- the dollar gets sold Big Time!
- Gold & Silver soar late last week!
Good Day… And a Marvelous Monday to you! Well, it wasn’t pretty, but my beloved Mizzou Tigers won on Saturday… The team came out flat, like I had suspicions they would, and had to fight back to win… But they did win, and went to 3-0 this season… Next up is Vanderbilt this Saturday… Go Tigers! My other beloved team is just playing out the season, and not doing that very well either… My Cardinals are hell bent and whiskey bound to finish under .500… UGH! 10-CC greets me this morning with their song: I’m Not In Love…
I could very well be singing that, but about not being in love with the two candidates for President… 350 Million people in this country, and these two are the best we can find to run for President? Well, that’s as far as I’ll take a discussion on politics this morning… So, moving on….
Well, the dollar got hammered late last week… When I left you on Thursday morning, the BBDXY was 1,234, and when the books closed on Friday, the BBDXY was down 8 index points to 1.226… The euro, which had seen weakness last week after the European Central Bank (ECB ) cut rates, got back on the rally tracks on Friday, and will be right back at 1.11 soon… Or, at least that’s how I see things going…
Of course we could see another round of PPT (Plunge Protection Team) buying of dollars to keep it from falling off the cliff, but at this point, they haven’t been seen, so I’m going to say that they aren’t going to step in this time, the rot on the dollar’s vine is being exposed, and they don’t feel they can stop it…
Gold & Silver took the route that if the dollar’s getting sold, they will rally… Gold was up $47 on Thursday, and followed that up with a $19 gain on Friday, to close the week at a new all-time high of $2,578… Silver gained $1.19 on Thursday, and added 85-cents on Friday to end the week at $30.80…
The short paper traders tried to bring Gold down on Friday, but the buying of physical Gold was just too much for them… They did bring Gold back $7 from it’s intraday high on Friday, which means Gold would have closed at 2,585… A new all-time high…
Here’s the thing that’s been on my mind about the two Presidential Candidates and the economy… Both of them refuse to address the elephant in the room… And that is our Debt, and what they are going to do about it… They won’t either, because both of them will add to the debt by whopping amounts… And if you think that’s no Big Deal, we’ve added debt before…. Here’s something that should put goose bumps down your spine… The U.S. government will spend a record $1.2 trillion on interest payments in 2024, the highest amount ever recorded. So, that’s one lump sum that will be added to the debt… And it just keeps getting worse, folks…
Defaulting on the debt is the only way out of this… I don’t think inflating the debt away is the way to go, because it would cause pain and suffering to everyone even the holders of our debt, for years…. I know that’s not a cheery way to start our day/ week… But defaulting on our debt, not all of it, maybe give the holders of the debt a few pennies on each bond, would get our debt back to a reasonable level… Maybe…
The price of Oil ended the week trading with a $68 handle… And the 10-year’s yield ended the week at 3.65% yield…
The main mover of the dollar, and Gold/ Silver late last week was the thought, finally I might add, that the FOMC meets this week, and they will be debasing the dollar… And most likely will announce that that is just the first rate cut of a few more to come… Like I pointed out last week, after this meeting, there will be 3 more FOMC meetings before year-end… Would the Fed Heads be so brave to cut rates 4 times before year-end? That would be equal to 100 Basis Points or 1 full percent… I had to laugh when I saw all the article about how the dollar was getting sold because of the FOMC meeting next week…. I laughed because it’s not like this was a “special meeting”, it had been on the agenda since the calendar was released last year!
In the overnight markets last night… The dollar continued to get sold last night overseas… The Selling wasn’t like the selling that went on late last week in the U.S. but the BBDXY is down 4 more index points this morning to start our day/ week… The euro has climbed over 1.11 again, and the Euro Wanna Bes are all on the rally tracks, which indicates to me that the dollar is in trouble… There really isn’t anything that the dollar bugs can do about this dollar selling, because they know in their heart of hearts that the Fed Heads are ready to debase the dollar this week.
Gold is up $6 to start our day/ week this morning, and Silver is up 18-cents… I’m really concerned about the FOMC Meeting this week… Here’s what I’m thinking… Right now, it’s a toss up between a 25 Basis Points Rate Cut and a 50 Basis Points Rate Cut… But the markets have become endeared with a idea of a 50 BP Rate Cut, and therefore if they don’t get one, they’ll be disappointed, and then we’ll have a situation where the rally that the Gold has had, will become a case of “buy the rumor, sell the fact”… I hope I’m barking up the wrong tree here, but I’ve seen this situation many times in my 50 years in the markets…
Yes, in 1973, about this time, our band had broken up, and I moved back to St. Louis from Midwest City Oklahoma. And needed to work… College classes had all started and so going to work for a year, before going off to college made abundant sense, so off to find a job I went… I happed to know a man who ran the back office at Stifel Nicolaus (brokerage co) and he offered me a job in the back office… And that started my career in the markets… A year later? I was so enamored with the markets that I shrugged off going to college…
Of course, I then had to go to night school for my college classes, which was a real pain for me, after going to work all day, then off to classes, and having little tots begging for me to play with them, when I was home attempting to study, as challenging… Ok, you didn’t open the letter today to read my bio… C’Mon Chuck!
The price of Oil has bumped higher to trade with a $70 handle this morning… And the 10-year is sitting steady Eddie to start our day/ week, trading with a 3.65% yield…
This will be Central Bank meeting Week… The Central Banks that will hold rate discussion this week includes policy decisions in Brazil, South Africa the UK and Japan. The first 3 could all see rate cut decisions, while the Bank of Japan will most likely remain unchanged, and if they do move it would be upward….
So… I was going through articles yesterday and came across this on YAHOO Finance.com and it’s JP Morgan those dastardly dudes, and their Chairmans, Jamie Dimon, who believes that the U.S. is going to suffer through an economic fate worse than a recession…. He had this to say: “The worst outcome is stagflation,” said Dimon. “And by the way, I wouldn’t take it off the table.”
Chuck again… Oh-no! Not stagflation… for those of you new to class… Stagflation is an economic period where inflation runs high, unemployment runs high, and growth runs low…. The last time we saw that in the U.S. was in the 70’s… And most of that decade, from 1973 to 1979, I would like to forget! Because of stagflation! Oh, well, we’ll move on from here, because this is just his opinion of what he sees coming for the U.S. there’s nothing in stone here…
The U.S. Data Cupboard wont’ get mistreated and left for the wolves again this week… But before we go there the Weekly Initial Jobless Claims last week were higher than expected (230,000) in a week that was shortened by the holiday…. So, this week’s report will be important to peruse…. Now, this week’s Data Cupboard…. it starts tomorrow with the Retail Sales for August report… The Butler Household Index indicates to me that it will be a very disappointing report…. We’ll also see the August reports for Industrial Production and Capacity Utilization… I expect that both of these will be disappointing… And then Wednesday is the FOMC rate announcement… So, we’ll busy this week for sure!
To recap… The dollar got hammered late last week, and then sold again in the overnight markets… Chuck is wondering why the PPT hasn’t stepped in yet, or maybe they won’t? Gold & Silver soared while the dollar was getting sold last week, and Gold hit an all-time high again… I read a report that said that $2,600 will become the next support level for Gold…. I guess it needs to reach that level first, eh? And Jamie Dimon has some very unencouraging words for us this morning…
For What It’s Worth… I read a piece this past weekend about how Big Al Greenspan would use the price of Gold to indicate to him whether or not his monetary policy was too strong or weak… And then I came across this article that talks about how Gold is the real de-dollarization, and it can be found here: Gold is the real de-dollarization play – Nassim Taleb | Kitco News
Or, here’s your snippet: “De-dollarization has become a trending topic amid the rising strength of the BRICS bloc and surging U.S. debt. But according to one analyst, while many are focused on competing currencies or digital assets, the real de-dollarization play is gold.
“People are not seeing the real ‘de-dollarization’ in progress,” essayist and mathematical statistician Nassim Taleb said in an X post. “It is not [about] trade settlements. Transactions are labeled in USD, as an anchor currency, but central banks (particularly BRICS) have been storing, that is, putting their reserves, in Gold.”
“Gold is up ~30% y-o-y,” Taleb highlighted.
Luke Gromen, founder and president of Forest for the Trees, responded with the following chart, noting that “It’s quietly been underway for 10 years; got much louder post-2022 sanctioning of Russian FX reserves.”
As Gromen mentioned, chatter about de-dollarization has been on the rise for the past several years. The decision to freeze Russian assets after the country invaded Ukraine served as a wake-up call for those who held large portions of their reserves in U.S. Treasuries.
Geopolitical and financial analyst Angelo Giuliano posted the same chart as Gromen, saying, “De-dollarization is happening.”
“Instead of buying US debt, countries are buying GOLD,” he added. “The US dollar Ponzi scheme is collapsing…the US exorbitant privilege to print endless amount of paper toilet currency is over. Gold hit an all-time high today [Sept. 12]. +30% yearly performance. Only the beginning.”
Chuck Again…. And NOW we know the real reason the Central Banks around the world have been buying physical Gold by the truckload…. And why does this matter to you? Because, as I always tell you… Follow the money… And the money has been chasing Gold for a couple of years now… If the Central Banks feel the need to own Gold, doesn’t that tell you that you should too? Got Gold?
Market Prices 9/16/ 2024: American Style: A$ .6743, kiwi .6191, C$ .7360, euro 1.1126, sterling 1.3203, Swiss $1.1841, European Style: rand 17.6543, krone 10.5916, SEK 10.1788, forint 353.76, zloty 3.8390, koruna 22.5002, RUB 91.20, yen 141.49, sing 1.2954, HKD 7.7992, INR 83.88, China 7.0972, peso 19.29, BRL 5.5252, BBDXY 1,222.55, Dollar Index 100.68, Oil $70.17, 10-year 3.65%, Silver $30.98, Platinum $992.00, Palladium $1,079.00, Copper $4.27, and Gold… $2,580.00
That’s it for today… Another week of no doctor appointments… YAHOO! Which means I’ll be here all week, try the veal, and tip the waitresses… HA! This is a BIG WEEK as the FOMC Meeting takes place starting tomorrow., and culminating on Wednesday afternoon with their rate decision… In my best Gomer Pyle voice: Surprise, Surprise, Surprise, Golly Sgt Carter, I heard the FOMC is going to cut rates, is that true? OK… Enough of that! I had a great time with my former EverBank colleagues on Friday last week… Thanks to Danielle for getting that together! It must be memories month, as I’ll meet up with classmates next week! The tumor in my mouth keeps growing, so I’m going to have to bite the bullet and hope my blood level is returned enough to fight the effects of my chemo… I’ve really enjoyed these past 6 weeks since my ordeal in the Jupiter Medical Center… That’s when they had to take me off the chemo, because my blood level was so low… So, tonight’s the night… UGH! Gary Wright and his keyboard only band takes us to the finish line today with his song: Dream Weaver…. I hope you have a Marvelous Monday today, and please Be Good To Yourself!
Chuck Butler