Rocktober 3, 2022
* Currencies and metals see some love late last week
* Who sabotaged the LNG Pipeline?
Good Day… And a Marvelous Monday to you! And Welcome to Rocktober! Well, my beloved Mizzou Tigers got “mizzoued” again on Saturday, when they allowed #1 Georgia off the hook. UGH! It was an absolutely Chamber of Commerce weekend here in the Midwest, while I’m sure all those in the path of hurricane Ian, wouldn’t agree with that. Autumn weather is so grand here this time of year, the days are warm, and the nights are cool… We celebrated little Evie’s 3rd Birthday yesterday, a week early, because we’ll be gone for her actual birthday next week. She was so darn cute in her pink birthday dress, with the chiffon making the dress look fluffy! So darn cute! Weezer greets me this morning with their song; Island in the Sun…
Well, the dollar took a breather at the end of last week… The BBDXY lost 2 index points on Friday, and closed the week at 1,337… The loss to the dollar wasn’t great shakes are anything like that, but it was a pause in the wrecking ball dollar’s run. The euro saw a rise to 98-cents, and the pound sterling saw a rise to 1.11… Not that the pound is out of the woods or anything like that, but it has seen a recovery of over 4 cents in the last week, after seeing the Bank of England (BOE) have to reverse their bond policy and begin to buy bonds again.. Apparently the markets liked that change in policy, thus keeping the opposites attract, mode…
The European Central Bank (ECB), not to be out done by the BOE, tried to jawbone the euro higher, by reiterating that they will keep hiking rates as long as inflation keeps rising. That jawboning was enough to put a little oomph behind the euro on Friday. China alerted its banks on Friday to prepare for major intervention… That’s right, “major intervention”.. They didn’t say by whom, or by how much but it was enough to wake up the markets to something other than selling the Asian currencies.
The price of Oil slipped $2 on Friday and ended the week trading with a $80 handle, and bonds still have gotten back the yield they lost when the Bank of England had to step in last week, The Treasury held a 2 -year auction last week and it was not received well.. In other words there weren’t enough buyers out there for the bonds, that the Primary Banks has to take up the slack. There’s a 5 year bond auction that will be on the docket for this week an I would bet the same holds true for this auction…
The folks that have annually just stepped up to the bar and taken their allotment of Treasuries have said, “no mas”, and that leaves the Treasury and primary banks to pick up the slack, even if they don’t want to… You see the Fed/ cabal/ Cartel used to be in the market for bonds that no one else wanted, but they’ve stepped away from the bond auctions, and now it’s a case of nobody wants the bonds… UH OH!
What this means is that the yields that are offered are going to have to be bumped higher to attract investors…And higher yields, mean higher bond servicing costs or higher interest rates if you will that have to be attached to the bonds, and that means more tax revenues ponied up to pay for higher interest rates on the bonds… Uh Oh again!
In The overnight markets last night… Dollar buying is creeping back into place, as we’ve seen the BBDXY gain over 1 index point last night and this morning… Gold is up $6 in the early trading today, while Silver has added 31-cents to its price. So, that’s a good start to the week… The price of Oil has slipped another buck overnight, as OPEC has announced another production cut… That should remedy Oil slipperiness…
I saw a blip from Ron Paul the other day, where he said that we should repeal 1913… And I thought, “He wait a minute that’s my line!” I used to talk about repealing 1913 all the time… I even answered the phone saying that for a while! 1913, for those of you new to class, was the year that Woodrow Wilson gave us the IRS, and The Federal Reserve… He also changed the way Senators were sent to Washington. But his two major grievances are the IRS and Federal Reserve… I’m just saying…
Mexico raised their interest rates 75 Basis Points to 9.25% last week… Finally, the Mexican Central Bank has raised rates to equal what I call a “premium rate” that I’ve always maintained that Mexico needed to pay to attract investors. I’ve always said that since Mexico had a “past” with indiscretions with regard to foreign investments, they needed to pay a premium over the expected rate to make investors forget about the losses they incurred in Mexico previously…
I think that Mexico is finally getting close to paying a premium rate… I would like to see the rate be 10%, before thinking that investors would feel comfortable there again… But I would think that some investors would think 9.25% is high enough… It’s 6 of one and 1/2 of a dozen of the other to me…
I talked about this last week, and knew that it would get done… I’m talking about the short-gap measures to fund the Gov’t… To this government it’s simply a vote to go deeper into debt… And that’s what happened.. this is from the St. Louis Post Dispatch “The Senate passed a short-term spending bill on Thursday that would avert a partial government shutdown when the current fiscal year ends at midnight Friday and provide another infusion of military and economic aid to Ukraine as it seeks to repel Russia’s brutal invasion.”
Notice it said that they will be looking to do a larger deal that include aid to Ukraine? How about aid to starving Americans you dimwits! You can’t go to a major city these days and walk around the town without tripping over a homeless person. I find this to be a major problem in this country that no one wants to talk about… Our leaders think that if they just ignore it that it will all just go away… Not so fast Tim! (Home Improvement) And why would we keep sending funds to Ukraine, when we know that they get misspent, and used by bad people? I shake my head in disgust that we keep sending money, THAT WE DON’T HAVE, to these people…
On a side bar here… You knew I wouldn’t let the sabotaging of the NordStream pipeline go without mentioning it right? Well, you have heard by now that it took large TNT explosives to the pipeline to shut it down last week.. Who would have done that? Well, simple detective work would have us ask a couple of questions like; What was the motive?, and Who benefits from this explosion? Well, let’s see… Can you say the U.S.? And if that’s ever proven to be fact, it could be the beginning of WWIII… Now that scares the bejeebers out of me, and should you too…
I’ve told you all before that I own Russian rubles, I make no hiding that fact to be the case. I originally bought my rubles as an “oil play”, and still own them through the major sell off earlier this year. The reason I bring this up now is that the ruble has been the best performing currency this year, and will probably remain that way the rest of the year, and if it is proven to be fat that the sabotaging of the pipeline was the responsibility of the U.S., then I would suspect the ruble to be in even more demand… I’m just saying…
The U.S. Data Cupboard last week, had some real economic prints on Friday. First up was the PCE (Personal Consumption Expenditures) The Fed Heads’ favorite inflation calculation… The PCE showed that inflation remained a problem in August, rising .3% in August and 6.2% Year on year… This report showed that there was more work to do with regards to interest rate hikes… We also saw Personal Income and Spending, which weren’t anything to write home about, with both of them rising .1% in August.
Today’s Data Cupboard will show us the national ISM Index… I’m still waiting for this index to fall below the line in the sand at 50… Last month the index number was 52.8%… I would think it would show a decrease in the number, given some of the regionals have shows some very weak numbers… But one never knows, does one?
To recap… The dollar took a pause on Friday last week, and appears to be running out of steam… But who knows? Gold only gained 70-cents on the day, Friday, and Silver gained 23-cents… Chuck thinks that the scene that played out last week with U.K. Gilts, is going to be played over and over again with different countries participating… Got Gold? The overnight markets showed
For What It’s Worth… Ok, you know me, and what I believe in when it comes to Gold… For all of you new to class, I believe that Gold is a store of wealth, and not a commodity that gets traded often on up or down ticks in price. Well, I came across this article on the Dollar Collapse site, and it shouts about how Gold is sound money, etc. It’s a long article, but I have a snippet for you. The article can be found here: Mises Wire: Abandoning Sound Money Leads to Tyranny and Ruin – DollarCollapse.com
Or, here’s your snippet: Sound money carries no counterparty risk (unlike a banknote, it is not simultaneously someone else’s obligation). And it retains relatively stable purchasing power over time.
Sound money has two simple value propositions. The first is that sound money protects capital and creates stability. People can accumulate savings and transmit value over time, allowing them to better plan, save, and invest for the future. The second is that sound money acts as a defense against excess debt accumulation and an ever-growing government.
The current system of fiat money issued by central banks enables unlimited deficit spending by government. Inflation allows the costs to be socialized across all holders of the currency by slowly and steadily stealing everyone’s purchasing power. From decade-long wars to wasteful domestic programs, the ability to create currency endlessly has empowered the government to spend in ways that it would not be able to if not for a printing press.
The Framers of the United States Constitution understood the importance of sound money, and that’s why they codified it. Article 1, section 10, states: “No State shall emit bills of credit … [or] make any Thing but gold and silver Coin a Tender in Payment of Debts.”
In 1913, Congress created the Federal Reserve System (which has since served to devalue the Federal Reserve Note more than 97 percent, despite its mandate to maintain price stability). Then came an income tax, gold confiscation in 1933 by executive order, the abrogation of gold clause contracts, and ultimately the complete severance of any tie between gold and the Federal Reserve Note in 1971.
What came next surprises no one: An explosion of government spending brings us to our present situation. Biden administration bureaucrats face no constraints on their borrowing and bailout schemes. America is now well down the road to financial insolvency, shouldering more than $30 trillion in debt.
History teaches us no government can ultimately escape the consequences of removing sound money from its monetary system. Absent the constraints on ever-expanding fiat money supply imposed by gold and silver, the current inflation problem can only worsen.”
Chuck Again… Once again, I’ll ask the question: Got Gold?
Market Prices 10/3/2022: American Style: A$ .6457, kiwi .5663, C$ .7285, euro .9756, Sterling 1.1221, Swiss 1.0125, European Style: rand 17.9937, krone 10.8177, SEK 11.1400, forint 434.91, zloty 4.9509, koruna 25.1084, RUB 58.97, yen 144.89, sing 1.4359, HKD 7.8500, INR 81.87, China 7.1159,
BBDXY 1,338.38, Dollar Index 112.56, Oil $80.62, 10-year 3.70%, Silver $19.44, Platinum $871.00, Palladium $2,196.00, Copper $3.42, and Gold… $1,666.85
That’s it for today… My beloved Cardinals will host either the Brewers or Phillies starting Friday this week for a best of 3 series, with all games in St. Louis. Albert Pujols tied Babe Ruth, for second place in RBI, yesterday… He’ll be alone in 2nd at some point in the next 3 games. I think, that is… fingers crossed! My Little Evie will be 3 in a week… She had a mishap and fell into an umbrella stand, and knocked her front tooth up into the gum. OUCH! Now when she smiles she looks like a hockey player! HA! We’ve really had a week of Chamber of Commerce weather here in the MidWest… I’m loving it! Warm days, cool nights, could last all year as far as I’m concerned! Saturday night we sat around a bonfire, with neighbors at our annual neighborhood block party… A grand time was had by all! Hey Mike Meyer! I’m listening to your fave song by Led Zeppelin this morning: Kashmir… I hope you have a Marvelous Monday today, and please remember to Be Good To Yourself!
Chuck Butler