The Dollar Is In A 2-Day Free Fall… Will It Continue?

Rocktober 26, 2022

* Currencies & Metals rally on Tuesday and overnight

* The Silver shortage is real… 

Good Day… And a Wonderful Wednesday to you! What an absolute ugly day yesterday, weather wise, here in the MidWest… Cold, raw, rainy, foggy, windy, all of those rolled into one day, and I had to go out in it to the ocularist… My eye prosthetic had to be “adjusted”, as it had been bothering me quite a bit lately. No baseball on TV last night, as the World Series doesn’t get started until Friday night, and with it being a Tuesday, there were no football games either… And my Blues weren’t playing, so… that led me to my laptop to read… Normally that means a very long Pfennig for you, but not today, most of what I read just repeated the same stuff… The 17-minute version of Pink Floyd’s song: Shine On You Crazy Diamond, greets me this morning…

Well, another day when the for no reason at all, other than a collapse of the housing prices data, and we all know that fundamentals don’t work that way any longer, the dollar got sold like funnel cakes at a State Fair. The BBDXY lost 11 index points and fell to 1,329 to end the day. The euro climbed to .9960, as traders thought, as long as the dollar is getting sold, and the European Central Bank meets on Thursday this week, we might as well give the euro some love… Gold had a near $10 turnaround on Tuesday, after being down over $6 in the early trading, Gold fought back to end the day up $3.40, with a price of $1,654.10. Silver also fought back, after being down 39-cents in the early trading, it gained 12-cents on the day, with a price of $19.43…

The price of Oil gained $2 to end the day with an $85 handle, and bonds gave back more yield yesterday… Apparently, the Mary Daly (Fed President S.F. Fed) comments must have had something to do with bonds yesterday… The 10-year’s yield dropped to 4.10%…

The Japanese yen is back to getting sold, after the Bank of Japan (BOJ), apparently blew through $50 Billion last Friday in an attempt to save the yen by selling dollars and buying yen…  Long Time, and I mean real Long Time readers, will recall the days when I talked about “Mr. Yen”…  Well, he’s back in the news, and I found this quote from him… “ The Japanese currency could weaken even further to 170 levels against the U.S. dollar next year, according to Japan’s former vice minister of finance for international affairs, Eisuke Sakakibara.

Sakakibara, known as “Mr. Yen” for his efforts to influence the currency’s exchange rate through verbal and official intervention in the late 1990s, said he expects the currency to depreciate further as it hovers near its weakest levels in 32 years.”

In The overnight markets last night…  There was follow through from the dollar selling in the U.S. session, as the BBDXY lost 9 more index points overnight. The euro has climbed back above parity, pound sterling gained, Aussie and kiwi jumped higher, and even the Japanese yen rallied a bit! Gold is up $16 in the early trading this morning, and Silver is up 19-cents, with both looking like they are ready for take-off! Recall, that I told you that it might come to this, a point, where the dollar tops out, and no longer grows to the moon… I’m not saying that’s it, that’s all for dollar strength, what I’m saying is, that it’s pretty suspicious that the dollar has turned around quickly, and with force… The BBDXY is down 20 index points since Monday… So to borrow a lyric from John Fogerty… “So Say Hey Willie, tell Ty Cobb and Joe DiMaggio; Don’t say “it ain’t so”, you know the time is now.”   

The price of Oil has risen in the $85 handle, and someone please tell me why they are buying bonds now?  The yield on the 10-year Treasury has fallen again and trades this morning with a 4.06% yield!  Memo to you bond buyers: The Fed is going to hike rates next week, and then again in December, do you really think it’s time to buy bonds now? C’MON! 

OK, I mentioned Mary Daly’s comments above so here they are: “Federal Reserve Bank of San Francisco President Mary Daly who has consistently reaffirmed the central bank’s commitment to curb inflation by raising interest rates, surprised investors by stating that the time has come “to start talking about stepping down” the pace of rate hikes. Daly’s comments were taken as an indication that the magnitude of further interest rate hikes could soon diminish.

Chuck again… Uh-Oh… suddenly, the Fed Heads aren’t singing from the same song sheet… And that by itself is reason to sell the dollar. This will be interesting to see how this all plays out at the FOMC meeting next week, where a 75 Basis Point rate hike is fully expected, but what will Jerome Powell say in his press conference afterward? Will he remain vigilante about hike rates aggressively, or will he begin to cow tow to the Casino Banks?

In Australia yesterday, their latest reading on inflation, saw CPI rise 7.3%, way above expectations, and that has put the Reserve Bank of Australia (RBA) back on notice… The markets are saying that the RBA turned dovish at their last meeting only hiking rates 25 Basis Points, and this latest CPI data will make them think fast.. or at least it had better, according to the markets.

So, if running strong inflation is good for the U.S. dollar, it must be good for the A$, and the A$ took the rise in inflation and ran with it to gain about ¾’s of a cent on the day. I know, it sounds weird, but that’s our “opposites trading” that exists today…

In our country’s game of whack a mole… The backup in California of ships out to sea, is over, as there are only 4 ships left out to sea, but now we have to deal with the lack of diesel, or the price of diesel as a roadblock to delivering goods across the nation. The rail strike is also looming as a real roadblock too, So, you snuff out one problem and get two more!

Britain has a new Prime Minister… Rishi Sunak, said he would try to fix the mess left by his predecessor, restore faith in politics and tackle a “profound economic crisis” but warned the country there would be difficult decisions ahead.”…

Well, what else did you expect him to say, “This country is in a world of hurt, with staggering inflation, more debt than we should have, and a teetering economy”?  Now, c’mon that won’t get anyone elected! But it sure would be the truth!

Ok, so remember a couple of weeks ago, when I said that I thought we could very well be heading for a decade of stock non-performance? Well, I found this on Seeking Alpha yesterday, “From “the Jan-2021 S&P 500 (SP500) (NYSEARCA:SPY) high (4,800 nominal, 5,100 real) we see the P/E ratio halved the 10 years 2021 to 2031E offset by EPS doubling in the same period (7.2% CAGR), leaving the S&P 500 price about flat in 2031 versus 2021 in real or nominal terms,” strategist Barry B. Bannister wrote in a note.”

Chuck again.. no, this isn’t going to be turned into a stock letter… But when someone out there that is a stock analyst, seems to walk in the same circle that I am, then I have to bring it to your attention! Oh, and this Barry Bannister works for Stifel Nicolaus… I sent my good friend, Rick B. a note yesterday and had this link to the story and said, “someone at your firm is reading the Pfennig”….  

Why do I see all this bad stuff for the next decade? Because of our debt, and our inability to reduce it or even stop adding to it. And our need as a country with all that debt to have inflation to eat away at the debt…The Fed Heads are talking a good game right now about fighting inflation, but… here’s the thing that sticks in my craw… The Fed Heads say they want inflation at 2%… Well, even at 2%, over 10 years, you have a lot of problems.. .But they are of the opinion that Joe 6-pack doesn’t understand that, and therefore no one will be storming the gates of the Eccles Bldg…

I have a question for anyone that will entertain it and maybe give me an answer… “Is our POTUS on the phone with Putin, trying to work out an peaceful solution to this mess? 

I’ll get a few readers who see that as me talking politics… and I see it as me talking logics… .For if this continues to escalate, nothing that we know of that exists, will be gone… I’m just saying.. .

OK.. Well, first it was the Shanghai Gold Exchange that came into existence a few years ago, and we all had high hopes that they would not allow futures contracts so no way the price manipulators could fudge the price of Gold… But that’s never really materialized here…  Now we have the new Gold exchange in India… Here’s an article that the good folks at GATA sent me, from the Indian Times that can be found here: BSE launches electronic gold receipts – Times of India (

“Leading stock exchange BSE has launched its electronic gold receipts on its platform, a move that will help in efficient and transparent price discovery of the yellow metal.

The exchange has introduced two new products of .995 and .999 purity during the Muhurat trading on Diwali and trading will be in multiples of 1 gram and deliveries in multiples of 10 grams and 100 grams, the exchange said in a statement.”

Chuck again, this could take India from being a price taker, to price maker… 

The U.S. Data Cupboard yesterday had the Case-Shiller Home Price Index (HPI) from August yesterday, and I told you above that the index had collapsed in August, and the 9.8% drop of home prices was the proof. Consumer Confidence fell from 107.8 to 102.4…  Well, that looks like it’s at least going the right direction… Not that I’m rooting for bad stuff to happen, it’s just that the this index hadn’t been showing the real truth in the confidence of the economy…

Today’s Data Cupboard is lacking at best… Just one of those days… We will see New Home Sales data, but we all know where that’s going… so, move along now, for these are not the droids we’re looking for!

To recap… The dollar got sold yesterday, it could have been Mary Daly’s comments, or it could have been the HPI dropping from the sky, either one, would, in the old days of fundamentals, be suffice for our reason the dollar got sold. The BBDXY lost 11 index points, while the euro rose in the 99-cent handle, and Gold fought back from being negative to start the day to close up $3.40…  And there was follow through in the overnight session last night with the BBDXY losing 9 more index points. That’s 20 index points since Monday, and the euro has climbed back above parity!

For What It’s Worth…  Yesterday, I talked about the shortages in Silver and Copper… I highlighted Copper yesterday, and today I have an article about the shortage that’s happening right now in Silver, and that article can be found here: “COMEX Deliverable Silver far less than imagined as 50% of ‘Eligible’ is not Available (

Or, here’s your snippet:” During September, silver inventories held in the vaults of the London Bullion Market Association (LBMA) in London fell by a massive 4.93%, and are now at a new record low. LBMA silver holdings now total only 27,101 tonnes (871.3 million oz.), and have fallen every month for 10 straight months.

Over on COMEX in New York, the Registered silver total is now only 1,186 tonnes (38.13 million oz.), a five year low. During September, the LBMA vaults in London lost 1,404 tonnes (45.166 million oz.) , which is more silver than in the whole COMEX Registered category.

The LBMA even conceded in its latest update on silver vault stocks in London that “some contributors noted that increased client demand led to a number of physical silver exports“. The contributors here refer to the vault operators within the London LBMA market, which are HSBC, JP Morgan, ICBC Standard, Brinks, Malca Amit, and Loomis.

Nicky Shiels, precious metals analyst for MKSPAMP, echoed that view when reporting back from the LBMA’s annual conference in Lisbon last week, when she said that conference delegates predicted a “super bullish Silver [price] ($28.30!)” in a year’s time “as the focus was on physical tightness driven by unprecedented demand“.

An important contributor to this ‘unprecedented demand’ for physical silver is India where silver imports have been zooming ahead. Silver imports into India totalled 1,812 tonnes in July, 1,149 tonnes in August and initial estimates for September are about 1,700 tonnes. Up until August 2022 (8 months), India’s silver imports totalled 6,517 tonnes. Adding September’s ~ 1,700 tonnes, gives 8,217 tonnes for 9 months of 2022 so far. Which if annualised this nearly 11,000 tonnes, which is one-third of the world’s annual silver supply.”

Chuck again…  This is a long article with a lot of numbers, so if you have the time, click the link above, if not, I hope you enjoyed your snippet today! HA!

Market Prices 10/26/2022: American Style: A$ .6478, kiwi .5800, C$ .7389,  euro 1.0026, sterling 1.1577, Swiss $1.010, European Style: rand 18.0061, krone 10.3437, SEK 10.9114,  forint 405.97,  zloty 4.7472,  koruna 24.4541, RUB 61.66, yen 147.30, sing 1.4068, HKD 7.8497, INR 82.73, China 7.1740, peso 19.82, BRL 5.3162,  BBDXY 1,320.74,  Dollar Index 110.25, Oil $85.95, 10-year 4.06%, Silver $19.58, Platinum $948.00, Palladium $1,948.00, Copper $3.46, and Gold… $1,670.16

That’s it for today… The ECB meet tomorrow, and the FOMC next week… For tomorrow morning thru to next Wednesday, things should be pretty wild and wacky…Lot’s of opinions as to what comes next, etc. Well, I’m stepping outside of my normal day today, with a visit to a new restaurant that south of where I live, not far south, just south… I hear they have a fried garlic baloney sandwich… That alone, has be signed up for a visit!  Hopefully the rain has stopped, as I didn’t hear any during the wee hours of the night last night… That reminds me of a funny…  Old people know why they call it the “wee” hours of the night!  HAHAHAHA!  One of my all-time fave bands, Poco, take us to the finish line today with their song: You Better Think Twice…    What? You weren’t aware of my love for Poco? Well, they didn’t stay together very long, but the stuff they did do, I have liked for a long time now.   I hope you have a Wonderful Wednesday today, and Please Be Good To Yourself!


Chuck Butler