January 6, 2021
* The euro finally breaches 1.23!
* Oil price trades above $50….
Good Day, and a Wonderful Wednesday to you! Thanks to all who sent along a note yesterday, confirming something that I already knew… That you dear Pfennig readers, are the best! OK, tried to stay awake for the Missouri Tigers basketball game VS Miss. St. last night, but one thing you learn when you come from west of the East Coast… The time difference doesn’t seem like much, but a game that starts at 8 back home, comes on at 9 here, which means it doesn’t end until 11…. UGH! I read this morning that they blew their halftime lead, and lost the game… UGH! What a beautiful day here yesterday! I do believe a “cold front” will be coming through this weekend, and the highs will only be in the mid 60’s… That’ll be our winter… HA! I had a dear reader send me a note telling me I needed to stop talking about how nice it is in Florida this time of year, or else, everyone will want to move here! HA! Smokey Robinson and the Miracles greet me this morning with their song: I Second That Emotion… So, if you feel like giving me a lifetime of devotion… I second that emotion… Smokey Robinson had the smoothest, coolest, voice!
OK… I’m kind of in La la land after listening Smokey Bill Robinson! OK… got to get it in gear! Well, as I left you yesterday morning, the dollar was back on the chopping block, and that’s where it stayed throughout the day Tuesday. Gold had an early $7 gain yesterday, and finished the day up $8.30, and closed at 1,951.50, and Silver gained 31-cents, to close at $27.61… The euro pushed with strength against the dollar, and closed the day at 1.2298… And the Aussie dollar (A$) really added some ground between its current value .7755, and 77-cents…
Let’s get back to the euro for a minute… The single unit has really rallied in recent months, and has finally breached the 1.23 level, which appeared to be a line of resistance for the euro, as it had breached the 1.23 level a couple of times in recent days, but had failed to hold the level or add to it. But in my humble opinion, this is something you see when an asset gets close to a line of resistance, it will test the line a few times before finally moving past it… And in the overnight markets the euro has pushed past 1.23, and has added to its value even more, trading right now at 1.2344…
Remember when I told you that in a weak dollar trend, the offset currency to the dollar is the euro, and the euro would rally, even with the Eurozone in an economic mess? Well, we are certainly seeing that these days, eh?
Speaking of the overnight markets, they have once again taken the conn on selling the dollar… As I just told you the euro is rallying, the Aussie dollar (A$) has really soared to above 78-cents… And recall yesterday, I told you about how the euro was rallying with their bad fundamentals? Well, I could have substituted the Japanese yen for the euro, for the yen too is on the rally tracks, and Japan is a mess! I recall years ago telling my colleague, Chris Gaffney, that it sure would be nice if the countries that had rallying currencies in the weak dollar trend, had good fundamentals to talk about… Sure looks like the same thing is happening again…
Well, the price of Oil rose to $50 yesterday… That was a nice jump in the price which on Monday was trading with a $47 handle for a while… I guess Oil traders and investors bought the Government line about ramping up the distribution of the virus vaccine, hook, line and sinker… I would have thought that they would wait and see if what the Gov’t said really came to fruition… But NOOOOOOO! The dollar is falling, daily, it seems, and Oil is a anti-dollar investment, which is strange given that most Oil trades in dollars… So, why not take a flyer on ramped up distribution of the vaccine?
With the price of Oil rising, the Petrol Currencies like: the Norwegian krone, Canadian dollar, Brazilian real, and Russian ruble have noticed, and traders are marking those currencies higher… You know, I’ve explained this before, but what the heck, I’m going to do it again! The Norwegian krone gets a double helping of attention in times like this, because, even though the krone isn’t tied to the euro, it follows the euro up and down, and when the euro is moving up, and Oil is moving up, the krone gets a double shot of love! The song from the Peter Pan movie of years ago, keeps popping into my head… We’re following the leader, the leader, the leader, wherever he may go!
Ok, I got my walking orders from a couple of dear readers yesterday… (I kid) They directed me to the real price of Copper… And where to find it, and that the prices I had listed were scrap Copper prices… So, all good from now on…
Well, have you ever thought in your wildest dreams that the U.S. would be compared to a Banana Republic? During the last weak dollar trend 2002-2011, my good friend, and former Big Boss, Frank Trotter and I would give presentations together… I would talk about the currencies and metals, and he would talk about the bank… There were a few times during that time period, when Frank would refer to the U.S. as a Banana Republic… He was the first to say that…
And now Michael Snyder, of whom I’ve used in the FWIW segment in the past, is now saying that the U.S. has become a Banana Republic…. Here’s a quote from him: “I know that sounds absolutely crazy, but it is true. Once the COVID pandemic hit the United States, those that control the levers of power in this country decided to go “full Weimar” and they never looked back. As a result, the size of our money supply is rising at a rate that would have been unimaginable just a few short years ago. M1 was up by more than 50 percent in 2020.”
I found that article here: Snyder: The United States Has Become A Banana Republic (blacklistednews.com)
I said yesterday that currency printing was going to help the price of Gold to rise in 2021, And I can’t emphasize that thought enough… The U.S. has put their currency printing on steroids… Apparently they really do want to see inflation rise… But, until the velocity of money begins to rise, inflation will be held to some select commodities, and agriculture… And mark my words now, so you can listen to them later… Once inflation begins to rise, the Fed will NOT be able to stem its rise…
And I ask one question: Got Gold?
And talk about timing! yesterday I said that thought that the 10-year Treasury would finally see its yield rise about 1.00% this year, and in the next 24 hours that’s exactly what it’s done! I did a double take on the figure when I looked it up this morning, for it’s been a month of Sundays since the 10-year’s yield was above 1.00%….
Man, I’ve got to say that this cutting out carbs (not full Keto) is boring! I can’t have pretzels with my low carb beer… I can’t have a late night snack of cookies and milk… I had tuna salad the other night wrapped in a lettuce leaf! And now I’m at a road block to losing more weight, and lowering my blood sugar number… I can’t get either one to go lower! UGH!… the good news is that I’m not ready to give up… But could I please have some variety here?
The U.S. Data Cupboard will have Dec. Factory Orders for us today, and the ADP Employment Report for December. Yesterday, the ISM for Dec. rose from 57 to 60! ARE YOU KIDDING ME? There is no way in hell that the manufacturing in this country is hitting on all eight! The markets ignored the print, and continued to sell dollars… So… I think that they saw the ridiculousness of that print!
To recap… The currencies and metals, and Oil all had good days yesterday… Nothing like Monday’s $44 gain for Gold, but a good day nonetheless… Oil is back to $50, a big step for Texas tea…. Let’s see if it can add to that figure, or slump again, as has been the case for the last year… Chuck talks about currency printing, and brings in Michael Snyder to give his thoughts on what’s going on there… And the euro finally breaches its line of resistance at 1.23…
Before we head to the big finish today, longtime reader, Bob, sent me an article that was titled: Madness, Mayhem, Manipulation and More Tyranny By John W. Whitehead… I loved that title… for 2021, Madness, Mayhem, Manipulation and More! I think that just about nails what I see for this year!
For What It’s Worth…. well… I have used articles by Egon Von Greyerz before, and will again this morning… In this article Egon talks about some numbers that have gotten completely out of control, like Money Supply, that we discussed earlier… And the article can be found here: THE FACTS & NUMBERS OF 2020, THE GOLDEN FUTURE OF 2021 (goldswitzerland.com)
Or, here’s your snippet: “As we say goodbye to 2020 and look toward 2021, the key numbers on my screen and mind have nothing to do with dates yet everything to do with this: 14.
14 is the number of trillions by which the aggregate money supply increased in the U.S., EU, Japan and eight other developed economies in a single year, 2020.
Wow.
Of course, other numbers matter in ways which can’t be fully fathomed, such as the 1.7 million deaths attributed to a global pandemic of the same year which has sent the global economy into a crisis not seen since the Great Depression.
And speaking of depressions, in terms of inflation-adjusted GDP growth rates per capita, the classic measure of a depression, we are clearly experiencing one now, and have been since before COVID.
As to other memorable 2020 numbers, and despite open evidence of an economic depression, the DOW shot past 30,000 as global GDP tanked, economies plunged and death counts mounted, proving yet again that there’s very little a money printer at a central bank near you can’t do to support a Frankenstein securities bubble.
In short, as viral risk locked us all indoors, every risk asset, from credits, equities to crypto’s saw a risk-on high (including a 66% surge in the MSCI All-Country stock index) that would make any market bull blush, then sneeze.
And if that wasn’t enough to make one question the death of capitalism and rational price discovery, the fact that 2020 also saw record low yields for junk bonds and a 5X increase in the price of Bitcoin ought to be evidence enough that investors are enjoying a collective madness led by an equally mad cadre of blind central bankers.”
Chuck again… a very good article in its entirety, so if you have a couple of minutes today, click on the link and read what Egon has to say….
Market Prices 1/6/21: American Style: A$ .7810, kiwi .7304, C$ .7894, euro 1.2344, sterling 1.3645, Swiss $1.1415, European Style: rand 14.9836, krone 8.4010, SEK 8.1517, forint 289.90, zloty 3.6535, koruna 21.1682, RUB 74.33, yen 102.78, sing 1.3158, HKD 7.7529, INR 73.05, China 6.4566, peso 19.71, BRL 5.2949, Dollar Index 89.28, Oil $50.07, 10-year 1.01%, Silver $27.55, Platinum $1,102.00, Palladium $2,502.00, Copper $3.63, and Gold… $1,946.10
That’s it for today… Man that was a real doozy of a day yesterday in the markets wasn’t it? It was “Moving Day”… as bond yields, currencies, metals, and Oil all made moves upward against the dollar! Well, I’m all set for another beautiful day here, before the “cold front” comes in… I laugh at the people on TV that tell their audiences to “bundle up the kids, with scarfs, hats and gloves, as they wait for the school bus”… It’s 51 degrees! Back home, if it was 51 degrees, people would think spring came early! It’s all funny to me… Another beautiful sunrise this morning, has me geared up for today, so you better not run into me on the deck today! HA! Ok… Jefferson Starship takes us to the finish line today with their song: Miracles… I hope you have a Wonderful Wednesday, and I hope you will Be Good To Yourself!
Chuck Butler