Will There Be Any Gold Left When Everyone Wants To Buy?

  • Currencies & metals rally VS the dollar on Friday
  • The 10-year Treasury gains bad momentum…

Good Day… And a Marvelous Monday to you! I hope everyone had a wonderful weekend.. For me, it was blah… as I was still dealing with this awful cold, and weather outside was chilly at best… The Semifinals of the NCAA Basketball Tournaments (men and women) were this past weekend, and the finals are set..  It’ll be UConn VS Purdue in the men’s final. I had those two picked in my bracket, but… so does probably 50,000 others! Congrats to: S. Carolina for winning the women’s side of the tournament. George Harrison greets me this morning with his song: My Sweet Lord

Well, what a day for Gold & Silver on Friday last week! Gold gained $38 on the day to close the week at $2,329.75, and Silver gained 48-cents to close the week at $27.48…  The yield on the 10-year reached 4.40%, and usually a higher yield is a death knell for Gold, but not this time, as Chinese buying, both Gov’t and personal buying is just going crazy these days… There’s no hesitation on the rising price as a hinderance to buying, they just keep the buys coming… And good for them! 

On a sidebar here… Longtime acquaintance, Brien Lundin, of the New Orleans Gold Conference, wrote something the other day that had me rethinking what I had thought moved the price of Gold… Brien said that geopolitical problems do NOT move the price of Gold… “Gold doesn’t care what’s going on in Gaza”…  Well, maybe he’s correct here… But, I’m still convinced that Gold is sought in times of troubles… 

And then there was this on Bloomberg.com: “For gold demand, look to emerging markets savers and central banks. Both have been “mega-buyers of bullion” since the start of the war in Ukraine, says Duncan MacInnes of Ruffer Investment Co. They don’t buy ETFs. They buy physical gold. In China, for example, there is a new trend among the young to buy tiny 24 carat beads or “beans” every month as a form of long-term saving, something gathering pace as faith in the investing potential of the property market fades.

Central banks aren’t in it for the short term either: they don’t buy gold to trade. They are buying it for the long term to hedge political risk; to underpin their own currencies; to offset any decline in the value of the dollar; and in place of US government bonds, which given the rate at which the US is accumulating debt ($1 trillion every 100 days, says Bank of America Corp.) are no longer deemed to be free of risk.”

Chuck again… See? It’s not just me that’s been saying that the U.S. Debt is a real problem! 

Ok, well, the dollar last Friday, failed to gain on the Whopper of a Jobs Jamboree number that was 303,000 jobs gained in March!  OMG are you kidding me? Why then are all the restaurants looking for help? Why are businesses begging for people to come in and apply?  This is nothing more than another attempt to pull the wool over your eyes, folks… Trust me on this one, this number will be revised much lower in the coming months, under the cover of darkness, and the markets will not notice it at all! 

So the dollar ended the week with the BBDXY at 1,242, the same level is was two days earlier, last week… The dollar began the week, last at 1,247… So, during the week it lost 5 index points… Not enough to turn the tide in the currencies favor, but enough for them out of the sick bed. 

The shining light in the currencies is the, and I can’t believe I’m saying this, the Mexican peso… the peso reached an 8-year high VS the dollar, on Friday… The peso is enjoying the rise in the price of Oil, and the fact that the Mexican Central Bank hasn’t dropped its interest rate of  11.25%! I have always maintained that Mexico had to raise interest rates to above a risk premium rate, and in March 2023, when it hit 11.25%, I said here, in this letter that they had finally reached that risk premium rate… The wink and nod was there then, but I’m sure most of you all missed that…

The price of Oil remained in the $86 handle on Friday, but it’s within spittin’ distance of $87, so hold on because I feel $90 coming soon… And I already told you that the 10-year’s yield hit 4.40% on Friday… 

In the overnight markets last night… there was sporadic dollar buying, and the BBDXY is up about ½ of an index point this morning. No biggie… Gold is seeing some profit taking from investors that should know better, and is down $3 to start the day/ week. Silver is up 12-cents to start the day/ week. The price of Oil remains in the $86 handle, and bonds got sold some more overnight, with the 10-year’s yield rising to 4.45%… 

Are we going to revisit 5% in the 10-year’s yield? It sure looks like it to me, and momentum to sell right now is pretty strong. The bond boys sure look like they have egg all over their collective faces, don’t they? Just weeks ago, they were spouting off about how the Fed was going to cut rates 3 times, and that it was time to buy bonds! Well, we all know now, how that turned out for them, eh? 

Well, did you feel the earthquake on Saturday out on the East Coast?  That reminded me of a time many years ago, when the St. Louis area was shaking in their boots because of a guy name Iben Browning, had predicted a major earthquake here… I was on the committee for Mark Twain Bank to develop an earthquake contingency plan… I had to cross a bridge of a major river in the area, to get to work, and that morning that the earthquake was predicted, I was scared to death to cross that bridge, I don’t think I’ve ever sped across a bridge any faster than I did! 

Stories from my past, I’m sure you didn’t sign up for those, did you? Oh, well, think of it as icing on the cake! HA! 

Getting back to the markets… For years the laughing stock of currencies was the Zimbabwe dollar… Well, maybe that will change now, that Zimbabwe has decided to issue a Gold backed dollar…   I’ll have to keep an eye (that’s all I have!) on this currency to see if this change does any good for them… 

The good folks at GATA sent me this note: “It’s getting a little less expensive across the country to buy investment metals like gold bars and silvercoins, as more states take up measures granting them exemptions from sales tax.

At least 44 states have either fully or partially repealed the sales tax on purchases of gold and silver, according to the Sound Money Defense League, a group funded by online dealer Money Metals Exchange.”

Chuck again… I wonder who the other 6 state are that haven’t dropped the sales tax on metals? I guess I can find out if I really needed to know, but this isn’t one of those need to know things… 

The U.S. Data Cupboard has the Jobs Jamboree for March that I talked about above, on Friday, and it knocked the ball out of the park! But Chuck thinks that it will be revised much lower in the coming months, under the cover of darkness… Hourly wages increased .3% in March, and 4.1% annually, which is a good thing considering inflation is still about 14% in real terms… But is still lagging quite a bit, eh? 

 To recap…. The Mexican peso reached an 8 year high VS the dollar, and Chuck tells why this is happening, and Gold kicked some tail on Friday and took names later…  Chuck remembers the past, and 44 states have nixed the sales tax on metals… The dollar ended the week down 5 index points in the BBDXY…

For What It’s Worth… Well, today, I have an article that I hope you all read in its entirety, by clicking the link that I will provide… It’s an excellent explanation as to why Gold & Bond yields are rising at the same time, and it can be found here: Gold and silver surge higher – MacleodFinance Substack

Or, here’s your snippet: “The answer can only be that the big, mainly Asian wealth funds look at the US Government’s finances and see deep trouble. The only way the US Government can satisfy its voracious appetite for debt is at higher interest rates and bond yields. And if interest rates go higher, they will crash financial markets, bring about commercial property and corporate insolvencies, and threaten the entire banking system. In short, foreigners are desperate to reduce their exposure to dollar credit as much as possible and the only way to do that is to buy real money without counterparty risk, which is gold.

To confuse traders, there is liquidity in smaller gold transactions. You can still buy kilo bars and coins. But if, for example, on the London market you are committed to deliver 400-ounce bars in quantity by next Tuesday, they are simply not available. I guess that’s where the problem lies.

If this squeeze on one or more bullion banks eases, then the price should too. But the problem will not be resolved: the evidence is that foreigners are increasingly turning their backs on the fiat dollar and the entire credit system.”

Chuck again… Yes, as I’ve been telling you all for some time now, that the only way the U.S. is going to be able to continue to spend money they don’t have, is to ratchet up the yield on Treasuries, because the foreign countries just don’t trust the U.S. any longer to be able to finance their debts…  This is going to come to a head sooner or later, folks… Got Gold?

Market Prices 4/8/2024: American Style: A$ .6586, kiwi .6017, C$ .7358, euro 1.0828, sterling 1.2616, Swiss $1.1033, European Stye: rand 18.6196, krone 10.7038, SEK 10.5899, forint 360.85, zloty 3.9486, koruna 23.4326, RUB 92.67, yen 151.91, sing 1.3494, HKD 7.8317, INR 83.31, China 7.2330, peso 16.43, BRL 5.0678, BBDXY 1,243.38, Dollar Index 104.38, Oil $86.27, 10-year 4.45%, Silver $27.60, Platinum $947.00, Palladium $1,044.00, Copper $4.26, and Gold… $2,326.60

That’s it for today…  Well, it’s eclipse day here in Missouri! We had just experienced a solar eclipse about 5 / 6 years ago, and it was pretty cool… I don’t think we’re in the total eclipse area, but we’ll experience the eclipse about 95%…  My beloved Cardinals won 2 of 3 from the Marlins, and now face the vaunted Phillies… No Pfennig tomorrow… I have a heart doctor appt early tomorrow morning… My heart doctor is a Cubs fan, so he always talks baseball with me, in between telling me to lose more weight! 

Jackson Browne takes us to the finish line today with his song: These Days…  I hope you have a Marvelous Monday today, and please remember to Be Good To Yourself! 

Chuck Butler