Remembering The Orlando Money Show, Circa 2011….

March 31, 2020

* Dollar bugs fight back in the overnight markets… 

* Is This All Chuck crying wolf again? 

Good day… and a Tom Terrific Tuesday to you! Well, day, whatever, of our self quarantine… The sun was much warmer yesterday, thank goodness, so I sat outside reading, eating lunch, and just enjoying the day… If I had sat outside that long in Florida, I would be sporting some red sun burn… but not here! The Missouri Sun is not as intense! Man I really wrote a lot yesterday! I think that today’s could be just as long, as I’m so frustrated with the lack of fundamentals… And I received a phone call from an old friend yesterday, I bet you can’t wait to see who it was the called me! HA! The Beatles greet me this morning with a beautiful song that’s just perfect for the early morning: Michelle…. My belle, these are words that go together well, my Michelle…

The currencies seemed to drift somewhat yesterday, with the euro slipping a bit, but the Aussie dollar (A$) and kiwi both climbing higher on the day.  However, in the overnight markets, the dollar bugs fought back and won back some lost ground, with the euro dropping back to a 1.09 handle, and so on…. I’m going to go all in on talking about the dollar in a minute, so get ready for that!…. I just wanted to take a minute here and talk about something I said in Orlando and the Orlando Money Show back in Feb. 2011…. I told people in that crowd that by the end of the current decade, the dollar would lose its reserve currency status… Well, the end of the decade came and went, without that happening, but…. But…. But, what do we have going on here? I can’t wait to talk about this! OK, so I was 6 months late… sue me! HA!

I had some good news come my way yesterday…. I was reading and looked up to see my phone lighting up with the name: Mogambo Guru calling me! WOW! It had been quite a few years since I last talked to the great Mogambo! Many Pfennig readers have sent me notes asking me how he was doing, and only because I celebrated a birthday last week, and so did he, that JMR Doug got us together once again! The great Mogambo told me that he stopped writing because there were no fundamentals in the markets any longer, no amount of economics background could prepare you for what was going on…. I told him I totally agreed, it had all become trader sentiment, with no fundamentals anywhere to be found, and with all markets manipulated in some fashion these days! We talked for about 30 minutes, so much to talk about… Family, health, markets, etc. I felt pumped up after ending the call! What a great guy! I feel so honored to be considered a friend….

Longtime readers might recall this story, but in case you forgot, here goes…. Many years ago, when writing a daily Pfennig I used a quote from the Mogambo Guru, and talked about how I loved reading his notes…. He then wrote in his letter about me, and my letter, and said, “ I don’t know why he decided to quote me, he never even sent me a fruit basket” After reading that, I called my friend Addison Wiggin at Agora Publishing, and asked him for the Mogambo’s home address, and sent him a fruit basket! He called me, we laughed until we cried, and a new friendship was formed!

OK… onward with the markets talk….  UGH!  

Recall me telling you yesterday that there was a Kentucky representative that attempted to get a voice vote on the Stimulus Bill, but failed, and then went on to say “if we’re giving away $6 Trillion why not $350 Trillion, and then give every citizen a big fat check for $1,000,0000?” Well, he was back in the news on the www.needtoknow.nets website…. Let’s check out what Rep. Massie had to say about the Stimulus Bill and how it’s going to fail….

“Thomas Massie explains that the Coronavirus stimulus bill will fail to restart the economy because it is based on the assumption that it will increase the production of goods and services, but you can’t increase something that is shut down by government decree no matter how much money you throw at it. Massie says regulations should be rolled back, especially for food, so local food markets can come back to life. Millions of dollars of produce now is rotting due to the closure of restaurants, and that is affecting many other businesses as well. Food shortages could result from this unprecedented strain on supply chains. He concludes that shutdown of the economy will cost more lives than the virus”

You know… I asked the question yesterday, “where is the Tea Party?” and I probably ruffled a few feathers, but in reality, where are they? They were supposed to be against more Government spending, and they were nowhere to be found, when the $2 Trillion stimulus bill was passed…. Wait! What? Yes, Americans need help… this Coronavirus has really knocked us for a loop…. But should we forfeiture the value of the dollar in doing so? Let me tell you this, the loss of the dollar as the reserve currency, is going to cost us much more, much, much more than having to not eat delivery pizza and other stuff for a few months?

I’m telling you now, so you might want to listen to me later, but I really would prefer that you listened to me now…. The Fed is going to be printing money unlimited…. They are going to be buying anything they want…. The Fed and Treasury have merged… This is all going straight toward, the loss of the dollar’s reserve currency… You don’t see it that way? Well, let me say this… Who was out there telling you that all that repo money the Fed was coming up with every day, was not a good thing? But the folks in the markets said, “it’s no big deal”…. But Chuck told you differently…. It was the air leaking out of the Fed’s Bubble….

So, let’s get down to the cheese that binds…. All this dollar printing is going to create debt…. Who’s going to pay for that debt? Not you, not me, right? Well, we will in a round about way… In my mind we’re going to see a huge run up of inflation… And this is going to bring us right back to the 70’s…. Only this time there will be no white knight to save the dollar… It’s going to take a major reversal of what we’re currently doing with the Fed, Treasury, Gov’t, etc. And I don’t see that coming… They can’t increase interest rates, they can’t reduce their balance sheet, and the dollar traders are seeing the writing on the wall… There’s no safety net here for the dollar, folks…. And when all the dust settles, you who have listened to me and protected your investment portfolio with Gold & Silver will be sending me notes, thanking me…. For all of you who thought I was the boy crying wolf…. Well, I hope the wolves are nice to you…

A few months ago, I talked about how I saw Stagflation returning 70’s style to our economy. With all the dollars that are going to be out there chasing goods that don’t exist, this is going to be very interesting…  

One of the things that I talked to the Mogambo Guru about yesterday was the Gold Market… You may recall his old saying about how “this investing stuff is easy, weeeee!” And then he’d talk about Gold & Silver…. He was very adamant about how the fundamentals are not in play right now with Gold…. And he would be exactly correct! I say that because over on they have an article titled: “the wild hunt for 100 ounce Gold Bars”…. The GATA folks sent me a note yesterday and they had a long essay about how physical Gold is sooooo difficult to find, and the U.S. is asking the Canadian Royal Mint to ramp up their production…. There’s no supply, but yet, Gold can’t get on a rally tracks and stay there!

One thing that sure is in play here folks is the old adage, that if you can’t get your hands on something it makes you that much more desperate to get your hands on it! People are paying huge premiums over spot for their Gold right now… It’s a crazy scene…

On a different front…. Russia announced yesterday that they are no longer going to be adding to their Gold reserves. The central bank didn’t explain the move, saying only that future decisions will depend on the state of financial markets…. See, they’re smarter than the average bear here folks…. They see the huge premiums that are being charged for physical Gold, and they’ve decided to sit on the sidelines until this all changes….

Longtime readers know that I’ve always told you to follow the money…. And in this case you might want to hold off on buying those Gold coins and bars right now…. Now don’t forget there’s a program that I’ve used many times in the past that my metals guru, Tim Smith at 1-800-926-4922 can explain and offer to you that can alleviate those huge premiums right now…. Give him a call and find out!

Gold couldn’t find a bid yesterday, and lost $4 on the day…. But…. for some unknown reason, the shiny metal is down $22 early this morning. This is the kind of trading I was talking about above…. What? Did the Fed announce that they were raising interest rates, and I didn’t hear about it? No! Of course they didn’t!  Yes, the Russian announcement yesterday could have caused some ripples, but not $26 worth of ripples!  Well, as I keep saying, buy the dips…. And this certainly appears to be a “dip”, eh? 

Remember during the housing crisis in 2007-08, when people were just leaving the keys to the house on the kitchen counter and walking away, never to return, thus giving their house and the equity they had it in to the bank?  Well, if this quarantine lasts much longer, I believe we’re going to begin to see that scenario play out once more…. And this time the credit cards with all their piled up credit card debt, will be left on the kitchen counter along with the keys to the house! 

Remember when I kept telling you that there were so many people out there that didn’t have $ in savings to help them in a rainy day? Well, the rain is pouring down outside for these folks right now…  Live by the sword, die by the sword….  I’m just saying… 

The U.S. Data Cupboard doesn’t have much for us today, but tomorrow, we’ll see the March ISM (manufacturing index) which in Feb, before the COVID-19 virus hit our shores, this index had already fallen to 44….  There’s an old adage out there in fundamentalism land, that says that two consecutive months below 45 indicates a recession….  So, all eyes will be on this data tomorrow… 

Before I head to the Big Finish today, I have this thought for you….Well… once again, I’m going to say “I told you so!” Remember a couple of weeks ago when I told you that the National Guard would be called out to make sure we stay in our houses? Well, this came in my in box yesterday, check it out! “All 50 of the nation’s governors have declared emergencies in their states and now many are starting to activate their Air and Army National Guard to help deal with the growing coronavirus pandemic.

There are now more than 11,400 Guard troops mobilized in the effort to cope with the coronavirus pandemic, officials said Wednesday afternoon.
Governors across all 50 states, Puerto Rico, Guam, the U.S. Virgin Islands and Washington D.C. have each mobilized components of their Army and Air National Guard to assist in their state’s response to the COVID-19 pandemic.

In addition, eight states have now approved the use of Dual-Status Commanders, giving them the authority to command active and reserve component troops under control of a state’s governor. As a governors’ response to the coronavirus pandemic continues to evolve, so does the Guard response.

“Americans should know the National Guard has their backs throughout this crisis. We’re in this together, and we’ll get through this together,” said Gen. Joseph Lengyel, Chief of the National Guard Bureau.”
Well, I have this question for you General…. “if the Gov. tells you to go patrol the streets and have checkpoints for passers through, will you obey those orders?” Because if you do, then that takes out step 5 of Bill Gates Pandemic reaction plan…. I’m just saying…  

To recap…. the currencies drifted yesterday, but got sold overnight, as the dollar bugs fought back… Gold lost $4 yesterday, but is down $22 this morning, and Chuck and the great Mogambo Guru, are lost on why this is happening…  Chuck is also in agreement with Representative Thomas Massie, that the Stimulus Bill isn’t going to amount to much for individuals…. And Chuck talks to the great Mogambo Guru! 

For What It’s Worth…. Thanks to longtime reader Bob who sent me the link to this article, and it’s written by a guy that sounds like he’s been reading the Pfennig for years, as he goes after the size of debt in the country… And says: ‘The Fed can’t fix what’s broken” and it can be found here:

Or, here’s your snippet: “he Federal Reserve is poised to spray trillions of dollars into the U.S. economy once a massive aid package to fight the coronavirus and its aftershocks is signed into law. These actions are unprecedented, going beyond anything it did during the 2008 financial crisis in a sign of the extraordinary challenge facing the nation.” – Bloomberg

Currently, the Federal Reserve is in a fight to offset an economic shock bigger than the financial crisis, and they are engaging every possible monetary tool within their arsenal to achieve that goal. The Fed is no longer just a “last resort” for the financial institutions, but now are the lender for the broader economy.

There is just one problem.

The Fed continues to try and stave off an event that is a necessary part of the economic cycle, a debt revulsion.

John Maynard Keynes contended that:
“A general glut would occur when aggregate demand for goods was insufficient, leading to an economic downturn resulting in losses of potential output due to unnecessarily high unemployment, which results from the defensive (or reactive) decisions of the producers.”

In other words, when there is a lack of demand from consumers due to high unemployment, then the contraction in demand would force producers to take defensive actions to reduce output. Such a confluence of actions would lead to a recession.”

Chuck again…. One of my fave sayings is: “You can’t fix stupid”…. And I bet you can guess what group of non-elected people I’m talking about here, eh?  I’m just saying….

Currencies today 3/31/20 American Style: A$.6090, kiwi .5935, C$ .7015, euro 1.0937, sterling 1.2347, Swiss $1.0335, European Style: rand 17.8728, krone 10.4841, SEK 10.1229, forint 328.69, zloty 4.1562,   koruna 24.9335, RUB 79.53, yen 108.63, sing 1.4268, HKD 7.7532, INR 74.78, China 7.0954, peso 23.80, BRL 5.1327, Dollar Index 99.86,   Oil $21.64,   10-year .69%, Silver $13.94, Platinum $718.68, Palladium $2,330.32, and Gold… $1,600.30

That’s it for today…  Well, how’s everyone getting along in their quarantine… You know I read somewhere that quarantine is from a Latin word that means for 40 days!  So, if we use the word correctly, we’ll all be secluded in our homes for 40 days!  Well, next week is the Holy Week, for Catholics, which ends with Easter, I know for one I’ll miss seeing the grandkids all dressed up in their Easter outfits… But I guess I should be thankful that we now have facetime on our phones and tablets!  And this new thing called Zoom….  We get all the family members on it and we can see each other and talk… pretty cool…    Ok… stay healthy… wash your hands so often that your fingerprints start to disappear!  America takes us to the finish line today with their song: Lonely People….  Seems like an appropriate song, eh?  I hope you have a Tom Terrific Tuesday, and will promise to Be Good To Yourself!   Wash those hands! 

Chuck Butler