January 23, 2019
* Russia not only books a Surplus, but also reduces its debt!
* Currencies are stuck in the mud…
Good Day… And a Wonderful Wednesday to you! It was a long day yesterday for yours truly, that began with a trip to Roger Dean Stadium for an exchange of tickets that they gave me in error… I made the person at the window pull out my order sheet, to confirm that they made the error, and not me! Not that I pointed any blame fingers! I just needed them to exchange them for the right tickets with a smile and a thank you for my business… Went to dinner with our good friends, Gus and Vivi last night, and it was a great night! The late Great Tom Petty greets me this morning with the song from his band, the heartbreakers: Last Dance With Mary Jane… which happens to be my favorite Tom Petty song, and the Good Lord knows he had a lot of them!
Well, another day, another day of no movement in the currencies… I’m really at a loss as to why the dollar isn’t getting sold like funnel cakes at a state fair, but then who does know why? All I know is that the currency markets seem to be stuck in the mud right now, waiting… for something to break out one way or the other… Could it be the 33 day Gov’t shutdown here in the U.S. that’s causing the problem? Or could it be the Trade War with China that continues on taking no prisoners, that’s causing the problem? Or could it be whether or not the U.S. economy is heading to a recession or not?
See? There are a truckload of things that could be putting its foot on the brake right now, and I’ve just talked about a few of them! Yesterday, I told you that Russia had booked a Current Account SURPLUS for 2018… And a longtime reader sent me a note and said, that it wasn’t just a SURPLIS, but also had reduced their Gov’t Debt in 2018… here’s the note from the RT; “Russia’s external debt has fallen by $64.4 billion or 12.4 percent from the beginning of last year, amounting to $453.7 billion as of January 1, 2019 – the lowest level since April 2009, according to Central Bank of Russia data.”
I would love to meet CBR Gov. Elvira Nabiullina one of these days… You know, I’ve told you all this story many times in the past, but years ago, I met the Gov. of Reserve Bank of New Zealand, Don Brash, face to face… He knew all about our tiny bank (Mark Twain Bank) as the buyers of huge amounts of his Gov’t issued bonds… And we talked, and he gave me his personal business card, with his direct phone number on the card… And told me to to call him, any time I had questions about NZ monetary policy… I put that offer to test a few months later, and called him… He answered the phone! And thus began a long distance relationship that remains to this day!
So, don’t begin to tell me that coming face to face with Elvira Nabiullina is out of the question! And if I did meet her, I would commend her for years of battling high inflation, and for changing the face of the CBR to a gold reserve accumulation Central Bank…
Normally, the Russian ruble would be strutting around like a 20-game winner… But with the price of Oil in the dumpster, and the U.S. defaming anything Russian these days, it’s difficult to move higher VS the dollar for the ruble… but it will, in my humble opinion, eventually… and that gives a lot of investors the opportunity to buy at cheaper leavels, and earn a very nice rate of interest… that’s above most countries in the world!
Oh me, oh my, I just checked the currencies again, and they still seem to be wearing the same clothes as yesterday… I’m not kidding when I tell you that… For instance, the Dollar Index traded yesterday morning at this time at 96.34, and this morning it’s trading at 96.32… I looked across the board and didn’t see any of the Dollar Index currencies on the rise today, so I’m wonder where the heck the .02 gain came from? Oh well, it is what it is… let’s move along.
Yesterday, I told you about how the state of Wyoming was introducing legislature to make Gold & Silver a part of their reserves… And today, I have another announcement from a different state that I’ll talk about in the FWIW section today. Just a little teaser, if you will…
Well, there’s a lot of optimism in the markets this morning that a Trade Deal is going to get done soon… I sure hope they don’t get disappointed, because that could cause a major ripple to the markets, that seem to have calmed down now, after a few weeks of manic selling. The 10-year Treasury’s yield has settled in around 2.75%, and Gold just can’t get past the $1,300 goal post.
Speaking of Gold… Did you hear the news last week that Sam Zell, the mortgage guru, multi-millionaire that’s an investing legend, announced that he was buying Gold for the first time in his life… I’ll step back and let that sink in a bit…
I’m not saying he’s the leader, and we need to following the leader here… I’m just saying that I believe he knows something that we don’t… so, you won’t hear me singing: We’re following the leader, the leader, the leader, we’re following the leader wherever he may go! That’s one of those songs that if you just now sang along with, will be in your head the rest of the day… So sorry about that!
The Great Data Vacuum here in the U.S. continues today… The only piece of data that has gotten through in the past week was the Existing Home Sales for December, which fell to 4.99 Million VS 5.33 Million in Nov. The rot on Housing’s vine continues to be exposed, little by little folks… And I think the Fed Heads are finally starting to wake up and smell the coffee here… At least I hope so!
An finally, the only things I’m hearing from the World Economic Forum in Davos, Switzerland, is gloom and doom… Hmmm…. These boys and girls are not the people to be expressing gloom and doom, but instead, they should be spreading the love… But they’ve chosen a different path this year, and that scares me a bit, not that they know any more about what’s going on right now than the rest of us… It’s just that when I say something, the markets don’t listen, but if one of those guys say something, well now that’s a horse of a different color, my friends…
A funny, ha-ha, note here… Years ago, when I was on the trading desk and writing each day, I had a dear reader who was absolutely positive in his research that I “moved the markets with my letter each day”… Wait, What? Yes, that’s what he claimed I did… Nice to think that my letter would have held that much clout, but it didn’t, no way, no how!
To recap… It’s another day of wallowing in the mud, that the currencies are stuck in right now… They can’t get out of the mud, and there’s nothing out there right now that would cause them to get out of the mud! Gold is also being held back, and the Ten year Treasury yield is around 2.75% and holding steady Eddie. There’s still a data vacuum, but some housing data did slip through and showed that the rot on housing’s vine is being exposed little by little…
For What It’s Worth… So, like I said above, yesterday I told you about the state of Wyoming, and today, comes word that Arizona is also looking to introduce legislature to include Gold & Silver in their reserves, and the article can be found here: https://www.moneymetals.com/news/2019/01/22/arizona-silver-gold-reserve-fund-001701
Or, here’s your snippet: “An Arizona legislator has put forward a bill to de-risk the state’s financial holdings with a modest allocation to physical gold and silver in the state’s reserve fund.
Introduced by Representative Mark Finchem (R-Tucson), the Arizona Sound Money Stabilization Act (HB 2500) requires that at least 10% of Arizona’s Budget Stabilization Fund be held in the monetary metals in a secure depository.
Arizona’s Budget Stabilization Fund has almost $500 million in assets but is currently invested in debt instruments and the stock market. The state owns no gold or silver.
Finchem’s past sound money initiatives have been successful. In 2017, Rep. Finchem passed the ground-breaking House Bill 2014, a measure which removed all income taxation of gold and silver at the state level.
Gold and silver do not have the default or inflation risks that bonds and other “fixed income” investments carry. Most importantly, physical gold and silver held in a depository carry no counterparty risk – or risk of failure or default – unlike stocks, bonds, and other financial assets.
In support of the measure, Rep. Finchem said, “it’s high time to safeguard the state’s assets and taxpayers against the volatile dollar.”
Chuck Again… He’s darn tootin’ right when he says that Gold and Silver do not that default risks of other investments! OK, which state is next on the docket to get this done?
Currencies today 1/23/19 American Style: A$.7138, kiwi .6790, C$ .7508, euro 1.13 60, sterling 1.2995, Swiss $1.0016, European Style: rand 13.8550, krone 8.5936, SEK 9.0295, forint 280.08, zloty 3.7735, koruna 22.5926, RUB 66.44, yen 109.65, sing 1.3593, HKD 7.8458, INR 71.21, China 6.8029, peso 19.10, BRL 3.7705, Dollar Index 96.32, Oil $53.62, 10-year 2.76%, Silver $15.41, Platinum $792.00, Palladium $1,346.02, and Gold… $1,285.17
That’s it for today… It got very windy here yesterday, and from what I can hear going on outside, it’s still very windy this morning! UGH, the wind sure curtails outside activities! And that’s what I come here for, to be outside soaking in Vitamin D! Oh well, I’m sure you don’t care, especially if it’s below freezing where you are! I got to watch our Blues the other day on TV down here, and the lost! UGH! It’s been an ugly season for Blues fans, but that’s our team, and we can’t stop rooting for them! It’s been a few years since I’ve attended a hockey game, so my rooting comes from a recliner! HA! Badfinger takes us to the finish line today with their song: Come And Get It…. I hope you have a Wonderful Wednesday, and continue to Be Good To Yourself!
Chuck Butler