- Bessent sends the dollar down the slippery slope
- and gives Gold/Silver bugs freedom to gain!
Good Day… And Marvelous Monday to you! Well, things sure changed after the Treasury Sec. Talked last week… He certainly is a market mover! My beloved Cardinals come limping home after a 3-city road trip and falling flat on their faces in Philly… The weather cooled off to more temperate levels this past weekend… I got outside to read a bit, but I had a very ugly weekend health wise, as my stomach is now the things that’s causing me trouble… The Rolling Stones greet me this morning with their song: Can’t You Hear Me Knocking
I have a bit of other things to talk about first up this morning, so let’s get to them and then we can find out where the markets closed on Friday and the overnight markets… OK? Of course that’s OK, because I’m doing the writing!
OK, we HAVE to start off this letter with a brief dissertation on what the U.S. is doing now with regards to bonds… Treasury Sec. Bessent told the markets last week two things, and those two things really riled up the markets… First, he said that the Treasury will buy “double the amount of bonds”…. he’ talking about the 10–30-year bonds and he’s going to be doing QE on steroids… But only it’s not real QE because the money he gets to buy all those bonds won’t be by the creation of dollars by the Fed Heads, it will be from the sale of short-term bonds (At a loss) …
I saw a quote by a pundit that said, “he’s applying a Band-Aid to a bullet wound” And that about wraps up his first statement to the markets… Oh, and the BBDXY dropped like a rock on his words….
The second thing he said was that “There’s nothing magic about the $40 trillion number, And we can grow our way out of that.”
Oh, my, what fantasy world does he live in? Didn’t the great Ronald Reagan say that he would get the economy to grow out of our debt then?” (that may have worked then because the debt was only $2.6 Trillion)
Oh, and we did go over $40 Trillion last week and that was only 5 months after we reached $39 Trillion!
So… as I told you things have changed… The BBDXY ended the week at 1,193… And Gold/Silver went on a buying rampage… Gold ended the week at $4,604 and Silver at $69.11
I’d like to think that Gold/Silver are now well on their second legs of their respective rallies…. But, I’ll have to see more buying and volume to sway me!
And the price of Oil ended the week with an $87 handle, and so far, the yield of the 10-year is holding steady Eddie ahead of the double buying, the Treasury announced last week. The 10-year’s yield ended the week at 4.73%…
In the overnight markets last night… The dollar got sold some more but in the early hours it came back and the BBDXU sits at 1,193 to start the day/week.. Gold and Silver are at it again, and Gold is up $53 and Silver is up 24=cents to start the day and week… Ok, so I’ve seen enough, Gold/Silver are on their second leg of the rally now… so far there’s no sign of the PPT… for the dollar, and that’s a good thing!
The price of Oil slid a bit overnight and starts the day/week with a $85 handle, while the 10-year still is resisting the buying of the bond news and opens the week at 4.71% yield…
Bessent must think about what he said regarding the $40 Trillion debt!
I don’t think he really thinks the economic growth would wipe out the $40 Trillion debt… But, he had to say that to calm the markets down a bit before they sent Gold/Silver to the moon! And the dollar on a very slippery slope…
Well, with the dollar losing ground faster than a speeding bullet, the euro has come back after getting sold for yen by the U.S. Treasury… The euro ended the week at 1.1678 and taking the rest of the currencies long for the ride… Shoot Rudy, even the Russian ruble had a good day for once in a Blue Moon… Ahh, Blue Moon, you saw me standing alone. Without a dream in my heart, Without a love of my own…. What a great song!
The Aussie dollar (A$) was drifting after the Reserve Bank of Australia (RBA) left their Official Cash Rate (interest rate) unchanged at their last meeting, probably due to what the RBA though the A$ would do if they raised rates again…. Well, they didn’t have to raise them as the A$ has taken off to higher ground anyway! I think what’s probably going on here is Japanese investors doing a new carry trade, using the A$…
Back in the last weak dollar trend, the carry trade using the A$ as the currency they borrowed… or bought outright… saw the A$ go over $1.00 and it dragged kiwi along for the ride as it too was used because the interest rates in these two nations were much higher than in Japan… not to say that history will repeat here, but… it will be at the scene of the crime…
Of course, the dollar needs to be in a weak trend… and it appears that it is entering one… I know, I know I said they were entering one a month or so ago… And this could be just a return to the underlying weak trend… Either way, it’s going in the right direction considering our problem Debt and the financing of it…
There’s always the PPT to put up roadblocks on the falling dollars…. That’s why I always say that Trend is not a ONE-WAY STREET! There can be volatility while the trend continues… I say this to tell all that took my suggestion a month or so ago to begin to diversify, not to panic and sell your currencies when there’s volatility, you’ll hear about it first right here in the Pfennig!
And now… The POTUS is threatening to bomb… Bond sellers…. I’m not kidding here… the POTUS told a reporter last week : “We have many types of intervention. That’s one. The ultimate intervention is our military. And, uh, if we have to use that, we will.”
Oh my, oh my, oh my… I can’t say what’s going through my mind right now… But what did Einstein say about repeating something over and over again thinking that the end result will change? I’m just saying…
Circling back for a minute on Bessent and the Treasury… I can’t believe that they can’t see that THIS is one of the reasons that the world keeps selling the dollar… The Treasury decided that this was easier than reducing the size of bond issuance (to finance the debt)… Well, it took 5 months to go from $39 Trillion to $40 Trillion in debt… at that rate we would be at $50 Trillion by the time that Spring Training Starts!. I don’t think that will happen but there’s a chance… And you’re telling me that there’s a chance? HA!
The U.S .Data Cupboard is a mixed-bag-o-data this week, with nothing really today or tomorrow, but Wednesday will be the pick day of the week with tons of data to print… So, the dollar isn’t going to get any help from a trumped-up data report so, the dollar is on it’s own today and tomorrow… And that could be a very bad thing for the dollar, in my humble opinion…
To recap… Gold/Silver had banner days as the week went on last week, and on Friday Gold climbed above $4,600 and Silver above $69… The dollar got sold for a basket of hopes and lies…. The U.S. Treasury Sec. Said that the treasury will buy double the bonds issued in the future for the 10-30 year bonds… This is not QE, from what they say… (whoever said that we can believe what they say!) They will sell short-term bonds to pay for the bonds they buy… So, no creation of dollars to pay for them… Now, do we really believe this?
For What It’s Worth… So, that got me thinking about what will happen if the bond intervention fails to work? To bring yields back down? And then I saw this and you can find it here: The Treasury’s bond-market intervention isn’t working. So what comes next? | Morningstar
Or, here’s your snippet: “‘It’s fair to say that at some point – at some time – there will be a crisis,’ says billionaire John Arnold, a former star Enron trader and the founder of philanthropy Arnold Ventures
The Treasury Department’s efforts to calm the bond-market selloff haven’t yet worked as well as hoped.
You can’t just sweep $40 trillion in U.S. national debt under a rug and forget about it.
That’s the bond market’s message to Treasury Secretary Scott Bessent in recent days, following his sudden efforts to calm an alarming selloff in long-term U.S. government bonds that recently pushed yields up a two-decade high.
Bessent outlined plans to buy more long-dated Treasurys this fall, promised to use the agency’s large “tool kit” to support the market and talked of coming new measures to contain the growing U.S. debt load.
Now, the question for traders is whether anything will get done to manage America’s growing debt pile, or if the bond market ends up calling the shots.
“It’s fair to say that at some point – at some time – there will be a crisis,” said John Arnold, a billionaire former Enron energy trader and the founder of philanthropy Arnold Ventures.”
Chuck Again… That’s a good question regarding the bond market ending up calling the shots… Because… They already are!
Market Prices 8/24/2026: American Style: A$.7161, kiwi .5961, C$ .7169, euro 1.1664, sterling 1.3633, Swiss $1.2464, European Style: rand 16. 0056, krone 9.3186, SEK 9.5029, forint 310.81, zloty 3.6740, koruna 20.6639, RUB 83.22, yen 159.11, sing 1.2706, HKD 7.8366, INR 95.74, China 6.7238, peso 16.92, BRL 5.1496, BBDXY 1,193, Dollar Index 98.98, Oil $85.39, 10-year 4.71%, Silver $69.35, Platinum $1,888.00, Palladium $1,371.00, Copper $6.68, and Gold… $4,657
That’s it for today… I’m here all week so try the veal! Bessent is going to try his “toolkit”… Good luck! This is the last week of August, and with August being the last full month of summer, it’ll be time for the kids to go back to school soon…. When I was a young school child, we always went back to school the day after Labor Day… but these days? Some have already started! YIKES! What happened to family vacations? Aye, Aye, Aye…. The Moody Blues takes us to the finish line today with a song from their Seventh Sojourn album (one of my faves): Isn’t Life Strange…. I hope you have a Marvelous Monday today, and Please Be Good To Yourself!
Chuck Butler