- Currencies & metals rally on Monday and overnight!
- Chuck explains money supply and inflation..
Good Day… And a Tom Terrific Tuesday to you! After a night and next day of sorrow because our Blues lost Game with 2.2 seconds to play, my beloved Cardinals tried to the sting out of the Blues loss, by winning their game last night VS the Pirates… The had to come from behind twice but in the end, they won the game… I’m really draggin’ the line (The Shondells) this morning, so i have no guarantees of how long this will be this morning… The Moody Blues greet me this morning with their song: Ride My See Saw…
Well, the selling of the dollar didn’t end with the overnight markets from Sunday night into Monday. The dollar was sold in the Monday session bringing the loss on the day to 5 index points in the BBDXY, which ended the day at 1,219… I find this welling to be very interesting, ahead of the FOMC meeting on Wednesday. I’ll talk about the reversal in the overnight markets section coming up, but first….
Gold & Silver had banner days ahead of the FOMC meeting, which again I find very interesting, but I was taught to never look a gift horse in the mouth… So, I’ll just say that Gold recovered its losses from last week in one day’s trading… Gold gained $94 on the day and closed Monday at $3,335… I hear that there’s a Silver short squeeze going on and that could propel Silver to $50… Hmm…. I’m from Missouri, I’ll have to be shown that! Not that I don’t think that without short paper traders, Silver could already be trading at $50, it’s just that the short paper traders are like the wolf that’s always at your door…
Silver gained 50-cents yesterday, and closed at $32,44… So, if there is a short squeeze going on here we should see Silver gain a large amount again today, until the short squeeze get enough water hosed onto it!
The price of Oil remained in the $57 handle yesterday, but ended the day at $57.99… Oh-so-close-eh? The 10-year Treasury’s yield saw more selling yesterday and the yield on the bond ended the day trading with a 4.435% yield…
In the overnight markets last night… Wel, before I retired last night, I checked the BBDXY to see if the dollar selling was still en-vogue… And it wasn’t, at that time, the BBDXY had gained to 1,224… But during the night as I slept (not very good) the dollar selling returned, and so we start today with the BBDXY at 1,220… All this dollar selling, and bond selling, with currencies, metals and Oil rallying ahead of the FOMC tomorrow, has got me scratching my bald head… And then I think about what I’ve always told you… Traders do NOT like unknowns in the markets… And with the POTUS announcing new tariffs, and the FOMC on the table, the markets are full of unknowns right now…
Gold continued is rebound overnight and early this morning, with a gain of $43 to follow up yesterday’s gain of $94… Silver is up 55-cents to start the day today and is back above the $33 handle. The short paper traders are on the other side of the trade now, and the Chinese are back from vacation, making for a perfect storm for the metals…
The price of oil bumped higher to a $58 handle overnight,,, I keep reading reports about how the folks at OPEC are going to swamp the globe with their large supplies of Oil… I would have to think that this is contra to what the OPEC dudes are seeking, a higher price in Oil… But who am I to question their motives? Oh, c’mon Chuck you do that to everyone all the time! Yes, I guess you’re right…
And the 10-year Treasury bond stayed Steady Eddie overnight, and begins today trading with a 4.34% yield… That’s it for the overnight markets, so onward and upward to the Op-Ed section of the letter…
Well, long ago, I wrote in the Pfennig what I thought was the cause of our inflation at that time… I’ve repeated myself many times throughout the years… What I’m talking about is money supply… You see, when they taught real economics in college, I was taught then that money supply equals inflation… And this past weekend I came across some data that showed money supply has gained over 200% from 2007 to now… Or, if you prefer to see it in actual dollars added to the markets, the total is $73,75 Trillion… And you know what follows money supply growth? Gold… That’s why I say it’s an excellent asset to use to hedge against inflation!
I’ve had that money supply data in my back pocket for a few days now, and decided that since the FOMC is assembling to discuss interest rates, I would pull it out, with hopes that someone in the ECCKLE Building will read it and say something to the FOMC members that will vote on a rate movement or not…
The decline of the dollar, is really beginning to show up all around the globe… This past weekend I read a piece by Mattew Piepenburg, at VongretzGold.com And since I have his whole article I thought I would cut a piece of what had to say, which as I’ve said before, “When Mattew talks I listen”… here you go: “As Uncle Sam now reaches $37T in public debt, the rest of the world, having seen that same bully of a fiat dollar weaponized and indebted beyond rational levels, is no longer as interested as it once was.
In short, for America, it’s now “our dollar, our problem” as the world slowly turns its back on the once hegemonic USA, UST and USD– the distrust and evidence of which is literally everywhere.
Equally evident are the desperate policy reactions from DC to make the dollar hegemonic again—from DOGE headlines and tariff destructions to even the tragic irony of a so-called BTC Strategic Reserve Fund…
In this era of a less trusted and demanded dollar and UST, the backdrop for gold couldn’t be stronger, and the argument for “peak gold” couldn’t be weaker.” – Matthew Piepenburg…
I really like his use of the old phrase, in his own words, from then Treasury head, Connolly, who told finance ministers around the world that “the dollar is our currency, but it’s your problem”… It also seems that the Asian currency rally is spreading across the Globe…
I’ve got to mention that in doing yesterday’s currency roundup, I noticed that the Singapore dollar (Sing) had really rallied… And it was due! Years ago, I explained that the Sing and the Chinese renminbi pretty much move in tandem, as one currency can’t get out of hand, while the other one doesn’t, because the two countries are in competition to export pharmaceuticals and other goods… And the Chinese renminbi has been allowed to gain quite a bit VS the dollar in recent times.. Of course, not in the last 5 days, as the Chinese were on holiday…
So, Gold is back on the rally tracks… Funny (not funny ha-ha), but this rally in Gold is coinciding with the return of the Chinese after their 5-day holiday that ended yesterday… Welcome back you’ve been sorely missed and there wasn’t enough volume from the West to keep the short paper traders at bay! A song gets into my head here, Thin Lizzy’s: The Boys Are Back In Town…
The U.S. Data Cupboard will have the final Trade Deficit for March for our viewing pleasure this morning… Recall that last week I wrote about how the initial Trade deficit had hit a new all-time record high, as companies are taking imports ahead of the tariffs, and that I didn’t like to see that, and wondered what the final Trade Deficit would look like… Well, I guess we’ll see later this morning, but I’m sure that it will be astronomically high!
To recap… The dollar is getting sold ahead of the FOMC meeting that will take place tomorrow afternoon… The metals are back on the rally tracks, after the Chinese return from their 5-day holiday… The short paper traders knew that the physical buying of Gold would be very low with China gone, and so they took that as their benefit and performed engineered takedowns in the metals… But that’s all over now, folks… The Data Cupboard will have the Trade Deficit for us to view this morning. And Chuck goes through his explanation of what money supply does to inflation, and so on… I hope you didn’t miss that!
For What It’s Worth… This article came to me from the good folks at GATA, and it’s an article that they pulled from Bloomberg.com So, I pulled up Bloomberg.com and found it! This is about how the dollar’s decline is really turning the Asian currencies into Tigers (my words, ) and it can be found here: Dollar’s Decline Is Fueling Dislocations Across Asian Currencies – Bloomberg
Or, here’s your snippet: “Asian currencies ripped higher against the US dollar Monday, extending a move that’s hurting exporters, weighing on equities and forcing central banks to intervene in the market to curb excessive gains.
Taiwan’s dollar surged the most since 1988, sending the nation’s benchmark stock index to its steepest slide in nearly a month. The offshore yuan climbed to its highest level in almost six months as exporters repatriated dollar earnings. The Hong Kong dollar held at the strong end of its allowed trading band for a second session. Meanwhile, the Indonesian rupiah recouped most of this year’s losses after slumping to a record low less than a month ago.
The volatility shows how an exodus from the world’s reserve currency can ripple through financial markets, as President Donald Trump’s shifting tariff policies fuel concern over a US recession. Last week, speculative traders became more bearish on the dollar than at any time since September, in a sign of growing reluctance among investors to hold US assets.
Taiwan’s dollar surged on Monday, the biggest intraday gain in over three decades, on speculation exporters are rushing to convert their holdings of US dollars to the island’s currency. Bloomberg MLIV Strategist Mark Cranfield shares his insights.
Asian currencies including the yen and yuan are benefiting from a mix of repatriation buying and as alternative investments amid the “sell America” wave. The strategy appeared to remain intact even as both Beijing and Washington seemed to be softening their stance on the trade war, with President Trump at the weekend signaling he’s open to reducing import duties on Chinese goods to spur trade.
“The natural way out of a lot of this trade tension is via the dollar balloon deflating,” said Brad Bechtel, global head of foreign exchange at Jefferies. Therefore, “loading up on a little downside for dollar versus Asia might make sense.”
Chuck again… Yes, unfortunately, the Asian Central Banks will be intervening to stem the advancement of their respective currencies, but one thing I learned long ago, in a galaxy far away, is that the markets always have deeper pockets than Central Banks… So having said that, it simply means that the Central Bank intervention will work in a short period of time, but in the end the markets will…
Market Prices 5/6/2025: American Style: A$ .6460, kiwi .5982, C$ .7243, euro 1.1331, sterling 1.3372, Swiss $1.2130, European Style: rand 18.2578, krone 10.3536, SEK 9.6104, forint 357.56, zloty 3.5756, koruna 22.0244, RUB 80.80, yen 142.28, sing 1.2891, HKD 7.7501, INR 84.43, China 7.2170, peso 19.71, BRL 5.6376, BBDXY 1,220, Dollar Index 99.55, Oil $58.22, 10-year 4.31%, Silver $33.10, Platinum $977.00, Palladium $958.00, Copper $4.71, and Gold… $3,378.44
That’s it for today… Well St. Louis sure is still reeling from our Blues loss Sunday night… UGH! My beloved Cardinals won last night to take some of the sting away… I woke up this morning with my stomach-turning upside down and giving me fits… It has settled down since, so I’m going to test drinking some coffee… Kathy surprised me last night by making her world-famous Tacos for Cino de Mayo! When we were younger we would go out with our neighbor friends and have a good time… I guess we’ve all just grown old… I won’t say grown up, because I haven’t, just grown old… Sirius XM is playing an old John Denver song this morning, that I used to LOVE playing on my guitar… The song to take us to the finish line today is his song: Back Home Again… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!
Chuck Butler