The Mania Phase… We’re In It!

April 26, 2021

* Currencies gain VS the dollar on Friday… 

* Taxes, as a result of every growing debt, to rise… 

Good Day… And a Marvelous Monday to you!  Well, did you tune in for the panel discussion that I participated in last Thursday? I thought it went pretty well, and I thoroughly enjoyed doing my bit, that’s for sure! I hadn’t seen Mary Anne and Pamela Aden for a few years, and afterwards I had the thought that maybe they had found the fountain of youth, for they looked the same to me, as they did the last time I saw them in Orlando, years ago! And Omar spoke as well as he writes, which sometimes is a tough trick to pull off…  And as far as I’m concerned, I have fun speaking, even more than I do writing… not that I do either of them very well, but I have fun!  So…  for all of you who had to work on Thursday during the Money Show presentation, I have a link to a YOUTUBE of the panel discussion, and here it is:   How’s that for a quick turnaround? HA! Gerry & The Pacemakers greet me this morning with their song: Ferry Across The Mersey…  I used to sing this song to Alex when he was a toddler to get him to sleep…  Alex is nearing 26 this summer, so that tells you how long ago that was!

Friday was an interesting day as far as the currencies are concerned… The dollar bugs were sent back to their wall boards, and the currencies romped and frolicked all about all day long, which saw the Dollar Index end the day fall below 91 to 90.85…  The euro is pushing toward 1.21, which is where we saw the PPT come in BIG TIME the last time the euro got to 1.21, and it’s been a tough row to hoe for the euro ever since, but after some back and forth trading of the last 5 weeks, the single unit is pushing toward 1.21 once again…  And kiwi has pushed through 72-cents, and so on… it was a day to frolic in the sun for the currencies…

But Gold & Silver were not allowed to go outside for any frolicking and they suffered their second consecutive day of selling on Friday.  Gold never could find a bid to end the week, and I have a sneaky feeling that the price manipulators were seeing to that!  The cryptocurrencies are seeing fear enter into their trading days, and for this I would have thought Gold & Silver to be the beneficiaries of any slippage in the cryptos…  But that was not to be, at least on Friday…  Gold closed the day down $7, to close at $1,777…  I have to apologize right here, right now, for deep sixing Gold last Wednesday, when the title of my Pfennig was Gold Inches Toward $1,800… Because ever since that morning, Gold has seen selling… Hmmm… Maybe I didn’t jinx it so much but rather I alerted the price manipulators, who were sleeping at the wheel, that Gold was nearing $1,800….    Either way, I should have just allowed Gold to fly under the radar…

Silver closed the day on Friday down 16-cents to end the week at $26.06.. I have to say this about Silver…  You know with the all the talk of a Green Deal, you would think that Silver would be inching higher daily…  I know you know this, but Silver is a major component of Solar Panels…  And that’s only one of its uses that don’t have anything with stores of wealth!  My spider sense is tingling folks, and it’s tingling because I think Silver is about to take off for higher ground. Traders just don’t know it yet, but they will very soon, that is if my spider sense is anything like it used to be!

In the overnight markets….. there’s been not much movement overnight, with the Dollar Index inching up to 90.88, but that’s about as noticeable as removing a bucket of sand from a beach… And Gold & Silver are basically flat in the early trading today…  I have this feeling that the markets traders have gone into a batten down the hatches mode, ahead of the FOMC Meeting on Wednesday this week.  Why would do they do this? Because the Cartel is a wild card, and traders don’t trust that they will keep everything moving along, and not mention tapering or anything like that. 

Ok, part of the discussion on Thursday’s panel was about how this “all -everything bubble’ dominates everyone’s thoughts these days…  I had chimed in and called this the “mania phase”, where investors just pile in and buy everything, no matter what the fundamentals are, like does the company make money?  And items that make no sense, like NFT’s, and crypto that were created as a joke.. Basically, this “mania phase” is the 3rd phase of a bull market. In the bull market of 1982 to 2000, in stocks, the mania phase didn’t kick in until 1995… Remember when Big Al Greenspan saw this, and tried to stop it with his “irrational exuberance” speech? So, the mania phase ran 5 years before bursting, and cause pain and losses everywhere… This one could very well last just as long, with interest rates at zero, and the Gov’t sending out stimmy checks like money grows on trees. With all the fake money on the streets, it will continue to drive up prices for things that everybody wants to buy, but nobody needs… Remember during the last weak dollar trend, when euros were the new king, and they were being use in movies instead of dollars? That was the mania phase for currencies… And in 2011 that was over…  So, that’s the whole story that I would have loved to explain on the panel discussion, but due to time constraints, we move ahead in the program…

So, last Thursday, I gave you a list of soft commodities that were flying high and in rally mode… Things like soybeans up 72%, heating Oil up 107%, food prices up 10%, copper up 83%, and lumber us 265%, all in the last year… I talked about how inflation is all around us, but there is no technical inflation… But the currency traders see these rallies and know that 1. Given the stress on the food and commodities delivery system in the past year, that now that things are opening up again, that there will be this HUGE rush to buy, and that will drive up prices, thus signaling inflation, and 2. The amount of fiscal stimulus that the U.S. is supplying will eventually drive price higher too, and that’s reason to mark down the dollar, and buy Gold…   Got Gold?

On a sidebar here… Don’t you just love when the President puts all Americans in one big pile and accuses us of things? I take major exception to him when he does this… he doesn’t know me, so until he takes the time to get to know me, he might not want to include me in his generalizations!  I know this has nothing to do with the markets, but, it was on my  mind since last Thursday, and I had to get that off my chest this morning… 

Ok… back to the markets, economies and dolts…  Ok, longtime readers have heard me crying wolf about the debt in the U.S. for more years than I care to count off…  But one of things I always told people about this rising debt was that taxes would be going higher…  And with that thought, here’s Dave Gonigam at the 5 Minute Forecast, on taxes….

“President Joe Biden will propose almost doubling the capital gains tax rate for wealthy individuals to 39.6% to help pay for a raft of social spending that addresses long-standing inequality, according to people familiar with the proposal.”

The higher rate would affect those with incomes of $1 million or more. The present rate is 20%. If you toss in the 3.8% Medicare surtax, it’s 23.8%. So in reality, the 39.6% proposal is 43.4%.

➢           That Medicare surtax on capital gains took effect as part of Obamacare. It kicks in whenever modified adjusted gross tops $250,000. And that $250K figure is not bumped up each year for inflation.

In states that impose steep capital gains tax like California and New York, the total government take would top 50%.”

Chuck again…  So, I can here a lot of you saying, “well that $1 Million in income, excludes me” Au Contraire Monfrere… Just wait… Because this is how this will play out… After a couple of years of not reaching the goals for tax receipts from this program, the Gov’t will come for your tax dollars… Trust me on that one folks, it starts at the top and trickles down, to you and me…

Debt just keeps moving higher every minute of every day… And there’s nothing I can do to stop it, so I just sit here and think of all the things that are being disrupted by it…  The research paper of Rogoff and Reinhart says that when a country’s debt get’s to 90% of GDP that it will cause a negative to GDP… And we’re currently around 130% of GDP, which explains why the GDP of the U.S. has averaged about 2.1% for the last decade…  This year will be an exception because of the shut down of the economy in 2020, but if you average out the two years, then it will no longer be an exception!

The U.S. Data Cupboard was very lacking last week… But this week will be different, starting this morning with March prints of Industrial Production and Capacity Utilization..  you may recall that these two were very disappointing in Feb at -1.2% and -.9% respectively…   Tomorrow we’ll see the stupid Consumer Confidence, which is really just a pulse of the stock market…  And Wednesday is an FOMC Day! How did that sneak up on us?  Well, it will be a FOMC meeting day with a press conference afterward…  The Cartel is not going to make any changes, so it will all be about what Jay Powell has to say in the press conference afterward!

Later in the week we’ll see the Weekly Initial Jobless Claims, and on Friday Personal Income and Spending will print for March…   So a fun-filled week packed with lots o’ data… Should be an interesting week… stay tuned!

To recap… The Currencies romped and frolicked over the dollar bugs on Friday, sending the euro to near 1.21, and the Dollar Index down to 90.85….  Gold & Silver were not allowed to participate in the dollar bashing on Friday… Gold was down $7, and Silver was down 14-cents… Chuck describes his thesis on the mania phase, and then goes into a discussion of taxation because of the debt, so you won’t want to have missed that!

For What It’s Worth…  Well… this is an article that the good folks at GATA posted this weekend, and so unless you are a member of GATA it’s not a public article, but I’ve got it here for you! This about a guy who has changed his mind on metals manipulation…  Don’t forget the recap of the article at the end, for I have a comparison for you… 

Or, here’s your snippet: “What does Ross Norman, formerly chief executive officer of London bullion dealer Sharps Pixley, now CEO of Metals Daily, think about gold market manipulation?

Three years ago, in an interview with Grant Williams’ Real Vision, Norman said “you betcha” when asked if central banks had an interest in manipulating the gold market, adding that while he didn’t know if they were doing it, he thought they “probably” were:

But now he does a 180:

“That same narrow linear thinking in my view — and this is where I disenfranchise many of you — applies to those who maintain that the gold market is manipulated. My frustration is firstly that there is not only no evidence to support that view and less regard or critical thinking around the second-order ef fect of pushing the mantra. I have many personal friends who would not consider investing in gold because they believe the bullshit … those morons pushing the line are working against their own interests, no matter the damage to the ‘brand.'”

No evidence?

GATA cordially invites Norman to support his assertion by responding to the decades of documentation”

Chuck again… Ok, so he thinks I’m a “moron”… Well, as Pee Wee Herman would say, “I’m rubber and you’re glue and everything you say bounces off me and sticks to you!”   Ok, here’s my comparison… First of all something along the way made him do this 180, right?  Maybe something to the tune of his new job makes him say these things?

I compare this to Big Al Greenspan… Many of you don’t know that Big Al was a student to Ayn Rand, who was the ultimate Gold Bug, which means Big Al was too a Gold bug, but then he went on to become the Fed Chairman, and suddenly, Gold is a Barbaric relic?  Never moving off that thought all his years at the Fed, but… as soon as he goes back to civilian life, he starts to tout the benefits of owning Gold…  Think what you want here, but I’m saying he was told to be the Fed Chairman that he would not be allowed to bestow his learnings of Gold…

And why is that, you ask? Because the Gov’t does not want Gold to be more popular than the dollar, and the Fed is the captain of the dollar’s ship, that’s why! 

Market Prices 4/26/2021: American Style: A$.7780,  kiwi .7218,  C$ .8037, euro 1.2082, sterling 1.3891, Swiss $1.0921, European Style: rand 14.2742, krone 8.3095, SEK 8.3806,  forint 300.80,  zloty 3.7711,   koruna 21.3649, RUB 74.83, yen 108.01, sing 1.3262, HKD 7.7594, INR 74.79, China 6.4944, peso 19.85, BRL 5.4741,  Dollar Index 90.88,  Oil $61.25,  10-year 1.59%, Silver $26.11, Platinum $1,240.00, Palladium $2,954, Copper $4.43, and Gold… $1,777.50

That’s it for today… We started the weekend with rain, and it lasted all day on Saturday, giving way to a beautiful day on Sunday…  I was able to sit outside, watch my beloved Cardinals sweep the Reds, and barbeque some very delicious Chicken Breasts… A Chamber of Commerce day for sure! Our Blues rallied on Saturday to defeat the Avalanche… they need more efforts like that to make the playoffs!  Billy Paul takes us to the finish line today with his song: Me & Mrs. Jones… This used to be a fave song of the guys on the trade desk back at Mark Twain Bank… I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler