The Last Pfennig Of 2022….

December 28, 2022

* Currencies & metals rally on Tuesday… 

* But get sold in the overnight markets last night… 

Good Day… And a Wonderful Wednesday  to one and all! I can’t believe it’s finally here! My winter vacation starts after I hit send today, and I’ll be heading south to get out of this awful weather! Last week, it seemed it might never get here, as I was getting cabin fever!  But patience, Chuck, patience…  Reminded me of when I was waiting for friends to come to Des Moines, Iowa, and help me move back home, and the day before it snowed a foot! This was the first week of May, and I sat there looking out the window of our apartment, and saying, “nobody is going to be able to get here to help”…   But they did, and all was right in the world once again… Jimmy Buffett greets me this morning with his song: A Pirate Looks At 40… 

Well, the dollar trading yesterday was more of the same, up a little, down a little and in the end, little movement. The BBDXY began the day at 1,252, and ended the day at 1.2454… The currencies didn’t really show any movement and so that was the day in currencies… Gold, which was up in the early trading, kept moving higher, and ended the day up $15.30, to close at $1,814.80. Silver held on to its early morning gains and ended the day up 31-cents, to close at $24.13…

Now, remember how I’ve talking about how trading these days is akin to Opposite Day? Where everything that should move the markets, doesn’t, and things that shouldn’t, does…  Gold is a prime example of that yesterday, as traders sounded the all clear horn on inflation, which means the rate hikes will end soon, and that got Gold bought… Inflation cooling? Gold rallying?  Opposites… for sure!

The price of Oil sagged by a buck yesterday, and lost the $80 handle, closing at $79… I was of the thought that with China opening up, that the price of Oil needed to get back to $80 and from there it would not be looking back… And that may still hold true, it’s just that this last week of the year trading is so weird… So, let’s not say, Chuck was wrong again, too soon…

Bond Boys seem consigned to agree that they have been wrong about the Fed’s Pivot, and have gone about marking bonds down to get the yields higher.. The 10-year closed yesterday with a 3.84% yield.

In the overnight markets last night… the dollar got sold a bit again overseas…The BBDXY is at a loss of 3 index points this morning. No big shakes, no major moves, just some drifting… The currencies are so range bound right now, that they are boring to watch… Gold is giving back its gains yesterday, in the early trading today, and it’s down $9 to start the day, while Silver is also playing that game, and is down 24-cents to start the day…  Up one day, down the next, Gold can’t seem to get any bids after a big rally… That to me suggests the price manipulators, or as Ed Steer calls them, “da boyz”… 

In the overnight markets, the price of Oil remained trading with a $79 handle, and the yield on the 10-year Treasury slipped a little and trades this morning at 3.81%…

Speaking of Ed Steer, I thought that he might have something to say about yesterday’s price action, so let’s listen in to what he had to say in his letter this morning that can be found here:  “As stated in my discussion on the DXY chart above, the currencies played no role whatsoever in the goings-on in the precious metals yesterday. This was strictly paper positioning in the GLOBEX/COMEX futures market between the Managed Money traders et al. on one side — and the commercial traders of whatever stripe on the other.

The prices of all four precious metals would have been at the moon or beyond by the COMEX close yesterday, if ‘da boyz’ hadn’t shown up when necessary.

Gold was allowed to close above $1,800 spot yesterday — and silver above $24…but it was hauled below that in GLOBEX trading on Tuesday evening.  Both are above their respective 200-day moving averages, with silver by the most.”

Chuck again… Ed always says it better than I can, so why not let the master have his say? 

Well, let’s take a look at the year before we turn the calendar…  Here are some of the major news items from 2022 that shook the markets…

Elon Musk became the Chief Twit

The great resignation took place

The Fed/ Cabal/ Cartel hikes rates aggressively… repeatedly!

Baseball owners / players agree on a new contract

The U.S. Special Oil Reserves get used 3 times

Russia invades Ukraine

The U.S. sends multiples of Million to Ukraine

The U.S. Current Defect goes past $31 Trillion

Gov’t spending sends inflation to 1970’s levels…

Gov’t CBDC’s get tested…

More JPMorgan metals traders are found guilty of price Manipulation

Mid terms didn’t hold any changes to speak of

The Housing Bubble is looking for the pin in the room

Stocks has their worst year since 2008….

Bond bull market ends

And Gold holds steady Eddie through all this…

I’m sure I missed one or two things that shook the markets, but I was going from memory, there wont’ be any write ups on 2022 until the year ends… So, as usual I was first! HA!

The U.S. Data Cupboard yesterday has the dueling Home Price Indexes… The Case/ Shiller Home Price Index was down -3.1% in Rocktober, while the Gov’t’s Home Price Index was down only -0.1%… I wish there were a private version of each Gov’t print, so that we could show everyone how preposterous their prints are… There’s nothing in the Data Cupboard for today, that matters that is, so we’ll just move along for these are not the droids we’re looking for! had a good article this morning, on the 5 things that could really upset the applecart in 2023… I picked one of the 5 things the writer talked about for you here: “Entrenched inflation

“The bond market is expecting inflation will pretty neatly come back into zone in 12 months,” said Matthew McLennan, co-head of the global value team at First Eagle Investment Management.

But that may be a big mistake. There is a real risk that wages growth and supply-side pressures like elevated energy costs keep fueling consumer price gains, he said.” 

Chuck again… Yes, this is the scenario I keep talking about, long lasting inflation that begins to wear and tear on the markets, and consumers… I really don’t get it that the markets aren’t getting the inflation memo… But who cares about them anyway? They have raped and pillaged the moms and pops for years, it’s time they get their comeuppance!  Wait! did I just say that out loud? I didn’t mean to, for it shows my ugly side… Oh well, the cat’s out of the bag now, and everyone knows the real me… HAHA! 

To recap… The dollar trading is like counting flowers on the wall, that don’t bother me at all playing solitaire till down with a deck of 51, smoking cigarettes and watching Captain Kangaroo, now don’t tell me, I’ve got nothing to do!   Sorry, but the trading in the dollar and currencies this week has me thinking of that great old 60’s song… Bond yields are moving higher once again, but are still inverted when compared to the 2 or 3 year Treasury yields…  And Oil is being subjected to the last week of the year trading, which at times is just plain weird!

For What It’s Worth… At one point last year, I began including the price of Copper in the market prices roundup each day. I wanted to show that the price was rising in relation to inflation rising… That, and the fact that a longtime reader asked me to include it!  Anyway, this article is about how Copper could potentially out perform Gold, percentage wise, in 2023, and it can be found here: Gold will shine in 2023 but copper is the long-term play to watch – America Pacific Mining | Kitco News

Or, here’s your snippet: “Gold will always play an essential role in a portfolio as a safe-haven asset; however, investors need to pay attention to copper as it could have more potential in 2023, according to one junior mining executive.

In a recent interview with Kitco News, Warwick Smith, chief executive officer of America Pacific Mining (CSE: USGD), said that although copper prices have been a lot more volatile than gold this past year, its fundamental outlook makes it a slightly more attractive investment compared to the yellow metal.

In early 2022 copper prices briefly rallied to an all-time high above $5 per pound; however, rising recession fears due to the Federal Reserve aggressive monetary policy stance have significantly weighed on the industrial metal. Copper prices are looking to end the year down 12%, last trading at $3.891 per pound.

By comparison, gold prices have held up relatively better than copper as it prepares to end the year in neutral territory, with prices trading around $1,825 an ounce.

Although gold prices remain an attractive asset as the world teeters on the brink of a recession, Smith said that copper is also well-positioned to weather the oncoming storm.

“With this electrification revolution going on, there is going to be a major supply deficit for copper,” he said. “Whether you’re looking towards a rough economic environment or not, the West is pushing hard on this electrification, and they’re going to need copper.”

Smith noted that an electric vehicle (EV) uses about 85 pounds of copper and there are expectations that there will be 7 million EVs on the road by 2025.

Although copper prices could fall lower through 2023, Smith said any price drop should be considered a long-term investment opportunity.

“Copper prices can go lower, but the global economy is at a tipping point, and it is going to be more base metals,” he said.”

Chuck Again… I agree with his last statement regarding the globe is at tipping point, and a return to base metals could be in the cards…

Market Prices 12/28/2022: American Style: A$.6792, kiwi .6345, C$ .7408, euro 1.0651, sterling 1.2088, Swiss $1.0790, European Style: rand 17.1725, krone 9.8123, SEK 10.4196, forint 378.89, zloty 4.4108, koruna 22.7105, RUB 72.23, yen 133.50, sing 1.3460, HKD 7.7931, INR 82.86, China 6.9754, peso 19.41, BRL 5.2660, BBDXY 1,251.82, Dollar Index 104.02, Oil $79.33, 10-year 3.81%, Silver $23.89, Platinum $1,030.00, Palladium $1,811.00, Copper $3.81, and Gold… $1,805.06

That’s it for today, this week and this year… Hopefully I’ll get out of here on the plane that I’m supposed to be on Friday morning… With all the recent cancellations of SWA flights, I’m on the fence of whether I should roll the dice with the plane not getting cancelled, or load up the car, and get on the road!  I’ll let you know what happened on Jan 17th…  when I return from my voyage even more south from where I spend my winters… OK, New Year Eve is coming up, my wife’s dad, used to call this, “Amateur night”, I’m glad I won’t be on the roads late that night! So, here are my wishes for 2023… That peace be brokered and no more escalation of war goes on. I wish that a cure for cancer is found, and that no one ever has to deal with this deadly, ghastly, disease again. Hey! If you’re going to wish for things, go BIG or go home!  Billy Paul takes us to the finish line today with one my all-time fave songs: Me & Mrs Jones…  I hope you have a Wonderful Wednesday today, and please, please, pretty please with sugar on top, Be Good To Yourself!

See you next year!

Chuck Butler