acknowledging that progress has been made and saying the Fed will be careful in where it goes from here, the central bank leader said inflation is still above where policymakers feel comfortable. He noted that the Fed will remain flexible as it contemplates further moves but gave little indication that it’s ready to start easing anytime soon.”
OK, does that sound like the Fed Heads are ready to stop hiking rates and pivot to rate cuts? Not to me, but… Apparently to the stock jockeys that continue to not believe what Powell has to say… Stocks rallied after Powell’s speech… The dollar rallied strongly, and Gold got sold… But hold on there Chuck, Gold was getting sold like funnel cakes at a State Fair, until it wasn’t getting sold any longer, and it rallied back to being down only $1.60 on the day, to end the week at $1,915.80. Silver had the same trading pattern, and ended the day up 11-cents to end the week at $24.32…
I actually read an article on Kitco where the writer said that he thought the Fed gave little guidance on future rate movements… And I thought to myself… I guess he doesn’t know Fed-speak… I’m just saying…
The BBDXY gained 5 index points on the day, to end the week at $1,242.38… I get it, the Fed/ Cabal/ Cartel’s el jefe says that inflation is still too high, and that interest rates will most likely be going higher.. And that’s good for the dollar, but… there’s a whammy in there… he says “inflation is still too high”… That means that whatever good the interest rates going higher give the dollar, inflation should be taking it away… The euro lost the 1.08 handle, and is once again looking weak… The fist week of this month, the euro was looking like it was ready to go on a run VS the dollar, and now, not so much… And the rest of the currencies all fall in line with the euro, which remains the offset currency to the dollar, the main trading currency with the dollar, the Big Dog…
The European Central Bank (ECB) President, LaGarde, said last week that inflation is still too high, and that the data would guide the ECB if higher rates are needed… That sounded way to wishy-washy for the markets, and they started selling euros… Memo to LaGarde… if you want to sound hawkish, then sound hawkish, don’t mail it in, or sound like you’re not sure…
Ok, enough of the lesson giving to Christine LaGarde… Time to move on…
The Petrol Currencies are hanging tough, especially the Mexican Peso, and Brazilian real… The gains they have booked VS the dollar have been held, and at times are added to … The Canadian dollar/ loonie, British sterling, Russian ruble, Norwegian krone, try desperately to move higher, but the dollar strength is too great right now…
Speaking of Petrol… The price of Oil gained a buck on Friday and got back to $80… No news in recent days about supply issues, or demand… So, this asset just drifts along to the whims of the traders…
In the overnight markets last night… There was lttle to no movement in the dollar, the BBDXY is up 1 index point, but is fading as I write. Gold is down just 20-cents to start the day and week, while Silver is down 15-cents. There wasn’t much movement in the currencies overnight, the Japanese yen lost another figure and is making all those that said a month or two ago that they were buying the yen on Bank of Japan comments about hiking rates… I said then that the BOJ had disappointed the markets for so long now that it would be difficult for me to take them at their word… I guess those yen buyers are finding out that now…
The price of Oil slipped a bit overnight, and trades this morning with a $79 handle, while bonds are just biding their time awaiting on the next supply of bonds to hit the streets…
Well, we’ve been talking about the de-dollarization that’s supposedly going on around the world… But according to SWIFT, that’s all malarky… Swift reported last week that “The figures show greenback-related trades rose to a record 46% in July, compared with slightly more than one-third a decade ago. The dollar was the top currency as measured by transaction count, followed by the euro, pound, yen, and yuan.”
Hmmm… of course, the Russian ruble was ousted from SWIFT, and they have been beating the drum, along with China, to stop using dollars in the terms of transactions, to demand to use their own sovereign currencies… Apparently that effort is going to take some time to really affect trade in the world…
The one thing to think about here is something I warned my audiences of many years ago… And that is, when the Saudi’s decide they no longer need to trade their oil in dollars, that will be like kryptonite for the dollar… And then last week the BRICS made an announcement that should be a large nail in the dollar’s coffin: “With Iran, Saudi Arabia and the United Arab Emirates joining BRICS, the multilateral mechanism now includes major global oil producers and importers. Analysts said that a wider adoption of local currencies for trade among BRICS countries, rather than using the US dollar, seems more natural.
Six candidates – Argentina, Egypt, Ethiopia, Iran, Saudi Arabia and the United Arab Emirates – will be admitted as BRICS members on January 1, 2024, South African president announced on Thursday at the BRICS summit.
Currently, BRICS members include Brazil, Russia, India, China and South Africa.”
But did we see this news on the cable news? or the national news? NO… we didn’t, because it doesn’t spread the BS that the administration is trying to spread, about how all of this won’t mean a hill of beans…
Circling back to the Jerome Powell Speech last Friday… I can’t understand why the stock jockeys won’t listen to his words, and trade accordingly, they always take the contra side of his words… I read last week that tons of cash is moving out of stocks and into money markets accounts… Well, even that news is taken with a grain of salt by the stock jockeys… And that’s all I can say about this…
OK… The U.S. Data Cupboard late last week had the July Durable Goods Orders, which I had warned you would probably be negative, and they were a negative -5.25%… I don’t think that illustrates a strong economy do you? The other piece of data that came through was the U. of Michigan Consumer Confidence report which lost ground in July going from 71.2 to 69.5… This week’s data cupboard doesn’t have too much for us to see that is if you are looking for anything early in the week… Late in the week we’ll see the color of Personal Income and Spending, the ADP Employment Report and on Friday, the Jobs Jamboree…
To recap… Powell’s words on Friday at the Jackson Hole Boondoggle, sent the dollar soaring higher… And for a while on Friday, it appeared that Gold would be getting sold down the river, but then it wasn’t and it ended the day down only $1.60… Stocks rallied, and has Chuck scratching his bald head wonder what the stock jockeys didn’t get from Powell’s words… The Brics had their meeting last week and announced 6 new members, of which the Saudi’s are one, and one that I think will bring huge changes to Oil contracts going forward…
For What It’s Worth… Remember Jan Nieuwenhuijs? He used to go by an alias… But he’s been a Gold researcher for a number of years, and has been with several different firms… He wrote an excellent piece last week, about how the West is losing control of the Gold price: And it can be found here: “The West Is Losing Control Over the Gold Price (gainesvillecoins.com)
Or, here’s your Snippet; “The most logical explanation for gold’s recent behavior is a combination of surreptitious buying by central banks from emerging markets, and strong private demand in Turkey and China. It’s possible the WGC’s estimates of covert central bank buying are too low, given these estimates were falling during the price spike at the end of 2022 and the beginning of 2023.
As some of you might have noticed the US dollar gold price has been declining in the last months of the period of our investigation, and London was still a net exporter. Perhaps the West will regain control over the price again. I don’t expect the gold price to fall to levels previously suggested by the rates model though.
Central bank buying is likely to stay strong. “We still believe that the official sector will remain a sizeable bullion buyer for the foreseeable future …, as factors that encouraged reserve managers to add gold reserves in recent years are expected to persist,” Metals Focus wrote this August.
We will have to wait and see if the East is able to further push up the price of gold and weaken the West’s control over the price. If so, gold will become less of a dollar derivative, and take more center stage in the international monetary system”
Chuck again… Jan goes through all sorts of reasons why he come to the conclusion, so if you have the time go to the link and read it all… But the snippet gives you the gist of his report…
Market Prices 8/28/2023: American Style: A$.6417, kiwi .5910, C$ .7350, euro 1.0808, sterling 1.2587, Swiss $1.1305, European Style: rand 18.6664, krone 10.7084, SEK 11.0122, forint 354.17, zloty 4.1407, koruna 22.3363, RUB 96.68, yen 146.52, sing 1.3566, HKD 7.8450, INR 82.62, China 7.2933, peso 16.71, BRL 4.8778, BBDXY 1,243.17, Dollar Index 104.11, Oil $79.91, 10-year 4.22%, Silver $24.23, Platinum $950.00, Palladium $1,2761.00, Copper $3.77, and Gold… $1,915.60
That’s it for today… How was your weekend? Mine started out good with a trip to my local watering hole on Friday, but then that turned out to be the top of the weekend… Of course, having little Evie here was a highlight… All the kids were here for a brief time on Saturday, to help clean up our mess in the basement, from the flood… The insurance has been sorted out, the builder has been selected, now we wait for the builder to show up to work… Until then I sit in the “ruins” of the basement to watch my games on TV… We have just 4 rooms upstairs that we can use… and only my TV room downstairs… My writing desk was saved, but has water damage so I’ll be getting a new writing desk in the future… Fun stuff! NOT! Jr. Walker and the All-Stars take us to the finish line with their song; What Does It Take? I hope you have a Marvelous Monday today, and Please Be Good To Yourself!
Chuck Butler