- Currencies and metals rally in the overnight markets last night
- Saving in the U.S. hits a low…
Good Day… And a Marvelous Monday to you! WELL, FINALLY! Finally, we had a beautiful weekend here in the Midwest. That weather came after a tornado ripped through the center/north of St. Louis, there was a ton of damage to properties, and loss of life for 5. Kentucky got the worst of it, so my thoughts were with all the folks that had a horrible tornado experience. My beloved Cardinals will come home after going 7-2 on their most recent road trip… That’s a good record for road games, better than their 1-10 they started the season with on the roqd! OK, so no Pfennig tomorrow and Thrusday, this week. Dr appts, and my next scheduled infusion will be my fun for the week. Chicago greets me this morning with their song: Saturday In The Park…
Well, the dollar drifted again on Friday last week, with the BBDXY losing 2 index points on the day… The selling was very uneven, and even the announcement by Moody’s rating agency that the U.S.’s credit rating had been reduced from AAA didn’t really set off dollar selling… I’m lost and confused as to what the dollar bears are waiting for… The U.S. just lost its last AAA rating, the economic data last week was awful at best, and to top it off Consumer Sentiment fell again in April… Could it be that the dollar bears are scared to take the dollar down because of the threat of the PPI intervening to stop their selling? Could be… Only The Shadow Knows…
Gold didn’t find the data too awful for the U.S. as it was sold again… I say that in jest, because the majority of the selling was by the short paper traders. Gold lost $38 to close the week at $3,201. Silver lost 36-cents on the day to close the week at $32.26… I have a very interesting piece for you in the FWIW section today from Matthew Piepenburg, regarding Gold, that I think you’ll want to allocate the time to read it… That is, IF you are interested in Gold… I can’t imagine too many readers of this letter that are not long Gold… I’m just saying…
And I need to get this out here… On Thursday last week I had a fat finger mistake/ typo once again… I reported Silver’s price at $92, when it should have been $32 and change… You know, I long agon at EverBank, I had to have the letter proofread before it got sent out… But that lead to so many arguments with me and the proofreaders about how I said something, that I was so happy when the Aden Sisters took over the publishing of the Pfennig, because the proofreaders were no more… But then that leads to typos like last Thursday… Again though, I doubt anyone that read that price went out an tried to sell Silver at $92!!!!! I’m just saying…
The price of Oil bumped higher on Friday, to end the week trading with a $62 handle… And the lowering of the US.s credit rating didn’t faze bond buyers, unless it was the Fed Heads doing the buying of bonds… The 10-year Treasury bond ended the week trading with a 4.48% yield… The 10-year had gone over 4.50% during the day on Friday, only to lose a few BPS late in the day.
In the overnight markets last night….The dollar is finding out what life is like without a AAA rating. This morning, as the BBDXY has lost 5 index points to start the day, week, and sits at 1,222 this morning. I can’t begin to tell you , well, then I guess I can after all! The dollar is long due or some bad treatment, or a trip to the woodshed, if you will. Let’s see how far this dollar selling runs this time before the PPT comes in an wraps a tourniquet around the bleeding…
Gold has a strong bid this mroning, and is up $40 to start the day/ week this morning… Makes sense doesn’t it that Gold would rally after the U.S. loses its last AAA rating? Right? Well, you never know for sure, if the short paper traders will see to it that Gold doesn’t get started going higher, or not… Apparently, not today, and that’s a good thing, but you can be assured that the short paper traders will be in there keeping Gold from going to the moon today. I’m just saying…
Silver is also on the rally tracks this morning and is up 40-cents to start the day/ week this morning… The price of Oil has dropped below $62, and starte the week trading with a 61 handle. we should keep an eye on the 10-year Treasury bond this week, folks, because its yield should be heading much higher, as investors sell the bond, because it no longer has a AAA rating. The 10-year’s yield starts the week at 4.54%…
Well, at least someone at the European Central Bank (ECB) agrees with me regarding further ECB rate cuts… This from Yahoo Finance: “The European Central Bank should stop cutting borrowing costs as turmoil in the global economy is fueling price pressures and inflation was at risk of exceeding the bank’s 2% target in the medium term, ECB board member Isabel Schnabel said on Friday.”
Chuck again… Now Schnabel now needs to sway a few more board members to his way of thinking… Because I think the threat of additional rate cuts from the ECB is what’s keeping the euro from taking off to higher ground, while the dollar drifts…
I found this on www.moneymetals.com regarding consumers saving… “During last month’s tariff war, a big driver of stock-market declines was foreigners selling.
Foreigners have stockpiled over $60 trillion in US assets — much of it in stocks. Which puts America at the mercy of those foreigners whenever foreigners get nervous.
Part of this is terrible trade deals, but the biggest driver is that Americans stopped saving money, instead spending their way into debt slavery.
According to the BEA, Americans currently save just 0.6% of gross national income. In the 90’s it was 7 and a half percent. In the 1960’s it was 12.6%.”
Chuck again… WOW! I knew that saving was going down, but to less than 1 percent? No Wonder Retail Sales in April were very disappointing! I’ll have the skinny on Retail Sales in the U.S. Data Cupboard section of the letter this morning… This is very eye opening to me, folks… Because this country depends on “consumption”, which means people buying stuff, spending money… That creates taxes, and that’s what the country used to run on… But now Deficits outrun taxes, every year! This from Bill Bonner last Friday, “The Congressional Budget Office’s baseline figures tells us that the Fed’s will collect $67 Trillion in revenues over the next ten years and the spend $89 Trillion, which would put our national debt at $58 Trillion..” – Bill Bonner
Of course, as longtime readers of this letter, you know that I truly feel that we, as a country, will never reach $58 Trillion debt, as our financial system will have collapsed previously… Oh, Got Gold?
In the gist of “We live in interesting times”… Remember when I told you that Costco was now selling Gold bars? Well, the good folks at GATA sent me this: “Gold has become such a hot commodity that Costco is apparently limiting how much its members can buy.
The warehouse retailer began selling 24-karat gold bars to its members in 2023, with a limit of two bars per person.”
Chuck again… Oh, the humanity! What will these buyers of Gold do now? HEHEHEHEHEHE
And have you heard about how Singapore wants to start a Gold HUB and bourse in their tiny country? This is very interesting and the Singaporeans must have already done all the due diligence regarding how to do this, what it entails, and etc. I find this very encouraging for Gold, given that the more you take away from the West in price of Gold the better… I’m just saying…
Before we head to the Big Finish today, I have this thought from Jerome Powell that appeared on Reuters, “Fed Chair Powell: Cutting discretionary federal spending will not fix US debt problem”…
Well, it may not fix the problem, but it sure would go a long way to correcting the deficit spending… He thinks the main debt problems lie with Medicare, Medicare, Social Security and the interest paid on the debt… Well, since I doubt anyone in America would go for cutting the fist 3 items, that leaves the interest paid on debt… So, isn’t that a catch 22?
The U.S Data Cupboard last Thursday was what I called the lollapalooza of data days, and it didn’t disappoint… April Retail Sales were just .1% growth… That’s what I would call disappointing, right? Industrial Production was flat as a pancake (Head East) at 0.0%, and Capacity Utilization fell to 77.7% from 78.8% in April… And the Empire State Manufacturing report was a negative -9.6%, and finally the Philly Fed report (manufacturing) was a negative -4%… Now, I said above that the U.S. Data was awful last week I wasn’t making that up now was i?
To recap… The dollar drifted lower on Friday last week, and ended the week at 1,229… Still too high in my opinion, and Chuck wonders what’s keeping the dollar bears from taking the dollar much lower. Gold saw some additional short paper trading on Friday along with Silver, and couldn’t take advantage of the U.S. losing its last AAA rating… Singapore wants to open its version of a Gold HUB… And boy does Chuck have something for you in the FWIW section below today!
For What It’s Worth… This is special folks.. This is the transcript of a video that Matthew Piepenburg made last week where he talks about how people are comparing 2011 to 2025 for Gold, and he goes through his thoughts as to why that’s not kosher, and it can be found here: Has Gold Peaked in 2025? Why This Isn’t a Repeat of 2011 (spoiler alert, this is long, so grab another cup of Joe, and sit down to read)
Or, here’s your snippet: “there’s a great deal of discussion understandable discussion of whether we’ve seen pete gold uh authors of the Elliot wave talked about a consolidation chart and that this makes sense that you know gold is reaching a period of all-time highs and will stay there and possibly retrace and he uses the example of 2011 and the technicals there,
I have nothing against technicals. I use them all the time in understanding markets. But when you’re looking at gold or comparing gold in 2025 to gold consolidation in 2011, you have to keep in mind that it’s a very, very different world in 2025 than it was in 2011. It’s also a very, very different gold market.
And the most obvious difference is in 2025, unlike 2011, you didn’t have treasury auctions basically failing. You didn’t have the rise of the BRICS coalition. You didn’t have gold as a tier one asset. You didn’t have central banks tripling their purchasing of gold, physical gold, post weaponization of the U.S. dollar.
You didn’t have this great movement of whales buying physical metals, and you didn’t have this great open distrust for the once sacred cow, the U.S. 10-year treasury. So to use technicals alone or Elliott waves alone isn’t certainly foolish, but it isn’t the entire story.
And it isn’t defending gold or defending your book to say that gold is going to behave differently in 2025 and going forward. than in 2011. And the simple reason is the world is very, very different today. The debt levels are much higher. The distrust for the US dollar is much higher.
The debasement of the dollar is much higher. Quantitative easing, one, two, three, four operation twists and unlimited QE is much more in our rear view mirror and much stronger than it was in 2011. So all of these forces that have been in place since 2011 have completely changed the landscape of just using technicals to understand the
rise in the gold price. The rise in the gold price is entirely correlated to the fall in fiat money purchasing power. And the fall in fiat purchasing money power is directly correlated to unsustainable debt levels that are now being monetized and will be monetized
through more mouse click to base money, whether it’s in dollars, euros, rubles, pesos, etc. So the future of gold is very simple and very different in 2025 because the destruction of paper money is far more acute today than it was in 2011. Again, nothing against using technicals and Elliott waves. They’re very helpful to me and others.
But when you’re looking at a monetary precious metal like gold, and you have to look at the macro backdrop, you have to look at the historical backdrop, you have to look beyond just technicals to understand the rise in the physical gold price today. Again, gold doesn’t move in a straight line,
but it’s in a secular direction north because fiat money is in a secular direction down.”
Chuck Again… Thank you Matthew for that explanation of why the technicals are not working here…
Market Prices 5/19/2025: American Style: A$
That’s it for today… There won’t be a Pfennig on Tuesday and Thursday this week, due to Dr Appts and an infusion… I warned you when I returned from the Jupiter Medical Center that I would have lots of doctor appointments coming, and I have! I don’t follow the St. Louis Battlehawks, UGL football team, but my sons do, and they eked out a 1-point win yesterday. I tried to watch some of it, but its not real football in my eye…. And our STL City soccer team is really bad this year, they’ve gone 10 games without a win! They can’t score goals and when that happens, you lose… UGH! I didn’t renew my season tickets to their games for next year, and you can bet they’ll be a much better team! The band, Missouri takes us to the finish line today with their great 70’s songL Movin’ On… I hopd you have a Marvelous Monday today, and please Be Good To Yourself!
Chuck Butler