Wage Inflation Begins To Creep Higher…

May 3, 2021

* Currencies & metals attempt to rally back this week… 

* Former Mint Director, says there’s a shortage of metals… 

Good Day… And a Marvelous Monday to you! And Welcome to May! Hopefully the crazy weather of April will have given up the ghost, and May will be more certain…  Pfennig tradition calls for me to repeat this little gag… If April Showers bring May flowers, what do May flowers bring?   The answer… Pilgrims! HA! Well, my internet and tv problems got all straightened out on Friday, so I’m a happy camper. My internet speed is now up to snuff with most of the world! Not that you clicked on this email to read about my internet speed!  I’ve come down with a cold… strange, I know… At first I thought it was just allergies, but I know the difference… Maybe too much tub thumpin’ on Friday? Oh, well, the Guess Who greet me this morning with their song: No Sugar Tonight/ New Mother Nature… There’s that Burton Cummings again!

So, when I left you on Thursday last week, the currencies were kicking some dollar tail, and taking names later, and Gold & Silver were seeing some slippage VS the dollar, but the main theme was that the dollar was getting sold, and currencies like the euro, sterling, franc, A$, and kiwi were all beneficiaries of this dollar weakness…  Now, wasn’t it just last week that I talked about how the last time the euro went above 1.21 that the Plunge Protection Team (PPT) came in, bought dollars and put resuscitation paddles on the dollar… Rampart, clear… zap! The dollar was back to being bought again, as all traders cowered to the PPT…

Well, They were doing it again last Friday… Gold got whacked again, the euro got pushed back below 1.21, and all the euphoria in the currencies had the wind taken out it, and now we’re left with the remains, and they sure look messy…  The PPT made sure there were no survivors.. Gold lost $9.50 after valiantly battling back all day, and Silver lost $8-cents.. Gold closed on Thursday at $1,772.00, and Silver at $26.10

Then on Friday, the boys in the band were back at it, pushing on Gold all day once again, but Gold resisted, and only lost $2.90 to close the week at $1,769.10. Silver didn’t battle as valiantly as Gold and lost 19-cents on Friday to close the week at $25.91

Trying to save the dollar… That’s all this was about folks… Sort of like getting a vote of confidence from the General Manager…  The field manager knows all too well that his time is short… And I would think that dollar bugs have to feel that way too… But as long as they have the PPT to keep things from getting out of hand… they’ll have some misguided confidence… 

Ok, I found this article on Kitco.com this morning, and thought it to be very important to my dear readers…  Read these next few paragraphs with all the seriousness you can muster up, because it deserves to be read that way…  take it away, Kitco! 

“A global shortage of physical gold and silver products has created a premium on coins and bars, and this premium is causing a disconnect between the spot price and the “true” price that retail investors need to pay, said Ed Moy, former director of the U.S. Mint.

Moy, who was the director of the U.S. Mint between 2006 and 2011, cites the inability of the mints around the world to keep up with physical coin and bar demand as a reason for this shortage.

“Not only the U.S. Mint, but other Mints around the world, Australia’s Perth Mint, the Mexican Mint, have all run out of gold, they can’t keep it in spot and there’s so many shortages retailers are having problems accessing that gold,” Moy told Michelle Makori, Kitco’s editor-in-chief.

Premiums on these physical gold and silver products can run as high as 20% in some places, Moy said.

“If you go to any of the top retailers for gold bullion and take a look at what they’re charging for an ounce American Eagle gold bullion coin, even though the spot price right now is $1,775 give or take, you’re hard pressed to find a ounce gold coin for anything less than $2,000, and I’ve seen it as high as $2,100,” he said.

One of the main reasons for why the spot prices have not caught up to gold and silver’s premium-adjusted price is that the overall markets are flooded with bullion derivatives, Moy said, but it’s only a matter of time before the short contracts keeping the price down expire.”

Chuck again… You know me folks, I’ve been writing about a shortage of metals for years, and now this article confirms what I’ve been saying? Well, it doesn’t get any better than that for me!  But what this article doesn’t really come out and say is that Gold & Silver will take for the moon when everybody, and I mean everybody demands delivery of the metals on the futures contracts they hold…  once again I ask… Got Gold? 

Well, did you see the Personal Income & Spending data from Friday?  Personal Income was up a whopping 21.1% in March, VS the negative -7.0% in Feb… Ok… didn’t everyone get their stimmy checks in March? So, what’s the hub-bub? This should have been expected…

One thing that wasn’t expected was the rise in wages… Ahhh grasshopper we’ve been waiting for this for years, is it finally happening? Well, let’s see… According to the data, U.S wages increased 1% in the 1st QTR, and also saw a 2.7% increase Year on year…  Now, I have to wonder if all those inflation naysayers are rethinking their position? Inflation is running as hot as a firecracker, are you ready for it? Or, have you fallen victim, or drank the Kool-Aid of those that keep saying there is no inflation?  Well, there’s only one thing to ask…. Got Gold?

Now as far as spending… That was up 4.3% in March, VS the negative -1% in Feb… So, contrary to what I thought most people did with their stimmy checks, thy stimmy checks got spent on NFT’s, dogecoin, and other insane investments… That 4.3% increase in spending will be interesting to see if it can be repeated in April… I doubt it, but maybe pigs do fly?

I don’t mean to make this a day of nothing but data stuff, but it appears that’s what it’s going to be… Last week also saw the final revision of 1st QTR GDP and it was revised upward to 6.4% from the previous revision of 4.3%… The propeller heads had to include the stimmy checks affect on GDP… Well, unless the Gov’t is ready to send out quarterly stimmy checks then the next QTR’s GDP won’t be as exciting as the 1st QTR…  I hate to be the bearer of bad news… But this euphoria over how well the economy is doing is like listening to two insane people talk about how the Mars helicopter works…

You know, you must keep in mind that inflation is like a currency’s kryptonite… So, to me, the PPT was just reducing the base levels of the currencies before they take off to higher ground in response to the raging inflation in the U.S.  

In the overnight markets… The currencies are attempting a comeback, and Gold & Silver are both moving up this morning with Gold up $6.60 and Silver up 18-cents.  The all clear horn has sounded, and now traders can get back to selling dollars, now that they know that the Big Bad Wolf, has gone…  Speaking of the Big Bad Wolf… I saw a cartoon the other day , that 4 squares, in the first square a little piggy built a house of dollars, in the next square a little piggy built a house of euros, and in the 3rd square the little piggy built a house of Gold… In the forth square, the house of dollars and euros were getting blown away, while the house of Gold stood solid, and a caption that read: We all know how this story ends… 

The U.S. Data Cupboard this week will be sporadic with economic prints… Today it will be the ISM for April, which will be strong, because that’s what happens when people get piles of money, and spend it, manufacturers gear up!   There is one piece of data today that should be interesting, and that is the vehicle sales for April… From what I’ve read… There are thousands of cars sitting on lots that can’t be sold, because they are awaiting a micro chip for their system…  Supply chain disruptions, who’d thunk that?  This will be a Jobs jamboree Friday week… 

To recap… The currencies & Metals saw a ton of dollar buying to end the week last week, the PPT was in protecting the dollar, and traders cowered to the all-mighty PPT…  The Dollar Index was trading at 90.57 last Thursday morning, and when the week ended on Friday, the Index was trading at 91.28…  In the overnight markets the currencies and metals are attempting to rally and comeback.. 

For What It’s Worth…  OK, this is really good, folks… I received this letter from the GATA folks, where Chris Marcus of Acadia Investments, as the current CFTC Chairman about his comments regarding the price suppression of Silver… There’s a YOUTUBE of this whole thing of which he is referring to and it can be found here: https://www.youtube.com/watch?v=HSS3zkWYhaY&t=763s

Or, here’s your snippet: “In an open letter to the acting chairman of the U.S. Commodity Futures Trading Commission, Rostin Behnam, published tonight, Chris Marcus of Arcadia Economics asks for an explanation of a comment Behnam made on March 18 that seemed to applaud and implicate the commission in the suppression of silver futures prices.

— you made the following statement: ‘The resiliency and the market structure of the futures market was able to tamp down what could have been a much worse situation in the silver market.

Also at the conference Behnam appears to have congratulated the commission “for utilizing its authority and some of the tools it has within the margin space to control the price and volatility of the silver contracts.”

Marcus also asks Behnam to explain an assertion made on CNBC in February by the research chief for the Goldman Sachs commodities desk, Jeff Currie, who, in regard to silver, said: “The shorts are the ETFs [exchange-traded funds]. The ETFs buy the physical, they turn around and they sell on the Comex to be able to hedge that physical position like any other corporate”:

But if silver ETFs are just accumulations of metal held for the benefit of their investors so their investment can track the silver price, why do the ETFs need to hedge against the metal’s price?

If silver ETFs are hedging their own silver, they are nullifying its potential for price appreciation and essentially rigging the market surreptitiously against their own investors.

The use of gold and silver ETFs to short the monetary metals markets for price suppression at strategic moments long has been suspected by many in the GATA camp.

Marcus’ letter itemizes much more evidence of improprieties in the silver market, but some of them would be explained by manipulative trading undertaken by, at the behest of, or with the approval of the U.S. government if such trading is legal and outside the commission’s jurisdiction.”

Chuck again… Well, this letter to the CFTC chairman for explanation of his comments regarding Silver will probably be wadded up and tossed into the circular basket, by the Chairman… You know, it would be really cool if a Senator or someone like that called the Chairman on the phone, and said, “you need to answer that letter, and do so truthfully”…   And then pigs might fly….

Market Prices  5/3/2021: American Style: A$ .7728,  kiwi .7165,  C$ .8133, euro 1.2048, sterling 1.3858, Swiss $1.0955, European Style: rand 14.4378, krone 8.3003, SEK 8.4385,  forint 298.90,  zloty 3.7815,   koruna 21.4144, RUB 75.21, yen 109.62, sing 1.3317, HKD 7.7676, INR 74.26, China 6.4735, peso 20.26, BRL 5.4361,  Dollar Index 91.19,  Oil $63.80,   10-year 1.62%, Silver $26.19, Platinum $1,202.00, Palladium $3,014.00, Copper $4.47, and Gold… $1,776.70

That’s it for today… except…. Today is the birthday of my good friend, Toni Moody! She’s one of those people that make it a Birthday Month… So Happy Birthday Month, Toni! Well, my beloved Cardinals swept the Pirates this past weekend, and come home to play the pond scum… Just kidding, they’ll be playing the Mets, who used to be BIG rivals with the Cardinals in the mid-to-late 80’s… For a few years it was either the Cardinals or the Mets who won the division… But then the MLB realigned divisions, and now we see the Mets 6 or 7 games a year… and none since 2019!  The weather people will be diligently at work this week, keeping people abreast of the rain conditions for those going to games… Next Sunday is Mother’s Day… So you have a few days to figure out what your mother would like… I used to buy my mom a dozen roses, for she loved flowers, and loved the aromas of fresh cut flowers… My mom and I had a special relationship, she supported me in any endeavor I undertook… I’ll always be indebted to her, for giving me the freedom to make my own decisions…  I miss you mom… You many notice the letter arrived in your mail box a little earlier than usual today… I was up at 3:30 coughing my fool head off, and decided to write and go back to sleep later…  And with that… The Ides of March take us to the finish line today with their song: Vehicle…  “I’m the friendly stranger in the black sedan won’t you hop inside my car”…  I hope you have a Marvelous Monday, and will continue to Be Good To Yourself!

Chuck Butler