Silver Gaps Higher!

July 21, 2020 

* Are the markets rewarding countries that tame the pandemic?

* Currencies, and metals all move higher VS the dollar on Monday

Good day… And a Tom Terrific Tuesday to you! Well, with this being the last Pfennig for 3 weeks, I thought I would write an epistle so that it could last a few days!  HA!  Not really, I didn’t mean to scare you from starting to read the letter!  I’m feeling pretty spunky this morning, and you never know what I’ll say…  So, there, that oughta keep you here and reading! I had a ton of emails in the Pfennig box that I went through yesterday… There was a reoccurring request in the box so I’ll get to that today, along with other things that popped into my mind yesterday…  So, we have all that going for us today, eh? And on top of that, Little Feat greet me this morning with their song: Fat Man In The Bathtub… A great way to start a day!

Well, the currencies inched higher on the day Monday, with the Aussie dollar (A$) leading the way… A couple of months ago, I wrote about the how the A$ was having a stealth-like rally, but I was leery of this rally given the Reserve Bank’s rate cuts, and the pandemic going around the world.  But, the stealth-like rally continued on, and now it’s not so stealth-like any longer…   And with that comes my challenge to come up with a reason why, investors are buying up not only A$’s but also kiwi…

So I began looking… and found some interesting data on the pandemic in these two island nations… It seems they have things under control, and that their economies will be opened up fully, in the next week or two, and people will begin to get back to normal practices, like going out to eat at a restaurant without fear….  And reading this, an idea came to my brain…  I’m thinking that the markets are going to begin to reward countries that tame the pandemic…  Which could be why the dollar is on shaky terra, right now, the markets giveth, and taketh away…

And carrying that idea forward, it explains why the Swedish krona has pulled away from the Norwegian krone. The Swedish version of a crown has really been on the rally tracks VS the dollar in recent weeks, and now we know why!  That is as long as you go along with my premise that the markets are rewarding those countries that are taming the pandemic. 

OK, back to regular programming….  Gold held onto its early morning $7.40 gain yesterday… to  close at $1,817.90… Silver  was pushing the envelope folks…. Silver actually traded over the $20 figure to $20.01 at one point yesterday, but eventually closed at $19.98…   And both metals are moving even higher this morning with Gold at $1.826 and Silver at $20.62… I want to take you higher! I’m seeing Sly Stone at Woodstock with his fringed white jacket pumping his arms in the air, singing, I want to take you higher!  What? You’ve never seen the movie Woodstock? Aye, Aye Aye…  Back in the day at Mark Twain Bank I used to give the Woodstock VCR to all new hires, and them to watch it, for I would be quizzing them eventually….  

OK, a little more from the history pages….   In the 70’s and 80’s you could get people to talk about Woodstock, but not any longer, it’s long gone from most people’s memories, but not mine! Not that I was there, I was only 14 in 1969, but I was in high school, and that’s all the kids talked about every day!

Circling back to Gold… I really did think that once Gold hit $1,800 that the level would be used as a launching pad for higher levels…. Quickly, I might add….    But, it’s proven me wrong, at least for now, I guess I should never underestimate the power of the PPT, or the short Gold sellers….  Did you read the article yesterday in the FWIW section from Alasdair McCleod?

Think about it for a minute, it’s really eye-opening… If we get to delivery day… And Gold has continued to move higher, the short sellers will have to buy to cover at the current price which would represent a HUGE loss, or they could deliver the Gold they sold short…  Ahem… Maybe they don’t have the Gold to deliver, they can’t default on a COMEX contract can they?  Not without repercussions, and deep repercussions at that!

And hearing that there was a default on the COMEX would send Gold skyrocketing, along with Silver because the same scenario applies to Silver…  I’ve long said that the COMEX should have had the cajones to stop Bullion Dealers from selling short more ounces of a metal than is above ground, which is what has been done through the years….  But then I’m not surprised by anything when it come to the U.S. Gov’t and its fingers in the cookie jar…  

Good friend and fellow newsletter writer, Dennis Miller, sent me a note last night and asked me if I thought “they” would allow Silver to close above $20 this week… I told him that in the words of the great James Grant, “You never know”…  but the prevailing winds sure feel like Silver is on a run, and there’ll be no stopping it…  Ain’t no stopping us now! 

Speaking of Alasdair McCleod, he had this to say about Silver’s 3% rise yesterday on Twitter: “Sprott Silver Trust To Purchase $1.5 Billion Of Physical Silver, A Jaw-Dropping 8.8% Of Annual Global Production!

So, do you think that maybe the word is out that Silver is on a run? 

Ok, have I got a treat for you today…. Longtime readers will recall my fondness of the words from James Grant, from the Interest Rate Observer, newsletter. And my fondness of the work of Grant Williams, of Things That Make You Go Hmmmm…  Well, last night I listened to a podcast with Bill Fleckenstein and Grant Williams, quizzing the great Oz… (James Grant)  and I had this thought, there are times when I may sound very “out there” with my thoughts, and the opportunity to have the great James Grant speak so everyone could hear him was there at my fingertips… And this over 1 hour podcast, can be found here…. Enjoy!

So, do you want to see something that befuddles the mind?  $14 Trillion of Government Bonds around the world have negative yields…  That means that some people somewhere have thought that it was better to have the guarantee of  money coming back to them, albeit less than they invested originally, and received money that the Gov’t has debased….   Now when you figure that one out, send me a note and explain the mind set of these investors to me, please…. 

I get it that Pension funds, and other type funds that have strict investment guidelines have to buy Gov’t bonds…  But that’s not $14 Trillion worth….  And to carry this befuddling idea even further, I believe there are $100 Trillion of Gov’t bonds outstanding that have a yield of zero to 1%… Oh, sign me up for that…. NOT! 

Speaking of Gov’t Bonds… U.S. Treasuries continue to tell a different story about the economy than the stock market does…  I was always taught to watch the bond boys…. So, that’s what I do!  Did you know that the Fed Reserve now owns more U.S. Treasuries than is outstanding in investor’s hands?  What does that tell you about the condition of the economy and financial system, when a country’s Central Bank is the country’s largest bond holder? 

I really do think that this is a sign that we should be heading for cover, Shoot Rudy, the bond boys see it, and the Gold & Silver traders see it, I’m waiting for the stock jockeys to wake up and smell the coffee… 

Ok, have I got a treat for you today…. Longtime readers will recall my fondness of the words from James Grant, from the Interest Rate Observer, newsletter. And my fondness of the work of Grant Williams, of Things That Make You Go Hmmmm…  Well, last night I listened to a podcast with Bill Fleckenstein and Grant Williams, quizzing the great Oz… (James Grant)  and I had this thought, there are times when I may sound very “out there” with my thoughts, and the opportunity to have the great James Grant speak so everyone could hear him was there at my fingertips… And this over 1 hour podcast, can be found here…. Enjoy!

OK, the U.S. Senate will finally, vote on the nominations of two new Fed Governors, one of which is Judy Shelton, and all that is supposed to take place today…  the gauntlet that these nominees have to go through is pretty daunting to say the least, but at least they’re almost to the finish line…  It’ll be nice to have the conversations at the Eccles Building spiced up a bit by the new blood to the group…  Maybe, just maybe, cause you never know, the Fed will become new-age thinkers…. HAHAHAHAHAHA! As IF!

The U.S. Data Cupboard is still lacking any real economic data, and it will remain that way for week…  But next week….  OMG there are so many data prints and events that could move the markets, and they are all centered around the Fed’s FOMC Meeting on Wednesday, where they will leave rates unchanged and tell us that things are moving along a little slower than they originally thought they would, but they’re sure that they see some green shoots…   (of course that’s me talking, not the Fed Heads, but we’ll see, eh?) Oh, and the first print of 2nd QTR GDP will be shown to us… 

Back to this week’s Data Cupboard, I see something that’s interesting, and that’s in the Weekly Initial Jobless Claims… The report has been pretty steady the last two weeks at 1.30 Million, but this week the forecasters have upped the number to 1.40 Million, so even the forecasters see that things aren’t so good… 

To Recap… The currencies and metals both moved higher VS the dollar yesterday, and overnight. Chuck explains why he thinks the A$, kiwi and krona, have all rallied in recent weeks…  Gold held onto its early morning gain to close at $1,817, and Silver…. AHH, Silver  gained 55-cents to close at $19.98, but this morning it sits at $20.62…  And Chuck tells us that the Sprott Metals Fund is going to buy a Humongous amount of Silver to match the buying in the fund… Do you think the word has gotten out that Silver is on a run? 

Before we head to the Big Finish, I received quite a few emails in the Pfennig box asking me where they could find the James Rickards forecast of a Reset on January 26th…  The World Economic Forum will meet on January 26th, so I’m sure Rickards is thinking that with all the big shots in one room, 6 feet apart, mind you, that they’ll be talking about the Big Reset…  and for all of you who want to see it in writing, I suggest you go to:   I do believe you’ll see it there… 

For What It’s Worth…. Well this is a first for the Pfennig… I’m going to give you the link to an article on the International Man site, long time acquaintance, Doug Casey’s venture…  This is a different kind of article today, as I prepare to get ready to leave on vacation. And when I saw that Ed Steer also printed it, I had to use it!  So, click here for the article: 

Or, here’s your snippet: “There’s a popular advert on American television in which a smiling born-again former drug addict clutches a pillow, which he claims will so improve your sleep that your whole life will change for the better.

Of course, in reality, the premise is not at all credible. And the presentation might even be considered to be cartoonish.

And yet the pillows are selling like hotcakes. They are the latest hula hoop, the latest wrinkle cream, “guaranteed” to improve your life dramatically in a very short time.

And of course, this miracle product doesn’t come cheap. It sells for over fifty dollars, whilst a now-outdated shredded foam pillow can be had for less than twenty dollars.

As with all such products, on rare occasion, someone will actually question the claims being made, and there have been those who have cut open the miracle pillows and found that they are filled with… shredded foam.

But of what use is this information to us? After all, with the present upheaval in our world, we have far greater concerns than whether we’re being suckered into a false claim by someone on television. We’re worried about our socio-economic and political future.

But the unfortunate fact is that the same part of our brain that falls for the claim that buying a new product can take all the pain in our existence away is the very same part of the brain that falls for claims by political leaders that buying into a change in the political system can take away all the pain in our socio-economic and political world.”

Chuck again… The article is quite a bit longer, but for space and time I had to cut it, so go to the link to read the entire article, which I believe is quite good… 

Market prices  7/21/20: American Style: A$.7080, kiwi .6610,  C$ .7428, euro 1.1440, sterling 1.2696, Swiss $1.0656, European Style: rand 16.4990, krone 9.1692, SEK 8.9478, forint 306.53,  zloty 3.8756,    koruna 23.0920, RUB 70.73, yen 107.27, sing 1.3887, HKD 7.7515, INR 74.42, China 6.9883, peso 22.34, BRL 5.3333,   Dollar Index 95.75,   Oil $40.81,  10-year .62%, Silver $20.62, Platinum $864.00, Palladium $2,219.00, and Gold… $1,826.60

That’s it for today, and for the next 3 weeks…  If anything really happens that’s big in the markets, I’ll probably tweet my thoughts on it, but that’s it no checking the markets, no taking notes on what to write about, etc. for the next 3 weeks…. I’m so excited!  I’m also excited that son Andrew, his bride, Rachel, grandson Braden and little Evie will be with us for 9 days of the vacation, which means I’ll get to get even closer to little Evie…  I don’t know what the neighborhood guys will do for the next 3 Fridays without me to host a driveway happy hour…  None of us feel comfortable going to our old watering hole, yet… So they’re on their own! HA! Elvin Bishop takes us to the finish line today with a good long song: Traveling Shoes… And with that I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself without me having to remind you to do so for the next 3 weeks!   

Chuck Butler