Virus Outbreak In China Pushes Commodities Down…

January 25, 2021

* Currencies push against the dollar bugs… 

* Gold bounces in the early trading today… 

Good Day… And a Marvelous Monday to you! Well, Congratulations to the Tampa Bay Bucs, and the K.C. Chiefs  for winning their respective conference championships, and will play in this year’s Super Bowl in two weeks…  And Saturday night was a “double winner” for me, as my beloved Missouri Tigers won their basketball game beating # 6 Tennessee, and our Blues won too!  I had the Blues on the TV and the Tigers on my phone…  We had some beautiful weather this past weekend, as I was left alone for the next two weeks… But that didn’t change what I do each day and night!  I watched the St. Louis weathercast last night, and they were fretting about snow and ice for this morning there… YUCK!  I’m glad I’m not there! The late Great Leon Russell greets me this morning with his song: Stranger In A Strange Land..   “how many days has it been since I was born, and how many days till I die? “

On Friday last week, the currencies pushed against the dollar bugs, and eventually gained some ground on the day, except that is the Aussie dollar (A$). The A$ saw some real selling on Friday. Falling from .7780 on Thursday to end the week at .7105…  I looked and looked for reasons for this decline but couldn’t find any… One would think that with commodity prices rising, that the lead “Commodity Currency” would be rising in price too… I see this morning that the A$ is rising again, so maybe it was just a day of profit taking….  

But then it occurred to me that the news that there’s a new Covid virus outbreak in China could be the news I’m looking for!  The fear here is that demand for raw materials will wane because of the outbreak, and that has thrown a spanner in the works as far as the A$ is concerned…  As I look at the other commodities, Copper has dropped a few cents on this news too… 

Gold lost $14.50 to close at $1,856.50, and Silver lost 44-cents to close at $25.58… This after Gold & Silver’s large gains on Wednesday last week. On Thursday, Gold was down $2.00 and Silver was up 12-cents…  The good folks at GATA sent me this on Friday, “silver market analyst Ted Butler  (no relation that I know of) writes about the seeming inability of the major bullion banks to close their huge short positions in silver futures without exploding the price and costing them a lot of money.

Butler writes: “This is the big shorts’ last stand.”

Most Gold & Silver owners would like to think that statement were going to be true… But to me, this isn’t about what the bullion banks want to do…. It’s about what the U.S. Gov’t wants them to do to suppress the price of Gold so that investors don’t lose faith in the dollar…   You may recall a Pfennig from back in the day, when I highlighted an article that centered on Blythe Masters the former head of JPMorgan’s Commodities desk, and her statement that “JPMorgan doesn’t enter trades for their own proprietary account, but for the accounts of their clients”

I’ll always remember that Pfennig, for it told me that 1. Either she was lying through her teeth or 2. She was telling the truth, and JPMorgan’s HUGE short positions were done for the Gov’t…    See? It pays to write for years, because things that people said, might come back into play!

One thing I want to point out is that the rising Commodity prices have nothing to do with the idea that the major economies are coming back strong..  Instead, the rise in Commodity prices have to do with the fears that inflation is ready to take off to higher ground…  Certainly not according to the the Gov’t’s calculation of CPI (consumer inflation), but if you go over to, the proprietor of the site, John Williams says that real inflation is running at 4.5%… And John also had this to say on his website:” Panicked, Unlimited Federal Reserve Money Creation and Federal Government Deficit Spending Continue and Will Expand, Triggering Major Domestic Inflation.”

Yes, major currency creation will not only spur inflation, (if the currency creation is in the hands of spenders to get the velocity of money moving) but will also debase the dollar even more, causing a loss of buying power for dollar holders, and fortify the reason why one holds Gold & Silver… I read a piece this past weekend where the author sounded as if he was a longtime Pfennig Reader, when he said, that he owns Gold, and it’s not for sale… He holds it as a store of wealth, and a hedge against the falling dollar…  Man, I could swear I’ve said those exact word one hundred times in this letter in the past!  Oh, well, at least there’s somebody out there that thinks like me! HA!

In the overnight markets… The currencies have drifted overnight, losing a little ground, but not much at this point. Gold is up $7 and Silver is up 21-cents in the early trading today, so a good start for those two.  The Russian ruble has slipped back to a 75-handle, from the 73-handle it traded last week. The price of Oil has slipped back to a $52 handle, and it appears the China news is affecting anything commodity related… 

The U.S. Data Cupboard finally gets back into the business of printing some real economic data this week, but not today! Today the Cupboard is as bare as a bone… Not only will the Cupboard get restocked this week, but we will also have a FOMC Meeting, the first one of 2021… And much like 2021, so far is much like 2020, the Cartel’s, I mean the Fed’s meeting will also be much like those that took plast last year… They’ll whine about not having the tools to prop up the economy, and throw Congress in front of the bus, claiming that Congress needs to pass more stimulus immediately…

But come on! Cartel, I mean Fed, you know better than that! The U.S. is broke! It doesn’t have the money in its purse to pay the piper, nor does it have the money to send out to citizens to help them out…  But maybe, now that I’ve said that, maybe, just maybe, cause we never know, the Cartel, I mean the Fed needs Congress to deficit spend till the cows come home, to increase inflation…  Not that the Cartel, I mean the Fed, wants to fight inflation, they think that they’ll be able to squelch any rapid rise in inflation… And Chuck says, “I’m from Missouri, they’re going to have to show me”! Because I don’t believe for one minute that they will be able to get inflation under control quickly… They’ve painted themselves into a corner, they can’t raise rates, and they if they can’t raise rates, they won’t be able to combat inflation…

This is going to be a doozy of a year, financial system wise, folks… I do believe that this massive increase in deficit spending that’s coming is going to bring into question, Who’s going to buy our Treasuries?” And when they total all the hands that rose to say they’re buying Treasuries, the amount left unbought is going to cause some major thinking to take place, folks… And remember what I told you a few months ago, about how the weight of debt was going to cause defaults…  They’re coming… I feel that train a comin’ it’s rolling around the bend, and ain’t seen a surplus since I don’t know when…  (Johnny Cash, with the help of C. Butler!)

And after last week’s European Central Bank’s (ECB) staying the course, with their negative deposit rates, and bond buying programs, it will be the Cartel, I mean the Fed’s turn to stay the course, with near zero interest rates, and their bond buying…  Imagine if the Cartel, I mean the Fed, actually said, “We’ve decided to TAPER our bond buying, to get back to no buying”   Imagine the temper tantrum the stock and bond markets would throw… Worse than a two-year old in the grocery aisle screaming and pounding the floor because they can’t have a candy bar!

So, back to the Data Cupboard this week… We’ll see Durable Goods, and Capital Goods orders, Personal Income and Spending, along with the FOMC meeting, and the usual Tub Thumpin’ Thursday fare, of Weekly Initial Jobless Claims…  But not today, the cupboard is bare..

To recap…  The currencies have been on a mission to push the dollar bugs back into the wallboards where they came from, but the pushing has been in small amounts, but for nondollar holders the dollar bugs are getting pushed around… Gold lost $14 on Friday… Silver lost 44-cents…  The FOMC meets this week, and Chuck thinks it’ll be a meeting of whining and crying…  But not real action…  Chuck talks about inflation, Gold & Silver Manipulation, and other stuff this morning, that if you just came here first, you’ll be compelled to go back and read! HA!

Before we head to the Big Finish… I dropped the ball last week, as I was asked to give the link to a webinar that my publishers, and good friends, Mary Anne and Pamela Aden were taking part in… But, I did get a reprieve of sorts, as they recorded the event and gave ,me the link for the recording. So if you can carve out a few minutes today or whenever, I think you’ll enjoy hearing what everyone on the Webinar had to say, and you can find that here:

For What It’s Worth….  Well, if I had a Gold coin for every time I read about some economist calling for a crash in the stock market, I would have to find a new place to store them!   But, this time this one is a little different, because this isn’t your ordinary economist… This is the venerate Jeremy Grantham, and when he talks people listen… he has his thoughts on the stock market and they can be found here: Investing Legend Sees “Spectacular” Crash In “The Next Few Months” | ZeroHedge

Or, here’s your snippet: “Two weeks ago, investing icon Jeremy Grantham turned apocalyptic and warned that the “Bursting Of This “Great, Epic Bubble” Will Be “Most Important Investing Event Of Your Lives.” Since then the market has generally continued to melt up, yet Grantham’s conviction that all this will end in tears has only grown, and in an interview with Bloomberg today, the co-founder of GMO who correctly called the last two crashes, now predicts that Joe Biden’s economic-recovery plan will propel stocks to perilous new heights, followed by an inevitable crash.

“We will have a few weeks of extra money and a few weeks of putting your last, desperate chips into the game, and then an even more spectacular bust,” the value-investing legend said in a Bloomberg “Front Row” interview.

“When you have reached this level of obvious super-enthusiasm, the bubble has always, without exception, broken in the next few months, not a few years.”

Amid market euphoria the likes of which have – literally – never been seen before. and which prompted Citi, B of A and Goldman to all warn that a selloff appears imminent, and which was fueled by risk-taking behavior funded by the latest round of pandemic-relief checks, Grantham has “no doubt” at least some of the $1.9 trillion in federal aid Biden is seeking from Congress will end up being spent on stocks instead of food or shelter.

While that will help push stocks even higher, Grantham then sees it all ending in tears, or rather a collapse rivaling the 1929 crash or the dot-com bust of 2000, when the Nasdaq cratered 80% before recovering thanks to trillions more in Fed “stimmy” checks.”

Chuck Again…  But not to worry, this is not going to happen overnight folks…  But didn’t you like Mr. Grantham using a phrase of mine…  “it’ll all lend up in tears”?   Pretty cool… 

Market Prices  1/25/21: American Style: A$ .7729,  kiwi .7210,  C$ .7874, euro 1.2158, sterling 1.3691, Swiss $1.1282, European Style: rand 15.2065, krone 8.4789, SEK 8.2768,  forint 293.52,  zloty 3.7333,   koruna 21.4376, RUB 75.26, yen 103.84, sing 1.3265, HKD 7.7512, INR 72.92, China 6.4763, peso 19.72, BRL 5.4653,  Dollar Index 90.24,  Oil $52.73,  10-year 1.08%, Silver $25.79, Platinum $1,117.00, Palladium $2,456.00, Copper $3.57, and Gold… $1,853.70

That’s it for today…  Well, I still haven’t heard from the folks at Roger Dean Stadium, regarding my Spring Training Season Tickets.. But a dear reader sent me a copy of a letter he received from the Twins about his season tickets… And I don’t like it one iota! As I’m sure the same procedure will be implemented at each stadium… At least fans are going to be in the stadium… That’s half the battle, but now, where will I sit? UGH!  Pitchers and catchers report in 3 weeks!  My blood sugar numbers are still falling, and that’s a great thing, albeit slowly!   And be sure to check out the Adens on the webinar link I have above!  I finished 1984… Man, there are so many things that remind me of today in that book… And now I’m onto another oldie but goodie, Fahrenheit 451, by Ray Bradbury… And when I finish that one, I’ll go back to my murder mysteries! Triumph takes us to the finish line today with their song: Fight The Good Fight…  my good friend, Rick B. will like that one!  I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler