The Price Of Oil Collapses!

April 21, 2020

* Currencies ended the day flat VS the dollar on Monday

* Gold see another round of selling this morning… 

Good Day…. And a Tom Terrific Tuesday to you! Well I had my video meeting with my primary doc yesterday morning, and he told me that “You look good”…. I started to ask him what rose colored glasses he was looking through, but he’s always been an Optimistic and positive person in my life, and I like him for that! The first time I met him, I had been handed over to him, as my primary doc. Had retired or something like that. He walked into the exam room, and stopped and with this very surprised look, he was awed, he said, “you don’t look like someone that’s been through what your medical records say you’ve been through”… I told him that first visit, that Cancer may win in the end, but it will know that it has a hell-of-a-time doing it, because cancer hadn’t met Chuck Butler! He has told me through the years, that he uses my story to inspire his patients that are down about something…. He once told me he was going to put me on a poster, and I told him he would need a wide angled lens…. The Yardbirds greet me this morning with their song: For Your Love…. The 5 original Yardbirds were not household names, but through the years, guys like Eric Clapton, Jeff Beck and Jimmy Page, all were members of the band…

Front and Center this morning, the price of Oil fell into negative territory yesterday, closing down negative $16…. This simply means that a holder of an Oil contract would have to pay the contra-side $16 to take it off their hands…. This is crazy folks…. And certainly an entry into your journal, right? Because no one, and I mean no one has ever seen this before! You lived in a time when the price of Oil went negative…. And most likely you lived in a time when the price of Oil was greater than $100…. As I’ve been telling you for weeks now, the supply was too great, for the lack of demand from the COVID-19 virus economic shut down. But this? Even this negative price surprised me, or should I say “shocked me”? Is this the beginning of the end of the financial system? It sure looks it could most certainly be just that to me!

In other markets, Gold gained some of the lost ground on Friday, back yesterday, with a gain of $9…. But that’s a far cry from the $33 the price manipulators took Gold down by on Friday! But seeing the reversal gives me a good feeling…. That these engineered price takedowns can’t keep a good bull market asset down! The physical demand is still strong folks… I heard from my metals guru, Tim, who told me that people are paying the outlandishly high premiums for their Gold coins and bars! I find that to be crazy…. Like I’ve said before the cheapest and more affordable way to own physical Gold is in a non-allocated account…. Call Tim at 1-800-926-4922, and ask him to explain this method of buying physical Gold, without the premiums!

The currencies ran upward for about an hour or two yesterday, and then came back to where they started the day, to finish the day flat VS the dollar…. To me, in this time of “everybody has problems” no movement in currencies is what should be taking place each day…. That is unless you want to buy the currency from the country that has only $235 Billion in debt, pays interest on deposits, and has gone hog wild buying physical Gold these past few years…. The country is Russia, and the currency is rubles….

I read last week that officials from the U.S. and Europe were meeting to discuss the elimination of the economic sanctions on Russia, at least while this COVID-19 virus is causing major problems in economies all over the world…. If that were to happen, we would see Russia’s economy really have the potential to get stronger, even in the face of a negative price for Oil….

OK… I’ve mentioned the Reserve Bank of New Zealand (RBNZ) a couple of times recently as they continue to tell people their banks are strong, they also continue to make drastic changes in banking rules, to ease the ability to make a loan…. The newest change comes by way of a proposal that has 10 days to become real, with lots of feedback due during the waiting time. But the proposal is to drop, not lower, but drop the LVR (loan, valuation, ratio) Again the RBNZ states that they are doing this to allow banks to make easier loans to citizens in need of money…. As someone that spent a good portion of his career in banks, (First National Bank St. Louis, Mark Twain Bank, Mercantile Bank, EverBank) I cringe when I hear that this is going to be taken out…. Banks are going to end up being up to their eyeballs in debt that can’t be paid back, and then what’s going to happen? UGH!….

And don’t tell me kiwi traders didn’t notice this proposal…. Kiwi got a good body blow to the mid section yesterday….

OK… This Oil thing really has my attention this morning, as it did last night too…. I mentioned the negative Oil price to my wife, and then said, “I wonder when the gas stations are going to pay us to fill our tanks?” HA! While I doubt I ever see that day, I do believe that cheaper gas prices will come of this move in the price of Oil, and that gas price drop will go a long way toward helping families that need some help…. Not that they can go anywhere right now, but when they are able to, it won’t cost them an arm and leg to fill the gas tank!

Last night before I went to bed, I jotted down what Gold was doing overseas, and it wasn’t a good note…. Gold was down $6 last night overseas…. And this morning…. I see that the shiny metal is down $27… Again, I ask, why?  Has the all clear horn sounded and I had my Bose noise cancelling headphones on and didn’t hear it?  This economic shutdown here and everywhere else is going to cause major disruptions to the food chain, the everything chain, thus throwing the financial system under a bus…. And Gold gets sold by $27?  Say it ain’t so , Joe!  Oh well, I carry on despite this news…. 

When Gold was above $1,700 the folks at Kitco came out and put a target price of $1,900 on Gold that would be reached in 3 months time. That’s the problem with making a call…. Everything in these markets change daily, so you make a call, and then look pretty much like a numskull a day later….  But I don’t think the guys & girls at Kitco are too far off base here….  Which makes Gold a real nice buy at these levels today, eh? 

The U.S. Data Cupboard is still pretty barren, with only the March Existing Home Sales on the docket… Yesterday, we had another regional manufacturing index print negative, this time it was the Chicago print that came in at -4.19%…. There is no data on the docket for tomorrow, so the markets will have a go of it on their own, (not as if they’ve been paying attention to all these negative reports, right?)

To recap….  Well, Chuck has settled down from his Monday tirade against the Fed, and its accomplices…. And meanwhile, back at the ranch, the price of Oil went negative yesterday… That’s right negative, if I own an oil contract, you’ll have to pay me to take delivery…. Is that not the crazyest thing you’ve ever witnessed?  Make sure you get your journal out for that one, folks!  Gold recovered $9 on Monday after experiencing a $33 takedown on Friday. And in the overnight markets Gold is down another $27…. 

For What It’s Worth…. Well, didn’t I tell you that the initial $1,200 stimulus per tax payer, wouldn’t be enough? I mean once the floodgates on deficit spending opened, there was always this chance that someone would think of this…. And they did, wanting to send more money to the tax payers…. I have that article for you here:

Or, here’s your snippet: “Ohio Rep. Ryan: Emergency Money for the People Act covers what the CARES Act missed. Since the coronavirus struck our shores, my focus has been on keeping Americans safe and ensuring working people don’t get left behind. Their struggles today are greater than ever. Too many have suffered job losses, shrinking income, isolation, and health issues — all while caring for children and other loved ones.
The one-time $1,200 stimulus check that many Americans are now receiving under the CARES Act was a good start, but it does not go far enough as this quarantine enters its second month. Rent is still due, credit card bills keep coming in, utilities still need to be paid, our phone plans haven’t gotten cheaper, we still need to buy groceries to feed our families. How far do politicians think one $1,200 check can stretch?

Every American age 16 and older who earns less $130,000 per year will receive this money.

That is why Representative Ro Khanna (D-CA) and I introduced the Emergency Money for the People Act, which will provide almost every American $2,000 per month until employment levels reach pre-coronavirus levels. Every American age 16 and older who earns less $130,000 per year will receive this money tax-free.”

Chuck again…. But Rep. Ryan, who’s going to pay for this? While the money will be tax-free as they say, it will eventually be paid in our taxes, folks…. Trust me on that one!

Currencies today 4/21/20 American Style: A$.6285, kiwi .5965, C$ .7027, euro 1.0835, sterling 1.2313, Swiss $1.0305, European Style: rand 18.9854, krone 10.6124, SEK 10.0970, forint 327.49, zloty 4.1795,    koruna 25.3560, RUB 74.62, yen 107.40, sing 1.4305, HKD 7.7499, INR 76.44, China 7.0727, peso 24.33, BRL 5.2673, Dollar Index 100.30,   Oil -$3.23,   10-year .56%, Silver $14.80, Platinum $734.58, Palladium $1,931.74, and Gold… $1,668.39

That’s it for today…. A little shorter today, thank goodness, my fat fingers were flying acrosss the keyboard yesterday morning, in an attempt to get everything that was on my mind in the letter! I watched Game 1 of the 2006 World Series last night… I was in a hotel bar in Panama watching the game on TV back in 2006… After the game that Anthony Reyes had Vs the Tigers that night, you would have thought his future was so bright he had to wear shades…. but the cruelty of baseball, found him a year or so later…. OK, I’ve been home almost a month now, this is getting to be a real pain. And it’s not that I get out all the time these days…. But the little I used to get out, I sure miss!   Creedence Clearwater Revival takes us to the finish line today with their song: I Put A Spell On You….  talk about holding on to a grudge a long time…. John Fogarty sure has against his mates in the CCR band…. Oh well that’s their business not mine….  I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!

Chuck Butler