When Will Safe Havens Be Bought Up By The Truck Loads?

February 18, 2020

* dollar bugs continue to put pressure on the currencies

* Jim Grant says the Fed is now the lender of first resort… Oh my! 

Good day… And a Tom Terrific Tuesday to you! In case you’re wondering about me, my visit to the wound center yesterday, was good, as more healing is taking place. On Mondays I don’t see the doctor, instead seeing a nurse who changes the soft cast on my leg. But I can see it healing, finally! It was a true Chamber of Commerce day here yesterday, and I spent a good amount of my day outside, under an umbrella. I know when my spring training buddies show up next week, they’re going to question where my tan is… But the chemo I take causes me to be very susceptible to the sun’s rays, and I would have sun burn in a matter of minutes… And I can not stand sun screen on my skin! Yes, I put it on, but I totally dislike doing so! Chris Isaac greets me this morning with his song: Wicked Games…

Well, the dollar bugs seemed to be worn out from their taking down of the euro on Friday last week, and left the single unit alone… Instead they directed their furor to the Aussie dollar (A$). To the A$’s credit though, it didn’t lose as much as the euro did on Friday last week, but it did fall back below 67-cents, as the Coronavirus begins to take chunks of different respective currencies get in their way…. And if the A$ gets old, its kissin’ cousin across the Tasman gets sold too…. UGH!  Like I said yesterday, and then gave you time to think about it, I would be very afraid of this virus spreading to Africa or India or both!

And I told you yesterday that the 1 to 2 buck loss that it had booked in the early morning was easily reversed, and while that’s no what happened, Gold is up $7 this morning, so no worries…. You’ve got to question what’s on trader’s minds these days, as the Coronavirus goes deeper into our society, and the so-called Safe Havens are getting bought, but Gold gets left out in the cold… So, maybe not a question in your mind, but it sure is in mine! And one day… we won’t need to ask this question any longer… Got Gold?

And yes, I know, my mom used to tell me, my teachers used to tell me, my wife always tells me, my kids tell me too…. I have a strange way of thinking of things… So, I have that going for me… But to my defense, I’ve never thought that my way of thinking about things was “strange”… More logical to me! For I’ve always used logic as my way of thinking how things ought to be… I’m just saying…

OK… back to the task at hand… Yesterday, when I was telling you that Industrial Production here in the U.S. printed negative, I forgot to tell that the for the last 7 months, it has contracted…. And yet no one on a trading desk seems to have a care about these things… It makes you wonder doesn’t it?

Or the repo mess that I haven’t talked about in a few days… In Ed Steer’s Saturday letter that can be found at www.edsteergoldsilver.com he had highlighted an interview with the great analysts, James Grant, that was on CNBC… I have just a snippet of what Mr. Grant said, but… it says enough!

“Jim Grant astutely notes that as banks and the federal government increasingly come to rely on the Fed for funding through the repo market and ‘Not-QE’ program respectively, the Fed is becoming the lender of first resort in our economy, not the lender of last resort.”

The Fed in my mind is completely out of control… and I saw a cartoon last week that I shared with my good friend and former Big Boss, Frank Trotter… it showed two fireman that had outfits on that noted them to be from the Fed, and they were spraying something on a fire, but the something they were spraying was gas coming from a gas can! That, right there, tells you everything you need to know about the Fed…

However, there is a chance that the Fed could be receiving a breath of fresh air in the form of Judy Shelton, of whom I’ve talked about before, and will be before the committee to approve or deny her nomination to the Fed Governors this Thursday… Why, as you may fave forgotten, would Judy Shelton be a good Fed Governor? Ahhh, grasshopper, come sit and hear about story about a woman named Judy, that is a Gold Bug! She has long advocated the return of a Gold Standard, and has been a frequent contributor to the GATA folks…

If she is approved, the next question will be will she lose her Gold Bug status being a member of the Fed like Big Al Greenspan did when he was brought to the Fed after learning at the knee of Gold Bug Ayn Rand? Big Al forgot all about his lessons and his love for Gold and put them all in the trunk of his new car that the Fed provided him, (I made that up about his car, but wouldn’t doubt it one second) , never to be take out until he had retired from the Fed….

Well… like I said yesterday this is a real zero for the U.S. Data Cupboard this week, and yesterday, being a holiday, there was none to print, and today’s version will only have some speeches by the Fed Heads…   There was some news on the retail front that I think begins to tell the story of a recession… First up, Pier 1 filed for bankruptcy…  This shows you that the yuppies aren’t spending… And second, Walmart issues a warning about earnings…  this shows you that the moms and pops aren’t spending…  the next shoe to fall will be when the high-end stores begin to show cracks in their respective foundations…  That will mean the deep pockets folks have gone home to play polo and have stopped spending… 

To recap…. the dollar bugs backed off their full frontal attack on the currencies on Monday, but still saw some downward movements in the currencies, although they were not as pronounced as they were on Friday, last week. Gold couldn’t find a way out of a $2 Buck loss, but is back on the rally tracks this morning up $7.   Chuck is wondering when the traders will begin to really fear the Coronavirus, and flee for safe havens by the droves… 

For What It’s Worth…  Well, I found this article this morning, in Ed Steer’s letter, once again… Thank goodness for Ed Steer, when I’m in a bind and need a FWIW article! OK, this is a rambling on about preparing for the next financial crisis, and it can be found here: https://internationalman.com/articles/the-benefits-of-economic-collapse/

Or, here’s your snippet: “I first began to predict a major economic collapse back in 1999. Although I understood that it was at least fifteen years off and possibly more, I believed that it would be wise to begin to prepare for it then, as the actual date of collapse could not be predicted. (Better to be a few years early than even one day too late.)

Not surprisingly, back then, this prediction appeared to most people to not only be unlikely, but laughable.

Today, we’re a good bit closer to the onset of an economic crisis and it now not only seems possible, but quite likely to an increasing number of those people who are paying attention.

And not surprisingly, as so many people are now realizing the inevitability of such a crisis, they’re also realizing that they should have been preparing for it. Preparation for a major event such as this requires a fair bit of time and many people are belatedly coming to realize that they may be caught with their pants down when the initial crashes begin.

Whenever the inevitability of such a debacle is first recognized, the first reaction for most people is to dive into denial, saying, “It simply can’t happen. Nobody would let it happen, because nobody benefits.”

Chuck again…  I too was way ahead of the last financial Crisis, as I pointed out the coming collapse in housing in my white paper dated 2003!   And then, like now, I think it’s very important that you are prepared for such an event… Like Jeff Thomas said, “Better to be a few years early, than one day late!”  So…. Got Gold? 

Currencies today 2/18/20 American Style: A$ .6685, kiwi .6397, C$ .7542, euro 1.0826, sterling 1.3040, Swiss $1.0195, European Style: rand 15.0490, krone 9.3168, SEK 9.7498, forint 309.62, zloty 3.7498,    koruna 22.9611, RUB 63.40, yen 109.71, sing 1.3920, HKD 7.7684, INR 71.47, China 6.9782, peso 18.63, BRL 4.3087, Dollar Index 99.18, Oil $51.18,    10-year 1.54%, Silver $17.89, Platinum $980.71, Palladium $2,535.68, and Gold… $1,588.08

That’s it for today…  It was late last night, and I was doing some reading, and suddenly my phone lit up, a text message, and then another, and another and this went on for 10 minutes… My watering hold buddies are all on a group text, and they were all worked up about something last night, I sat here laughing so hard!  OK… no new injuries to report from Cardinals’ Camp… I think I’ll go over to the fields today, and see what they are working on. 17 years ago when I first started being down here longer for spring training, I would go to the back fields, and there wouldn’t be 50 people back there… Nowadays, there are so many folks you can’t get a seat in the stands!  So, on second thought, I think I’ll skip the back fields today…  See how easily I can talk myself out of doing something?  HA!  The Allman Brothers take us to the finish line today with their song: Dreams… I hope you have a Tom Terrific Tuesday, and please Be Good to Yourself! 

Chuck Butler