Negative Rates & Digital Currencies Coming To A Country Near You!

Rocktober 27, 2020

* Traders go into “shutdown” ahead of the election

* Chuck has a mea culpa for you today, you don’t want to miss that! 

Good Day… And a Tom Terrific Tuesday, and Manfred The Wonder Dog Day to you! I think going forward I’m going to give Manfred his own day, on Wednesday…  It’ll change to a Manfred the Wonder Dog Wednesday! So back-to-back days of an old cartoon favorite of mine…  Well, Mrs. Barrett was confirmed as a Supreme Court Justice… You know, politics aside, I think this person was the best qualified judge to be confirmed in over 50 years of me following this confirmation process, that has turned into a circus, and not a fun one. But Mrs. Barrett showed great composure during the somewhat questionable questions posed to her… Congrats Amy Coney Barrett!  The Dodgers have a 3-2 games lead in the best of seven World Series that will resume tonight. Come on Rays!  Journey greets me this morning with their song, and my fave Journey song: Girl Can’t Help It…

Well, I switched on the Monday Night Football game last night, just to see what the new stadium that was built for the Rams, looked like… I’m not into the NFL as much as I used to be… I don’t think I have to explain to you why, I soured on the NFL… Shoot Rudy, I even stopped playing fantasy football! And that’s all I’ll say about that…

So… I think traders and the markets have gone into a semi-shut down ahead of the election next week…  When I looked at the currencies and metals last night, the euro  was trading in the same clothes it had on in the early morning… 1.1820…  Gold was able to pound out a small gain on the day, rising a whopping $1.00… Silver couldn’t find a bid, and lost 34-cents on the day… Which means the closing prices on Monday were $1,903 for Gold and $24.34 respectively…

And to cement that thought even more, in the overnight markets and early trading there’s been little to no movement… The currencies are all (except the Petrol currencies) up but by pips not cents or dollars… The Petrol Currencies are the opposite with them down pips, because the price of Oil has slipped once again… Late last week Oil was trading with a $41 handle, and this morning it’s back down to a $38 handle…  

And the same, little to no movement, holds true for the metals too.. Gold is up 40-cents and Silver is up 11 cents this morning…  I’ve seen this shutdown of trading before when we got close to an election… So, this doesn’t surprise me, except for how early they began this shutdown… 

I have a big mea culpa this morning regarding something I said 10 years ago, so we’ll get to that in due time… But first, I want to talk about my call earlier this year about the Fed going to negative interest rates…  My fave writer, Grant Williams, and his letter Things That Make You Go Hmmm, (TTMYGH) did a very in depth review of negative interest rates in his letter this week…  You know what I found out in his letter, is that all of the countries that have negative interest rates, were all talking a year prior, and made statements like “negative interest rates don’t work”… But then a year later, they all went negative…  The Bank of England (BOE) is the latest to go through this process…  A year ago, they issued a statement that did not speak well of negative rates…

But what did we learn last week? That the BOE was seriously considering implementing negative interest rates…  I tell you all this to bring us to this….  What normally takes place in the U.K. usually ends up coming ashore here in the U.S. about 6 months later…  Which. give or take a month due to the BOE dragging their feet, would put negative interest rates here in the U.S. next summer… And don’t forget the Fed Heads have made it clear that they are not considering negative rates… Yeah, and I have a bridge to sell them!  As if negative rates aren’t bad enough… here’s comes the point that makes the cheese bind… “Andy Haldane, a member of the Monetary Policy Committee (MPC), the UK’s equivalent of the FOMC suggested that to achieve properly negative rates, the abolition of cash itself might be necessary.”

Do you recall me telling you that a couple of months ago? That along with negative rates we would see cash outlawed, and the next day your bank account won’t show dollars any longer… It will be digits…  And with that the very last of our civil liberties are thrown out the window….   And again I borrowed this from Grant Williams TTMYGH this week,  It will finish off this discussion with a quote from (Ambrose Evans-Pritchard): “Five years into the global experiment with negative interest rates, we know enough to conclude that it has destructive anthropological effects and does more economic harm than good.

Negative rates do not stimulate lending for useful economic activity. They damage “good” banks by eviscerating their bread and butter business model, but help “bad” banks play the casino.

They can increase precautionary savings by households and therefore drain money out of the real economy. They stretch public tolerance of overmighty central banks to near breaking point.”

Ok.. Chuck again… let’s move on to the mea Culpa I told you about above…. So… How many of you were in the audience of the Orlando Money show in 2011, when I shocked everyone by saying that by the end of the current decade we would have a new currency regime, and that the Chinese renminbi would be taking over the reserve currency status?  I not only talked about it back then, but wrote about it… I think the first time I wrote about it I had about 100 people unsubscribe from my letter… Did that deter me?  No… But looky here, we’re coming down to the end of the decade, and….  No currency regime change… Was I wrong, or was my timing just wrong? 

China has done a lot of things to open up their markets, and get cross border currency exchanges working in the past 9 years… And this quote from the People’s Bank of China Gov. Yi, last weekend reminded me that I hadn’t talked about it much lately… Let’s listen in to what Mr. Yi, had to say…

“People’s Bank of China Governor Yi Gang said that promoting broader use of the yuan will continue alongside the opening of markets. “The regulator’s main job is to reduce restrictions on the cross-border use of the currency, and let it take its own course,”

Chuck again… Does it sound to you like China is backing off their quest to become a world leader in currency use?  It sure doesn’t to me… .And that brings me to my error in timing… I should have known that the Chinese have very long range plans… 100 years plan to be exact… Not that the currency regime change would take 100 years… But that’s how they view things, in long ranges…  And 10 years is NOT a long range…  It may seem long if you’re in prison serving 10 years for manipulating currency markets, no wait! Nobody goes to jail over that! What am I thinking?  But you get the point… 10 years is not a long range…

Oh, and one more thing on China… Their ownership of U.S. Treasuries have fallen to 2017 levels… They’re going the wrong way there folks…  I’m just saying…

The U.S. Data Cupboard will have the Sept. Durable Goods and Capital Goods Orders…  After a brief recovery I’m thinking that we’ll see this data fall back… sort of like the red coat military, fire, and fall back! The Case/ Shiller Home Price Index for Aug. will also print today, I’m expecting home prices to be rising given you can get a 30 year fixed rate mortgage for 2.25% these days…  And finally the stupid Consumer Confidence will print…   So, a busy day, but… as I said above, I do believe that traders have gone into a “holding pattern” ahead of next week’s election.

To recap… The currencies and metals didn’t get out of bed and remained in their same clothes all day yesterday, and through to this morning…  The euro failed to launch, and Gold gained a whopping $1.00….  Chuck reminds everyone what he said a couple of months ago, and what he said 10 years ago… One is yet to come to fruition, and other was timed badly… 

For What It’s worth…OK… a couple of weeks ago I wrote about all the rents and mortgage payments that were being waived and how that would end up hurting the bond holder…  Well, according to Reuters, that easy living is just about over, and that article can be found here: https://www.reuters.com/article/us-usa-housing-eviction-insight-idUSKBN27415U

Or, here’s your snippet: “It has been a nightmare year for many of America’s renters. The local, state and federal eviction bans that gave them temporary protection in the spring began to lapse in early summer – ensnaring renters like Bean in the gap. September’s reprieve by the CDC, which protected many, but not all, renters will expire in January.

At that point, an estimated $32 billion in back rent will come due, with up to 8 million tenants facing eviction filings, according to a tracking tool developed by the global advisory firm Stout Risius and Ross, which works with the nonprofit National Coalition for a Civil Right to Counsel. The nonprofit group advocates for tenants in eviction court to secure lawyers.

In a typical year, 3.6 million people face eviction cases, according to the Princeton University Eviction Lab, a national housing research center.

Landlords, most of whom are mom-and-pop operators with mortgages to pay, say they, too, are under unprecedented financial strain, as many move into the eighth month of nonpayment. Many owners are “not generating sufficient revenue,” said Bob Pinnegar, CEO of the National Apartment Association. “This is not a high-profit-margin business.”

“Only 9 cents of every dollar return to the owner or investor as profit,” he added.

Unless Congress and the Trump administration move past their deadlock over the contours of a new COVID-19 relief package and include financial relief for tenants and landlords, January will bring a surge in displacement and homelessness “unlike anything we have ever seen,” said John Pollock, a Public Justice Center attorney and coordinator of the National Coalition for a Civil Right to Counsel.”

Chuck again…  Again, blame it on the lack of stimulus… do not EVER blame the renter for not having rainy day savings to use for times like this…  I’m just saying… This is one of those unintended consequences of shutting down the economy…  And one that’s bad… bad for the people that will be shown the streets, if something isn’t worked out…  And pretty soon we’re going to be getting to the holiday season, and I don’t recall anything major getting done in the holiday season, do you? … I’m just saying.. 

And before I go on… I want to make something perfectly clear… I’m not just about money and the economy, and I don’t want anyone to die… But there are major things that go missing when an economy is shut down. I feel that that human life itself is destroyed  or at least spiritually in the inhuman lives they’ve asked us to lead. Cancer and other diseases go undetected, and I take that personally…  I’ve always said that cancer is a dastardly disease, and that I wouldn’t wish this on my worst enemy… 

Market  Prices 10/27/20: American Style: A$ .7133, kiwi .6703, C$ .7590, euro 1.1827, sterling 1.3034, Swiss $1.1019, European Style: rand 16.1342, krone 9.1588,  SEK 8.7162,  forint 308.85,  zloty 3.8762,   koruna 23.1157, RUB 76.36, yen 104.65, sing 1.3590, HKD 7.7498, INR 73.58, China 6.6991, peso 20.88,  BRL 5.6211,  Dollar Index 92.91,  Oil $38.71,  10-year .78%, Silver $24.45, Platinum $889.00, Palladium $2,388.00, and Gold… $1,903.70

That’s it for today… This whole negative interest thing has got me all lathered up folks… And I do still believe that it’s coming…  Little Evie has come to the house to stay the day with us… That puts a big smile on my face, and I forget about all the “other stuff”…   A rough night of sleep for me last night… Sometimes the chemo just does that to me, and then when I finally get to sleep, the alarm goes off! UGH!   This Saturday, Halloween, my beloved Mizzou Tigers travel to Gainesville, Florida to play the might Gators… This will be a BIG test for my Tigers…   Yes, takes us to the finish line today with their song: Rhythm Of Love…   I hope you have a Tom Terrific Day, and please Be Good To Yourself!

Chuck Butler

Hedge Funds Say Gold Will Exit It’s $1,900 Cage Soon!

Rocktober 26, 2020

* Currencies rally on Friday, but turn around overnight… 

* Gold gets old on Friday, but turns around this morning… 

Good Day… And a Marvelous Monday to you… Well… In case you’re wondering… It was a gloomy weekend here, very chilly, and a good 20 degrees below normal… But the gloomy day didn’t stop my beloved Mizzou Tigers from upsetting Kentucky on Saturday! Their second win VS a team that my Tigers were forecast to lose to… And then to follow up the joy of a Saturday victory for my Tigers, the Rays made a ninth inning rally to comeback and beat the Dodgers… That was tense, and I didn’t even have a dog in that fight! All four grandkids were here Saturday night, and 3 stayed over… My little Evie is walking steady now, and so darn cute! Delaney Grace was here to help. I still can’t believe she’s 13 now! Saturday was also the wedding of our former neighbor’s son…  So, good luck Drew & Chloe!  It was strange being in church with a face mask on… I’m just saying…

I’m also just saying that I’ve had it with all this tip toeing around each other, and not being able to live our lives… The way I see it, is this… We all know that tomorrow is not promised to any of us… And that pre-pandemic, we also knew that there was risk every day… You may just be going across town to the store, in your car, but you never know, right?   I’ve said this before, and quite frankly I don’t want to hear a lot of naysayers in the response box regarding this… But we should have never locked down the country and the economy… We should have taken the steps to insure those “at higher risk” were kept safe, but the rest of the economy should have been open, period.   I read where the “cases” are soaring again in Missouri… But… did you know that the test that they use to determine for them, positive or negative, wasn’t developed to do that?  So, we get a positive test, but if they multiplied it more times, it would be negative…  This “cases thing” has gotten out of control… 

OK… I’m off my soap box now… aren’t you glad?  Because I know you didn’t open up my letter today to hear my views on the virus testing…. So, with that in mind… The currencies had a good day on Friday, with the euro pushing higher into the 1.18 handle once again…  There seems to be more and more articles out there talking about the digitization of our economy…  If they had just read my Pfennig from a couple of months ago, they could have saved themselves some time to write about something else… And for all those people that needed to get the news from elsewhere, shame on them! They should be Pfennig readers! HA!

But when I turned on the light over my laptop this morning, I saw that the overnight markets have reversed the Friday gains in the euro…  Gold is up $4 in the early trading, but Silver, Platinum and Palladium are all on the selling blocks this morning… So, it’s a strange day to begin the week, the final week before the national election…  

And in a case of believe or don’t… The stimulus negotiators are still talking…  I know one thing, that when they are old and losing their breath, they’ll wish that they hadn’t wasted so much breath on these negotiations!  Everybody is talking… talk, talk, talk… 

So, all this talk has gotten the sentiment swaying toward selling dollars… . It’s not an all-out change of sentiment, but… more and more the dollar gets pushed to the edge, and then gets saved, and then it gets pushed to the edge again, and then saved… Pretty soon the dollar will get pushed to close to the edge to be saved…  I’m just saying…

And, don’t blame me when it gets shoved over the edge… I’ve warned you for some time now that this was coming… Too much Debt… too much currency printing… too much division in the country… too much keeping rates near zero… and…. The current strong dollar trend is too long in the tooth…

Well, Gold & Sliver didn’t have a good day like the currencies did on Friday… But… Gold at one point in the day was down big… and came back during the day to close down just $3.80, to $1,902.30. Silver followed the fortunes of Gold and ended down just 12-cents to $24.68…  Not a good two days altogether for the metals… But… I would think that this week will be different, as the rumors of a stimulus bill have abated…  All talk and no walk… That’s our Congress!  Everybody wants their 2-cents in the bill and when it finally gets finished, it has so much crap in it, that you wouldn’t know it was supposed to be helping the citizens of the country!   I’ve said this before, but, my dad used to say, “Money talks, and B.S. walks”…. 

I mentioned too much debt above…  It was just a couple of weeks ago that I told you that the Current Debt had reached $27 Trillion… In that short period of time, the debt has already risen $132 Billion!   That averages out to about $10 Billion per day… Which if you averaged it out a year, would equal $3.65 Trillion…   And that doesn’t take into consideration, when stimulus bills get passed, and the hit to the deficit is a one-time amount!   Too much debt… too much debt… I need to pound this into the heads of traders…

Things around the world aren’t getting any better folks… But as I’ve explained before… The U.S. is supposed to be better than the everyone else. They have the reserve currency of the world, and is supposed to be taking care of the reserve currency in the world, but are doing a very poor job of that!

I had a dear reader send me a note last week, from someone that used to live here in the U.S. but moved to New Zealand, and he gave his viewpoint on how we got into this mess…  And while reading his note, I was reminded of how I made such a HUGE fuss over what he was talking about back in the day when it was all going down…. I’m talking about how the U.S. allowed Manufacturers to move their businesses abroad for cheaper labor and more profits…  I know, I know, it’s a free country, blah, blah, blah, but…. The Gov’t should have levied huge fines for even thinking about moving their business abroad, and should have made them repatriate their profits and then taxed the hell out of them then…  But noooooo…  We allowed them to close shop here, put workers out the door, and move their businesses abroad, and then to make matters worse, on two occasions the mental giants that run our country, gave tax amnesty to repatriated funds!  They should have taxed them to the max for leaving!

We used to be a country that made things…. And what we made was good! But through the years, we turned into a services country… And our service stinks! But you have to learn how to make lemonade out of lemons, right? So… where are all the leaders that allowed this to happen under their watch? Probably sitting out on their ocean view veranda with umbrella cocktails and eating chocolate bon bons…

OK… Boy I’ve stepped up on the soap box a couple of times this morning.. . I had better be careful stepping back down, I lose my balance easily! 

Gold should be heading toward $2,500 by now, given it reached $2,000 back in August…  But it’s not, the fault of Gold buyers, they continue to demand Gold & Silver, but the price manipulators won’t back off…. 

Because, as I’ve said before, the Gov’t can NOT have Gold & Silver in foreign Central Banks’s vaults replacing the dollars they hold…. That’s why the practice of having more short contracts on the books representing more ounces of Gold or Silver than is currently above ground, is not investigated, and shut down….  Oh, and one more thing on Debt…  Did you know that the total of student debt in this country is $1.64 Trillion? And that about a third of that total is in arrears? 

But Gold will get there and beyond one of these days, because, the dollar is going bye-bye… So long, farewell,  auf Wiedersehen, good night! And when the weight of the debt becomes too much even for the almighty dollar to carry…. Gold will take over….  I’m just saying…

The U.S. Data Cupboard gets back into the business of yielding economic data this week, after spending last week on hiatus!  We’ll see prints like Durable Goods and Capital Goods Orders, The first 3rd QTR GDP print, Personal Income and Spending, and the Employment Cost Index (ECI) for the 3rd QTR, which is a very watched print by the Cartel, I mean the Fed Heads… 

To recap… Friday saw the currencies rally in the face of a Gold & Silver selling. And just like all the other times the euro gets close to 1.19, it sees selling, which is happening this morning… Gold is bouncing back this morning, but Silver, Platinum and Palladium are all getting sold… Chuck thinks that this represents a strange way to start the week…  Chuck gets on his soapbox to yell about virus testing, and what was the thing that started the mess we’re in…  And I bet you’re thinking that it’s Richard Nixon’s exit from the Bretton Woods Agreement, but that’s too easy of a target, I went with this something else! 

For What It’s Worth…  Well, I talked a lot about Gold this morning, so to keep that frame of mind going, here’s an article that was in the Daily Reckoning by James Rickards on what’s moving the Gold price higher, and it can be found here: https://dailyreckoning.com/central-banks-golds-greatest-ally-2/ 

Or, here’s your snippet: “What’s driving this bull market in gold?

It’s not retail investors (apart from a small number who understand the dynamics), and it’s not institutional investors (institutional portfolio allocations to gold are typically about 1-2%).

Instead, the steady buying is coming from central banks (especially Russia and China) and from the super-rich, who typically store their gold in private non-bank vaults in Switzerland and other good, rule-of-law jurisdictions.

The drive toward larger portfolio allocations to gold (in some cases up to 10%) is coming not just from the rich themselves but from their wealth managers and portfolio advisers.

This is a sea change.

For decades, wealth managers have rejected gold and pushed their clients into stocks, corporate credit and alternative investments, including private equity. All of those portfolio allocations backfired when the coronavirus came along. Equity markets have since recovered, due in no small part to massive intervention by the Fed.

The Fed doesn’t entirely explain the rally, but it’s certainly played a critical part. The market is nonetheless set up for another fall. The upcoming election is just one catalyst.

Not only will uncertainty reign until Election Day. It will continue to reign after Election Day.

If Trump wins, the Resistance will not take it well. They will challenge the outcome in court, deny the legitimacy of a Trump victory, and extreme elements in the Resistance will burn American cities.”

Chuck again… To add to Jim’s view…  A dear reader sent me a note that talked about how Hedge Funds Say Gold  Is Set to Depart $1,900 Cage Soon…  Well… as always, I would prefer that they are correct! 

Market  Prices 10/26/20: American Style: A$ .7132, kiwi .6693, C$ .7583, euro 1.1820, sterling 1.3047, Swiss $1.1031, European Style: rand 16.2495, krone 9.2497, SEK 8.7441,  forint 308.54,  zloty 3.8737,   koruna 23.0756, RUB 75.79, yen 104.83, sing 1.3607, HKD 7.7498, INR 73.96, China 6.6768, peso 21.05,  BRL 5.6181,  Dollar Index 93.00,  Oil $38.84,  10-year .81%, Silver $24.39, Platinum $881.00, Palladium $2,413.00, and Gold… $1,906.60

That’s it for today… Like I said above, no debating what I said about the virus this morning, you won’t change my mind on iota!  Well, this coming Saturday will be Halloween! Boo!  For now, I’ve given up on the sweets, something I should have done years ago, but… I just love them!  So, I won’t be helping myself to the candy bars in the dish I use to distribute treats to the trick-or-treaters…  UGH!  And Saturday will also be a Blue Moon! And it’s supposed to be clear so we can see it! I sure hope so… Halloween with a full moon…  The werewolves will be out! Badfinger takes us to the finish line today with their song: Come And Get It…   I hope you have a Marvelous Monday today, and will Be Good To Yourself! 

Chuck Butler

 

 

Negotiators Take Another Run At A Stimulus Package…

Rocktober 22, 2020

* Currencies & metals rally on Wednesday

* But get sold on Thursday… UGH! 

Good day… And a Tub Thumpin’ Thursday to you! Yesterday was another gray and gloomy day here, and Tuesday night it rained like dickens! At one point in the middle of the night I thought a Tornado was moving through the area, the wind and rain was so loud. So, the weather people said that we were in a drought, well I would say after the last few days,, we’re not in a drought any longer! The creek behind my property is rollin’ like thunder!  We used to have beavers that would dam up the creek, normally right behind my house… And weather like this would devastate their dam, but they would get right back to work building it up again… I had to wrap chicken wire around the trunks of my trees that line the creek, for fear that the beavers would get them… The trees are still all there, so I guess I saved them! But no, I’m not a tree hugger…  In case you were thinking that! Chicago greets me this morning with one of their early songs: Movin In… from their 2nd album, which the first time I ever heard it, I was blown away by the wall of sound that the band featured….

Well, yesterday, I said, “The stimulus deadline came and went”… And then later in the day I heard that the powers that be had given the deadline a 48 hour extension… So, here we are at on the day that the 48 hours ends, and once again I would think that the stimulus bill has a snowball’s chance in hell of getting done… So, all the hope that the Robinhood investors, and Wall Streeters have built up is going to be disappointing…  That’s all I have to say about that!

OK… well… all this talk of being near the goal line for a new stimulus bill, sure has the dollar bugs on the run… The euro continued to move higher in the 1.18 handle yesterday, and the Aussie dollar (A$) which has been spending time in the wood shed, afraid to come out and show their bruises, finally got on the rally tracks again yesterday, and climbed back above 71-cents…  It was a good day all around for the currencies… Now… let’s see what happened in metals, eh?

For the first time in some trading days, Gold & Silver were able to add on to their early gains throughout the day Wednesday… Gold ended up $18 to close at $1,925.30, and Silver ended up 45-cents to close at $25.13…    You know, the price manipulators used the threat of no stimulus as their reason to sell Gold a couple of weeks ago… I wonder what will happen this time?  Because Gold seems to be moving ahead and leaving all that baggage in its rear view mirror… But the price manipulators/ the wolves, are always at the door…

I told you yesterday that Silver guru, Ted Butler (no relation, blah, blah, blah)  was  interviewed this week by Tom Bodrovics at Palisade Radio, explains why he thinks that price suppression in Silver is beginning to fail as the longstanding concentrated short position maintained by bullion banks breaks apart and starts to lose money.

And if you want to listen to him explain his thoughts, here is a youtube video that you can watch curtesy of the folks at GATA…

https://www.youtube.com/watch?v=tSy4gq2OpRk&feature=youtu.be

OK… all that good stuff that went on yesterday, is being unwound in the overnight and early trading markets on this Tub Thumpin’ Thursday… UGH!  Gold has given back $20 this morning and Silver has given back 46-cents, while the euro falls back within the 1.18 handle… Yesterday, it looked like things were finally going in the right direction, and today… 

For what I can see about Gold’s loss this morning is that $3 of the loss is from dollar strength, and $17 is from sellers…  So, once again we’re seeing the price manipulators at the COMEX window… UGH!  From what I’m seeing, there’s news that the stimulus negotiators will meet again today, and that’s why the dollar has rebounded… Really? Give me a break! I was born… Just not yesterday! 

For all the Ivy league schools, and others of note, Stanford, to mention one, why can’t we as a nation produce another Thomas Jefferson?  Man this man could think and put his thoughts down in writing so that everyone could read them…  I had a guy send me a nasty note a couple of weeks ago, when I cited something that Thomas Jefferson said about Bankers…  he apparently is one of “those kids” brought up the thought that you should hate American, it’s founders, it’s capitalism, it’s history, and so on… But to brighten my day… I had a long time reader send me a picture of a postcard she obtained while visiting Monticello when she was young girl, and the picture is of Thomas Jefferson…  So, at least someone shared my admiration of the man!

Ok, back to regularly scheduled programming….  

I noticed yesterday that the Canadian dollar / loonie had taken a step outside its normal comfort zone of 75-cents, and was trading above 76-cents… I even did a double take on that number when I was typing the Market Prices roundup…  So, later in the day, I had to find out what was going on up north…  Well, it seems that not only was the uptick in the price of Oil helping, but so was some economic data…. Retail Sales for Sept. came in bang on the Aug. number of .4% gain, which sure beats the negative numbers that were printing a few months ago… And their version of CPI (consumer inflation )  showed at .5% gain YOY… which was up from the Aug YOY number of just .1%…   So, to me, this tell me that inflation is going up and interest rates will have to follow eventually… And like all markets, the traders were looking ahead… 

I was having a long conversation, on the phone, with good friend, Dennis Miller yesterday, and during the conversation we agreed that the middle class in the U.S. is a dying breed… And in 20 years, there probably won’t be a middle class, as we knew it to be, silent bur strong!

What brought that conversation on? Well, we were talking about how difficult it is for normal people to build any wealth toward their golden years…. With interest rates near zero, and will be for a long time going forward, how can Joe six-pack save?  I talked about how stupid the Cartel, I mean the Fed is in their desire to ramp up inflation, because when you ramp up inflation, it can get out of hand, and pretty soon you would have to raise rates to combat the inflation… And I don’t mean by 25 Basis Points!  Remember when inflation got out of hand in the 70’s and how high Paul Volcker had to raise rates to get inflation under control?  Remember his Saturday Night Special? 

The Fed can’t raise rates past 3% in my view…  Because with rates any  higher, the debt servicing costs would probably outdistance the tax receipts in this country…  And then there would no funds left over for all the other deficit spending programs…  And one of the first one to get cut, I’m afraid would be Social Security… OOOOhhhh, I can hardly wait for that to happen! NOT!   What is debt servicing costs I hear some of you asking? 

That’s market parlance for bond interest costs….  The U.S. issues Treasuries to finance their debt, and those Treasuries have an interest rate that’s payable to the holder.  For the past 13 years, The Gov’t has gotten off Scot-free of worrying about debt servicing costs, because interest rates have been near zero all that time, save a couple of rate hikes by Janet Yellen, who had a dastardly  agenda she was playing….   Those rate hikes  were quickly turned around last spring…

I find the news that physical demand for Gold continues even in the face of Russia halting their Gold purchases while the economy works its way through their version of the pandemic. Apparently China has slowed down on their Gold purchases too. But of course that doesn’t mean they stopped mining Gold…  You know when I first started following Gold, Australia was the number one country for Gold mining…  So… just like reserve currencies of the world, eventually the leader gets knocked down by the new kid on the block…  I’m just saying…

But my metals guru, Tim Smith of TIAA Bank World Markets 1-800-926-4922, tells me that physical demand is still strong… So I asked him about the premiums if they had come down, and he replied, “ Retail Demand is still strong, although off the peak demand of this spring, and premiums have come down a bit, but certainly not wat they were pre-COVID” 

Well that’s about what I expected to hear, even with the news last week that some Central Banks were selling their Gold… Probably from countries that can’t pay their bills due to their respective economic lockdowns… I wouldn’t worry too much about this news… Because it didn’t mention the Big three of Gold buyers.. Russia, China and India… 

The U.S. Data Cupboard has the Weekly Initial Jobless Claims for last week… And looky there! The Weekly Jobless Claims fell last week to 787,000, thus breaking the streak of plus 800,000 each week that has gone on since March…  I’m going to have to look into this number because after rising the last three weeks, it suddenly falls?  That seems suspicious to me, doesn’t it you? 

A longtime friend, David Gonigam, of the 5 Minute Forecast, at: https://5minforecast.com/  had some thoughts about the unemployment picture in out country, so I’ll hand over the reins for the Pfennig to him…  Here’s David… “For the record: Seven months into the lockdowns, the numbers show people are just plain giving up looking for work.

The Labor Department released state-by-state job figures yesterday. Of the 30 states where unemployment fell last month… the size of the labor force shrank in more than half of them.

A shrinking labor force means fewer people working or looking for work. That’s one reason the official unemployment rate has fallen from a peak of 14.7% in April to 7.9% in September.

Economists don’t see any obvious reason. School closings keeping moms at home? California has many schools shut down and Florida does not, but labor force participation is flat in both states. Nor does there seem to be any evidence of more people looking for work in states where job searches are a condition for collecting extended unemployment benefits.

Yet another 2020 head-scratcher…”

Chuck again…  I’ve gone on too long again today, so I’ll head to the Big Finish…

To recap… The currencies had a good day yesterday, as the thoughts that a new stimulus may still be in the offering and sent the dollar bugs well into the wall boards they came from… Gold & Silver were able to add on to their early gains for once in a blue moon, and ended the day on as the Godfather of Soul, James Brown, says… On the Good Foot! But have given back all those gains yesterday in the early trading today… UGH! 

For What It’s Worth…  I was just thinking that I should have saved the David Gonigam thoughts for the FWIW, but instead I have an article for you from Forbes, that the GATA folks first sent me, and then I saw it highlighted on Ed Steer’s letter this morning, so I knew it was FWIW worthy!  It’s an article about Citicorp shouting out about how investors need to buy Silver… and it can be found here:https://www.forbes.com/sites/timtreadgold/2020/10/20/silver-shines-says-citi-tipping-a-60-price-rise—for-starters/#4b9011107646 

Or, here’s your snippet: ” Silver has been a graveyard for investors since the Hunt brothers tried to corner the market for “poor man’s gold” 40 years ago, so when a big-name investment bank earlier this week forecast a 60% rise in the silver price most investors yawned.

Citi, which has a well-connected resources research team, has put its neck on the silver block in an advisory note with a tip that the price of the metal will rise to $40 an ounce over the next 12-months.

Silver is currently trading around $24.80 an ounce on the London bullion market, having already risen by 38% from $18/oz since the start of the year.

Citi’s case for silver is based on growing demand from investors who see silver as a cheap entry point into the world of precious metals dominated by gold, with a bonus of strong industrial demand.

But the bank doesn’t stop at a 605% silver rally. It also argues that there is a technical case for silver doubling $50/oz, and potentially rising four-fold to $100/oz. The bank said its foreign exchange (FX) technical team is very bullish on silver with “$50/oz a very realistic target — and $100/oz possible.”

Chuck again…  $100 Silver?  WOW! If Silver would ever trade at $100 an oz. I might even get a hug and kiss from my wife! HA!  

Market  Prices 10/22/20: American Style: A$ .7100,  kiwi .6663, C$ .7597, euro 1.1822, sterling 1.3093, Swiss $1.1021, European Style: rand 16.3110, krone 9.2495, SEK 8.7765,  forint 308.25,  zloty 3.8743,   koruna 22.0288, RUB 76.96, yen 104.67, sing 1.3570, HKD 7.7498, INR 73.61, China 6.6525, peso 21.17,  BRL 5.6019,  Dollar Index 92.89,  Oil $40.32,  10-year .81%, Silver $24.67, Platinum $871.00, Palladium $2,394.00, and Gold.. $1,905.50

That’s it for today…  Well maybe the Rays heard my cheers for them, as they won Game 2 to even the Series with the Dodgers…  Man these games go late into the night!  Well, it’s supposed to get warm again today, and then back to chilly tomorrow… So, I’ve got to get outside today while I can! I have a new book to read… I thought I would try something different than my usual detective books, like Harry Bosch, Mike Bennet, Alex Cross, and Cormoran Strike, and I’m reading: The Madness of Crowds… So, far so good…  Just thought I needed to expand my reading material! HA! Oasis takes to the finish line today with their song: Wonder Wall… I laugh whenever I hear Oasis on my iPod… Because, remember they were supposed to be better than the Beatles?  Where are you now Oasis? I’m just saying… I hope you have a Tub Thumpin’ Thursday, and a Fantastico Friday tomorrow, and will sure to Be Good To Yourself!

Chuck Butler

 

The Stimulus Deadline Comes & Goes…

Rocktober 21, 2020

* Currencies & metals are rallying this morning… 

* The Bond Boys don’t like the no stimulus decision… 

Good Day… And a Wonderful Wednesday to you!  Well, my former colleague at Mark Twain Bank had to point out something to me yesterday… I did have an “I Voted” sticker on the back of the instructions card that, of course I failed to read completely! So, Thanks, Neil for pointing that out to me! I peeled the sticker off the card and slapped it on my shirt! It made me feel good! And now I can track my ballot, on line to make sure it gets there and is counted! YAHOO! The World Series began last night with the Dodgers & Rays playing… An interesting matchup of the highest paid team VS the 3rd lowest paid team… I’ll be rooting for the underdog, here… So Go Rays! Heartsfield greets me this morning with their song: The Wonder Of It All… 

I think about that a lot, folks… I think about how things were as a kid…  and how much they’ve changed through the years. So, if you ever think that today is boring… I heard Adam Carolla talk about this… get yourself a time machine, and set it for 1972, and then go back there for one day, to see what life was like, and then return to today, and about the time you’re feeling bored with today again, you go back to 1972…  Rotary phones, screwed to the wall…. No video games… no ipad… no ipod…  sure gas was just 23-cents, but… the car you had probably was a beater, and so on… And since time machines don’t exist, you’ll have to use your mind… Go ahead, it’s a great exercise for your gray matter! 

The other day, I said, “Alexa, play smooth jazz” and suddenly throughout the house we had Stan Getz blowing away on his sax…  The Wonder of it all….

Ok, sorry I beat around the bush a little this morning, before giving a recap on what happened in the markets that I cover…. So, with no further ado….  It was another “meh day” for the currencies and metals yesterday, as the euro climbed further into the 1.18 handle throughout the day, and Gold gained $2.80 to close at $1,906.80, and Silver gained 24-cents to close at $24.69…  Both Gold & Silver were higher than their closing numbers during the day, and once again, I don’t see Gold & Silver owners selling for profits on a day like yesterday, so I’ll chalk this backing off from the highs of the day, as case of price manipulators showing up at the COMEX with arms full of short trades once again…

I could be wrong about that, but it just seems silly to me to take a profit on something that should be held as a piece of wealth, when the metal is only up $8 or whatever, during a day…  But then I would never sell my Gold & Silver unless the man was at the door to take away my house… No wait, I own my house they couldn’t do that! But you get my drift…

I read a piece by Silver guru, Ted Butler, no relation that I know of, and he is of the opinion that these daily forays by the price manipulators to bring down the price of Gold & Silver, are beginning to see an end to them… Geez, I sure hope so… Wouldn’t it be nice if we could wake up, no wait! UGH!, I don’t know why my fat fingers start to do that, but your brains does tell your fingers what to type, right?  Anyhoo… Wouldn’t it be nice if we could see Gold & Silver trade on fundamentals?   With no interference?   I would think so!

In the overnight markets, the dollar bugs really went into hiding, and the currencies and metals have both put on some rallies. The euro is trading at 1.11850 as I write, and Gold is up $12 this morning, with Silver up 36-cents, to bring Silver back above $25!….  

And though it’s not a real indication of what the currencies are doing, The Dollar Index has dropped from 93.55 last week to 92.81 today… Things are looking like they could go the wrong say for the dollar once again, but we’ve seen these moves by the dollar to edge near the cliff, only to see the PPT come in, buy dollars, and save the day…  

Well, the Tuesday deadline for a stimulus came and went…  You know me, right? I would love for people to have money to do the things they want to do, but… I don’t believe that waiting for checks from the Gov’t is the way to get that done… I also don’t believe the Gov’t should be in the business of spending even more money that they don’t have and won’t ever have… So, to me, I’m glad that nothing was done… 

The bond boys didn’t like it that nothing was done, and the 10-year Treasury lost ground on the day. Yesterday the 10-year’s yield was .77%, and today it’s .81%…  Now before you start harping at me that there’s only 4 basis points of a move there… Let me remind you that bonds trade in large amounts… very large amounts… And 4 basis points of yield will move the price of the bond enough to cause a loss, and that’s what I’m talking about here… 

And then speaking of the euro….  I said yesterday that I thought that the dollar bugs had drawn a line in the sand at 1.18…  But, one of these days, the euro will treat that line in the sand like the U.S. treated Saddam’s infamous line in the sand….  (In case you’re too young to recall, the U.S. military went through Saddam’s line in the sand like Grant took Richmond)…  I’ve always refrained from using that phrase. It was one of my dad’s favorite phrases, but I always refrained from using it in fear that my Southern readers would take offense…  So, if It offended you, I apologize, but for emphasis to what I was saying I just couldn’t think of another phrase… .

I haven’t talked about the Chinese renminbi since I told you about how the Chinese Gov’t had announced that they were going to put the kyboshes on further appreciation of the renminbi… The renminbi is still stronger than it was a couple of months ago, but the daily appreciations have seemed to have stopped…. That’s one thing that I’ve always liked about the Chinese… They don’t say something unless they mean it… So, when they said that they are attempting to remove the dollar from their lives…. They meant it!  Think about that for a minute…

The Japanese yen has turned into the Hong Kong Dollar… Not technically it hasn’t!  But, what I’m talking about is how the yen barely moves from its daily figure of 105 ish, and the honker stays steady Eddie at 7.75-ish….  (the honker is pegged to the dollar)   You know, when I first began my career in the foreign markets, as the foreign bond trader, in 1992, the yen was 133, and I thought it was pegged to the dollar because it barely moved from day to day. Of course I was incorrect, about that, but still it didn’t tell me the story of why the yen remained to steady, and other currencies were kicking the dollar’s tail and taking names later…  Well, you have to take things into perspective… In 1985 at the time of the Plaza Accord, the yen was at 251…. And in 1971 when currencies were set free to float, the yen was 357…  So, owning yen from that time to now would have been a great trade, no?

And of course as I write that, I see that the yen moved to 104.85 this morning… UGH!  Oh well, that’s still near 105-ish… 

Sort of like owning Gold since 2000…  In 2000, Gold traded around $280 per oz.   And today it’s $1,900-ish….  And then imagine, it is isn’t hard to do, that Gold’s price is reset at $10,000 oz…  I can envision it, now it just need to become reality…

And just when you thought you wouldn’t hear me talk about the collapse of the financial system so much… Craig Hemke of TF Metals, sounds as if he’s been reading the Pfennig… The GATA folks sent this to me yesterday, and here’s Craig Hemke: “”Just about anyone can see that we stand at the doorstep of an epochal change in the global monetary system. The Great Keynesian Experiment is failing, as the monetary growth needed to service the existing global debt is finally exceeding the capacity of the system to provide for itself. Put another way, the global central banks are now permanently in a mode where only the continual and rapid creation of additional fiat currency can feed The Beast of exponential debt.”

I watched a video from Mike Maloney the other day that a reader sent me to watch, (see I did my homework, aren’t you proud of me? )  and he explained the history of monetary regimes… In essence the average of each lasted about 40 years….  And we’re currently near 50 years (1971-?), so our system is long in the tooth, so to say…. And I know when I first told you that I thought the weight of the debt would cause the financial system to collapse, you were shocked… How could I say that, our system has been in place for 49 years, and it hasn’t collapsed yet?, I can here you saying…. Well, hopefully, you’ve come around to my way of thinking…..  

Got Gold?

I heard a funny the other day, that I’ll share with you…  At Thanksgiving this year, bring up your view of politics, it will definitely reduce the number of Christmas gifts you need to buy this year!  HA!  Speaking of politics, we had a lively discussion last night about the two parties…. I’m so proud of my youngest son Alex for a number of reasons, but last night, he proved that he was well read, and well versed on the politics of today, and….  We agreed on everything!   My wife, well… she had to play devil’s advocate on everything we talked about…

OK… Man, am I full of good news and cheer this morning! NOT!  I shared a cartoon with my watering hole buddies yesterday… A traffic cop that is a lighting bug, pulls over a lighting bug on a motorcycle, and tells him, “Your tail light is out”….  I laughed and laughed and laughed at that….  And reminded me of a joke I used to tell the kids to use on Halloween, but they never did…. What did one fly say to the other fly?  You’re man is open!   HAHAHAHAHAHA!

So, there did I even out the tone of the letter this morning?

Well, as I said yesterday housing sure is hitting on all eight cylinders these days… And why not, with mortgage rates in the 2’s….  Housing Starts and Building Permits both for Sept. beat expectations, and showed that even in a pandemic, if the price is right (servicing cost) houses will sell!   Speaking of the pandemic, I see where people are buying cars online now…. Wait What?  Don’t you have to test drive a car to see how it feels, and you sit in it, kick the tires, etc.?  Well, I guess not…  And think pretty soon you’ll be able to ask the car salesmen, “Just how many digits is this car selling for?”   HA!  The Wonder of it all…. 

Today’s Data Cupboard is reserved strictly for the Cartel’s, I mean the Fed’s Beige Book…  Cartel, I mean Fed heads, Brainard, Mester and Kaplan will all speak somewhere today… Who’s going to let the cat out of the bag regarding the new digital currency the Fed is working on?

Maybe none of them, maybe they’ve been sworn to secrecy…  But knowing out Fed Heads like I do, They are all primed and pumped to be the first to tell you… But maybe the timing isn’t right, just yet… We’ll see…

To recap… Another “meh day” in both the currencies and metals… They gained ground, mind you, but not so much that you would notice…  The only thing different from Monday’s Meh day, was that the little dogs finally got off the porch to chase the dollar bugs down the street…  (the other currencies not named euro,)

For What It’s Worth…. Ok, I know I’ve run on long this morning, so I’ll try to make this a short FWIW… I found this on Ed Steer’s letter (www.edsteergoldsilver.com) and it’s a foreigner’s view point on the U.S. and it can be found here: https://internationalman.com/articles/is-there-hope-for-the-us/

Or, here’s your snippet: “For the entire lives of anyone under the age of seventy-five, the U.S. has been at the top of the heap in almost every way. For decades, it had greater freedom, greater prosperity and higher production than any other country in the world.

America was a cornucopia – the centre for innovation and trends in technology, the arts and social development. And today, many Americans, even if they complain about changes for the worse in their country, come back quickly to say, “This is still the greatest country in the world.” Or, “Everybody is still trying to come here.”

Well, truth be told, neither of these knee-jerk comments is accurate any longer. But even those who have come to that realisation tend to resort to the inevitable fall-back comment: “Well, whattaya gonna do? It’s just as bad everyplace else.”

And yet, this is also inaccurate. Throughout the history of the world, whenever a country had entered its decline stage, others were in the process of rising up.

And this is just as true today. There are countries where prosperity and production are far greater than in the U.S. and, increasingly, countries where the key ingredient that made America great – Liberty – is present to a far greater degree.”

Chuck again…  As usual the actual article is much longer and gets into much more than I can print here, so take a look by clicking the link above, that is, if you’re interested! 

Market Prices 10/21/20: American Style: A$ .7085, kiwi .6631,  C$ .7625, euro 1.1850, sterling 1.3057, Swiss $1.1061, European Style: rand 16.3864, krone 9.2147, SEK 8.7407,  forint 307.05,  zloty 3.8595,   koruna 22.9360, RUB 77.58, yen 104.84, sing 1.3555, HKD 7.7498, INR 73.64, China 6.6758, peso 21.08,  BRL 5.5959,  Dollar Index 92.81,  Oil $41.00,   10-year .81%, Silver $25.04, Platinum $884.00, Palladium $2,429.00, and Gold.. $1,918.70

That’s it for today…  Well, the Dodgers won Game 1 last night… C’mon Rays you can do it!  My beloved Mizzou Tigers finally will get back on the gridiron this Saturday, with their redone schedule, they’ll play Kentucky… Go Tigers!  The Band Styx, takes us to the finish line today with their song: Lorelei…   And that reminds me of my former assistant, little Christine, she once said that she wanted to be called Lorelei… And it stuck only with a guy on the brokerage desk, who always called her Lorelei…  good memories, for sure! I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler

Powell Talks About A Digital Currency For Us!

Rocktober 20, 2020 

* Currencies and metals have a “meh day”

* It’s not time, yet, for Chuck to gloat… 

Good Day… And a Tom Terrific and Manfred the Wonder Dog Day to you! Well, I voted yesterday… I usually vote absentee, since I can’t stand in long lines very long without major pain… And the National Election is one of those times!  The thing I missed was the lack of a (I Voted) sticker! HA!  My trip to the wound center was OK… once again another doctor said, “keep doing what you’re doing”…  It’s a good thing I have insurance, or else I would balk at paying a doctor their fees if that’s all I heard out of them! HA!  I have to wear shorts to the wound center, obviously, and when I stepped outside, it was cold and rainy, and I shivered, and said, “ I wanna be where it’s warm”! Well, I’m getting to hear, one of my two fave songs from Chicago this morning… Chicago greets me with their song: Hard Habit To Break….  I have to say that I didn’t always care for the direction that Chicago went after the death of Terry Kath, but this song, just gets to me in a good way…

Well, the hopes I had for a very good day in the currencies and metals yesterday, turned into a Meh, day… Gold did hold on to some of its early gains to close up $3.50 at $1,903.00…. And Silver closed up $17-cents. at $24/35/// But those gains were off their earlier gains… I can’t see Gold holders selling at a profit on the day, as the profit was, while good, not great…. So, it had to be more price manipulators showing up at the COMEX with arms full of short Gold & Silver trades…  It’s become a common day occurrence these days, as I think the bullion banks can see the writing on the wall, that no matter what direction we go, Gold is going to rally… 

The euro held its gains throughout the day, so the dollar bugs were non existent for one day, that is… The Aussie dollar (A$) didn’t fare as well as the euro, and lost about ½=-cent on the day…  Speaking of Australia… I have a long time reader, Bob, who sends me links that I use from time to time in the FWIW section… He lives in Australia, and he sent me a link to a file of simply beautiful flower gardens in Australia… It’s spring there, and the flowers are in bloom!   One of the things weighing on the A$ has been the strict lockdown of the economy… It was reported the other day that a woman walking in a park, was arrested for not following distancing rules…  Now that’s strict…  Now we all know what a lockdown like that can do an economy, and so the A$ is having a difficult time gaining any traction, right now…

In the overnight and early morning trading markets, the euro has popped back over 1.18, which seems to be the line drawn in the sand by the dollar bugs… They’ll allow the euro to reach 1.18, but that’s about it… So, we’ll see how today goes for the single unit… The euro is about the only currency to see gains though, this morning… Gold and Silver are basically flat this morning, so they have that going for them… 

Well… have you heard the news, there’s good rockin’ at midnight, no wait! The news I’m talking about is serious stuff, we don’t need silly stuff right now!  The news I’m talking about is that Fed Chairman Jerome Powell, gave a speech recently on why the Fed wants to develop a digital currency…  here’s what the Fed Chairman thinks about a digital currency… “It’s more important for the United States to get it right than to be first,” adding that “we are committed to carefully and thoughtfully evaluating the potential costs and benefits of a central bank digital currency for the U.S. economy and payments system. We have not made a decision to issue a CBDC.”

I guess this is where I gloat… No wait, it’s not a done deal just yet, but with 80% of the Central Banks around the world “exploring the idea of a digital currency”, I would have to say that IT’S COMING! And that will be the end of the last of our civil liberties, folks…  You know, through the years, that we, as a country, were accumulating piles of debt each year, I really though that it was because these guys that elected were just too stupid to figure out what all that debt was going to do to the economy… 

But now, I think I see where this was all going in the first place… They knew that if the debt got so large, it would collapse the financial system, and when that happened they could introduce their digital currency, and central planning, and all the other crap that goes with this plan… 

It’s really a sad state of affairs, folks…  I think I’ll go out today, and spend some cash just for old times sake….  And savor what it feels like to have some cash in your pocket, that you can pull out, and lay it on the counter… There’s so much freedom and feeling of accomplishment involved with the exchange of cash….  And that feeling is going to be gone, eventually, folks… These guys don’t talk about something unless it’s 80% through its testing phase….  And the “new Bretton Woods” meeting that the IMF is calling for? Seems too soon to introduce the new financial system, so what is the IMF up to?   

No good…. That’s what!  Given what we all know has happened to countries that needed help from the IMF… The countries all wished they hadn’t called the IMF to begin with when it’s all over…  I’m just saying..

Got Gold?  

The U.S. Data Cupboard today has the Housing Starts and Building Permits, and from the looks of it, they have had a very good September… And why wouldn’t they? Mortgage rates are in the 2’s…  That’s crazy! Tomorrow’s Cupboard offering will be the cartel’s, I mean the Fed’s Beige Book… Not that this is a market mover, but does sometimes give us a hint of what the regional Fed Heads are seeing… 

To recap…  Our “up day” turned into a “meh day” yesterday, Gold & Silver couldn’t hold their early gains, but did finish out the day with small gains, and the euro pushed higher, but the rest of the currencies aren’t following along at this time… It’s time for the little dogs to get off the porch and follow the big dog (euro) down the street to chase the dollar bugs! 

For What it’s Worth….  Longtime readers will recall me referring to Koos Jansen a lot in times past whenever I wanted someone else’s opinion on the direction of Gold…  Well, Koos changed his name back to his original name of Jan Nieuwenhuijs…. And he no longer writes for Voima Gold, he has hung out his own shingle… Recently he tweeted the following:  Gold is the only way out for central banks.

CBs want inflation? They need a higher gold price.

CBs want to repair their balance sheets? They need a higher gold price.

CBs want to reset the system with an immutable, neutral, and evenly distributed reserve asset? That’s gold.

So, when the GATA folks sent me a link to his latest article, I thought, welcome back Koos, I mean Jan, and this is a FWIW article!  The article follows up on his thoughts above, and it can be found here: https://thegoldobserver.substack.com/p/gold-is-the-only-way-out-for-central

Or, here’s your snippet: “The tweet was born out of several ideas I had for articles to write. One, on the relationship between the gold price, inflation expectations, and the inflation needed to lower the debt burden. Two, on the accounting structure of central banks’ balance sheets, and the ability of using gains in the price of gold to absorb losses on other assets. Three, on restoring financial stability through a new equitable monetary system that incorporates gold. In aggregate, I think gold will be used to get out of the current financial mess.

Today’s article is a preview of the three aforementioned articles.  

Gold, Inflation Expectations, and Inflation

Due to excessive debt levels, central banks are desperate to spur inflation and keep interest rates at or below zero. Deeply negative real interest rates would lower the debt burden. But creating consumer price inflation is not easy in this day and age.

Strictly speaking, there is no economic law that guarantees that a higher gold price will create inflation. Though, historically the gold price has been an expression of inflation expectations. In turn, inflation expectations are what feed into inflation. So, when the gold price goes up, inflation usually rises within a year or two.

In the 1990’s the Federal Reserve even based its monetary policy partially on the price of gold (source). If the gold price went up—and the market signaled it was expecting inflation to rise—the Fed would tighten. If the gold price fell, the Fed would do the opposite. On February 22, 1994, the Chairman of the Fed, Alan Greenspan, explained to Congress:

[Gold] is a store of value measure which has shown a fairly consistent lead on inflation expectations and has been over the years a reasonably good indicator, among others, of what inflation expectations are doing. It does this better than commodity prices or a lot of other things.

A higher gold price can bolster inflation expectations, and this is what central banks want.”

Chuck again… The article is much longer, so if you have the time, and it interests you, be sure to click the link above to go to Jan’s new website!

Market  Prices 10/20/20: American Style: A$ .7030,  kiwi .6560, C$ .7582, euro 1.1810, sterling 1.2927, Swiss $1.1013, European Style: rand 16.5305, krone 9.2860, SEK 8.7890,  forint 309.50,  zloty 3.8778,   koruna 23.0584, RUB 77.75, yen 105.67, sing 1.3578, HKD 7.7498, INR 73.45, China 6.6840, peso 21.19,  BRL 5.6056,  Dollar Index 93.26,  Oil $40.88,  10-year .77%, Silver $24.61, Platinum $865.00, Palladium $2,382.00, and Gold… $1,903.00

That’s it for today… Man… I was really draggin’ the line this morning until I started talking about digital currencies, that really got my motor running!  HA! Another gray, gloomy day with more rain this afternoon for us today… UGH!  I really do have to go where it’s warm!  We usually head to S. Florida this time of year, and come home around Thanksgiving, but not this year, with my leg wounds having to have their dressing changed every other day, and be seen by a doctor once a week, that put the kyboshes on our annual Fall Trip South…  I’m so depressed about that, I can’t express my depression any more than that…  So… will there be Trick-or-Treaters in your neck of the woods this year?  I would miss the little ones if they decided to not Trick -or-Treat this year…  I’m so done with this virus thing, all these changes have gotten to me and I don’t want to deal with them any longer!  I had better stop there…  The Four Tops takes us to the finish line today with their song: Reach Out, I’ll Be There…  Man, did I love me some Four Tops when I was a young man and could dance to their music…   I hope you have a Tom Terrific and Manfred the Wonder Dog day, and please Be Good To Yourself! 

Chuck Butler

 

The IMF Calls For A New… Bretton Woods!

Rocktober 19, 2020

* Friday was a down day, today looks good though

* Weekly Jobless Claims rise again last week! 

Good Day… And a Marvelous Monday to you… It’s a rainy Monday here, here and usually, rainy days and Mondays always get me down, but… I’m going to try and avoid that feeling today!  It was a very quiet weekend here, which was good, because I was so worn out from last weekend’s activities that it took me until Thursday to feel stronger…  It’s getting to be that time of year, when people spend a lot of time indoors, and since I only feel safe being with people outside, I guess that eliminates any future happy hours indoors here at the Butler House…  I’ve been having driveway happy hours on Friday afternoons, and they worked out great. Now, what to do? I’ll figure it out! Ever had a case of the gout? Well, one of the medicines I take has a side effect of the gout… So, I take another medicine to combat that, but every now and then I wake up in the morning, and my toe hurts so darn bad! And it takes about 3-4 days before the stiffness and pain is gone…, and that’s what happened to me on Saturday morning! UGH! Steely Dan greets me this morning with their song: Do It Again…

Which is what the IMF is calling for…. If you haven’t heard, this was big news this weekend, and the IMF has called for a new Bretton Woods Meeting…  The details haven’t ben ironed out yet, but they will, and when they do I’ll let you know…  Immediately after hearing that announcement, my mind started racing, and coming up with questions… Is this the so-called New Reset?  What’s troubling the IMF?  You do know that the IMF is controlled by the U.S. right?  What isn’t controlled by the U.S. would be easier to name off items!  I’ve long thought that one day I would hear of a great meeting of finance ministers from around the Globe, and they would announce a new market for Gold… Gold would from then on have it’s price guaranteed to be $10,000 an ounce with the Gov’t taking all bids and offers at $10,000…  Wouldn’t that be something if this the meeting where comes to fruition?

OK… Well, Friday was a down day for the markets… stocks, currencies, and metals all got sold, as the Politics keep getting argued over and played by the stimulus negotiators… I told you previously, what the hold up was, and I still believe that to be thc case…  The markets seem to believe that every one needs some new free currency….  This is a slippery slope folks… But since we’ve been headed down the road to collectivism we might as well go through the door with both feet! I hate that we’re going in this direction, but the last time we had free markets that didn’t need bailouts and individuals that didn’t caah for clunkers, and tax rebates, and stimulus checks, was a long time ago my friends…

Boy that just changed my frame of mind… and now I’m depressed!  Oh, well, it is what it is, and there’s nothing I can do to change things…. So, as Neil Young sang, Don’t let it bring you down it’s only Castles Burning….

Gold closed down $9 on Friday and last traded at $1,900…  The euro was basically unchanged, after attempting to rally, it got snuffed out, and the single unit traded just a hair above 1.17, to close the week. When I last wrote to on last Thursday, the 10-year Treasury’s yield was .69%, and this morning it’s come back to .75%… Must have been a boatload of bonds getting sold late last week, eh?  Look the bond boys can buy or sell bonds to affect the yield on bonds… So, they, the bond boys, could be saying, we’re selling to push the yield higher because we fear inflation is rising…  

In the overnight and early trading markets things are looking like it will be an up day today… Gold has gained back the $9 it lost on Friday, this morning, and Silver is up 51-cents early… The dollar bugs either haven’t crawled out of the wall boards, to wreak their havoc in the currencies, or they’re not going to participate today, as the euro is rallying in the early morning…   

I finally finished my Cormoran Strike novel, all 965 pages of it, and went back to reading my book on Thomas Jefferson last week… I mentioned before that Jefferson was no fan of Hamilton, because it was Hamilton that had introduced legislature that would allow a Central Bank…  To which, Jefferson replied… “The central bank is an institution of the most deadly hostility existing against the Principles and form of our Constitution. I am an Enemy to all banks discounting bills, or notes for anything but Coin. If the American People allow private banks to control the issuance of their currency, first by inflation and then by deflation, the banks and corporations that will grow up around them will deprive the People of all their Property until their Children will wake up homeless on the continent their Fathers conquered.” – Thomas Jefferson. (1743-1826).

Now, I was brought up with the understanding that Thomas Jefferson was the smartest man of his time, and if not the smartest, then in the top 5… I think reading this comment by Jefferson only deepens my understanding, for Jefferson back in 1800 thought so little of a Central Bank and their business, and it’s a part of history!  This is not a made up quote, folks… Jefferson actually said those words! And unfortunately, it appears that his foresight is coming into play now…   I’m just saying this to wake you up, and make you realize what the cartel, I mean the Fed is doing to us….

Well, to start this week off with a bang… I know that I talk about the price manipulators a lot, but what I haven’t done in a long time is explain just how this price manipulation is done…  In 1971, the U.S.’s Gold horde had fallen from around 20,000 tons of Gold or 2/3rd s of the worlds total, to the 8,000 some odd tons they supposedly hold now… This was the reason Richard Nixon took the Gold backing off of the trade dollar. (remember individuals weren’t yet allowed to hold Gold, stemming from the sham that FDR pulled by confiscating everyone’s Gold at $20 an ounce and then revaluing it at $35 an ounce now that the Gov’t owned it!, which was a devaluation of the dollar, but that point is often missed).  Was that our trade deficit kept growing, thus allowing foreign countries to submit their bill to the Gold Window and take away the Gold that was owed to them…

Over the years, Gold Leasing has become a very BIG part of every day Gold transactions…  So, the trade goes like this… The Central Bank that owns physical Gold, leases the Gold at a price, and interest to a bullion bank… The Bullion bank then sells the Gold to its clients, and takes those proceeds and invests the money in a higher paying interest rate than what they are being charged…   Now that all sounds hunky dory right?

Except…  The Bullion bank doesn’t have the Gold to deliver bank to the central bank on the lease agreement, unless…. They would buy back all the Gold they sold, at the current prices… But what if the price of Gold has gone higher by a lot, thus causing the bullion bank to take a loss?   Ahh, this is where it gets dicey folks…  The Bullion Bank figures out that they can hedge their trade by selling Gold in the futures market, thus keeping a lid on the price of Gold… And when the futures contract comes due, they had no intention of delivering the Gold, so they simply roll the futures contract at a new price… And if all that was only for the lease contract amount, no one would say a word…. But… When you produce more short contracts than Gold that is above ground…. And when you sell so many contracts that it would take 90 days of production to cover the short sales… Someone, the regulators, should be asking questions…  

And so when I say, the price manipulators showed up at the COMEX with arms full of short contracts, I’m telling you what is happening… Although, I’m sure most trades are electronic these days…  The same goes with Silver, of course….    However it takes 180 days of production to meet the short sales traded, with Silver!

And why doesn’t the U.S. Gov’t, Congress, The Treasury, the CFTC, anyone look into this price manipulation, and shut it down?  Because, as I’ve told you before, it is my opinion that the U.S. Gov’t is behind all this, gives the wink and nod to the JPMorgans and other price manipulators that they won’t be prosecuted or sent to jail for doing the Gov’t’s dirty deed… dirty deeds, done dirt cheap (AC/DC)… Sure they get their hands slapped for “spoofing”, which is a form of price manipulation, but not this short sale arrangement!  

And the reason the Gov’t is behind this, is they cannot, and I can’t emphasize that word enough, Cannot, allow gold to become more popular than their precious dollar.. . What if Central Banks decided to buy Gold instead of hording dollars? Oh, wait! China and Russia do that now… Hmmm…  Now, make sure to take good notes, because you’ll be quizzed on this at some point in the future!

This week’s U.S. Data Cupboard is a real let down following last week’s late week rush of data prints… A bunch of housing prints will be the Data Cupboard’s offering this week, and that won’t get me excited to see them one bit!   Speaking of late last week’s rush of data prints, we saw the the previous stimulus checks finally get spent on back to school clothes, and it jacked up Retail Sales to 1.9% gain in September… But before you go out and buy everyone at the bar a beer in celebration that the economy is recovering, you might want to stick around to see that Sept. Industrial Production came at a negative -.6%…  And Capacity Utilization came in weaker too at 71.5 in Sept. down from 72 in August…  I know I’ve told you all this 100 times before, but just for GP, Capacity Utilization is one of the forward looking economic prints we see… And it’s going the wrong way!

To recap… Friday was a “down day”, and today looks like it will be an “up day”, with Gold, Silver and the euro rallying in the early morning trading. The BIG NEWS from the weekend is that the IMF is calling for a New Bretton Woods… Wait, What?  Now I don’t know if this going to be the Big Reset that’s been talked about, But wouldn’t it make sense to do that at a get together of the world’s finance ministers? I’m just saying…  

For What It’s Worth….  OK… I know what a lot of people would say about this number, but before you jump to conclusions, think about it more… What I’m talking about is the final figure for the Budget Deficit this year… Yes, the virus spending really bloated the number, but… remember, before the virus hit our shores, the economy was already showing signs of going for a ride on the slippery slope… So, this is the report that the final figure was $3.1 Trillion… And it can be found here: https://www.cnbc.com/2020/10/16/us-government-budget-ends-fiscal-year-with-a-more-than-3-trillion-deficit.html? 

Or, here’s your snippet: “Efforts to combat the coronavirus pandemic left the U.S. government submerged in red ink as its fiscal year came to a close.

The final tally for the budget deficit in fiscal 2020 came to $3.13 trillion, more than triple last year’s shortfall of $984 billion and double the previous record of $1.4 trillion in 2009, courtesy of a stimulus package passed that year to battle the financial crisis.

Most of the damage to this year’s budget came due to the CARES Act, a $2.2 trillion spending package that included extra unemployment compensation to workers displaced during the pandemic and forgivable loans to business as an incentive to retain workers.

Receipts for the year came to $3.42 trillion against outlays of $6.55 trillion, the biggest of which came during June when the government spent $1.1 trillion, according to the Treasury Department.

The fiscal year ended with government debt at just under $27 trillion, all but $6 trillion of which is held by the public.

Tax collections came in at 1.61 trillion for the year, $203 billion less than estimated in the budget. Corporate tax collections missed the budget estimate by $51.8 billion while social insurance and retirement receipts were $2.1 billion below.”

Chuck again…  Think about that for a minute, folks… of the $27 Trillion, $21 Trillion of it is held by the public,  and a lot of that is held by strangers…  

Market  Prices 10/19/20: American Style: A$ .7105,  kiwi .6642, C$ .7592, euro 1.1778, sterling 1.3000, Swiss $1.0989, European Style: rand 16.4620, krone 9.2940, SEK 8.7938,  forint 310.20,  zloty 3.8807,  koruna 23.2161, RUB 77.80, yen 105.34, sing 1.3573, HKD 7.7498, INR 73.28, China 6.6876, peso 21.08,  BRL 5.6086,  Dollar Index 93.26,  Oil $39.98,   10-year .76%, Silver $24.79, Platinum $873.00, Palladium $2,379.00, and Gold… $1,910.80

That’s it for today… a little heavy on Gold manipulation, and a little light on what’s going on, but it is what it is…  And a little later than usual… I had problems this morning, and that’s all I’ll say about that…  I head to the wound center this afternoon, from what I’m seeing, from the dressing changes I’ve made in the last week, there’s progress in healing going on… But why does it have to be so sloth-like?  The Chemo I take comes into play here, because it slows the healing process… so I guess that’s the answer to my own question! Duh!  Rainy days and Mondays… UGH!  But we’ve actually been in a drought, so the rain, to some, is welcome!  The Cyrkle takes us to the finish line today with their song: Red Rubber Ball…  Now, lets see how many of you have paid attention…  the Cyrkle was the opening band for what famous band?   The answer tomorrow… I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler

Guess What A Spider Whispered To Chuck?

Rocktober 15, 2020

* Gold & Silver rally on Wed. but are soft this morning

* Dollar bugs have confidence that could be short term? 

Good day… And a Tub Thumpin’ Thursday to you! All’s well with my heart and the pacemaker, according to the device specialist and the heart doc. Yesterday…  We talked baseball a bit, before getting down the brass tacks… I have to say that going to the hospital for the doctor visit, and parking far away from the door, the whole process just wore me out… I came home, had a bit to eat for lunch, and then fell asleep in my recliner, where I have to elevate my legs for 3 hours a day, and so I figure if I have to sit there for 3 hours, I might as well take a nap! I woke up in time to turn on the NLCS game 3, and watch the Dodgers go bananas on Braves pitching, it was 14-0 in the 3rd inning!  It didn’t matter if Warren Spahn was pitching, the Dodgers were going to hit the ball with authority! WOW!  I have a treat song for the older crowd this morning, it’s Nina Simone with her song: Feeling Good….  I know Michael Buble did a retake on this song, but I prefer the original… What a sexy sultry voice!

There just wasn’t much going on in the markets yesterday folks… so this ought to be short-n-sweet, but you never know what I might ho off on a tangent on, so let’s grab that cup of coffee, and begin the day! 

Gold found a way to hold onto most of its early morning trading gain of $11, as the day went along… Of course there was some upward movement during the day that quickly had cold water thrown on it by the price manipulators…  Gold closed at $1,902.20, up $9.50 on the day, and Silver had to fight to hold onto most of its early morning trading gains too. Silver closed at $24.36, up 36-cents on the day…

But in the overnight and early trading markets, Gold & Silver look pretty soft, and have given back some gains… Gold is down $5, and Silver is down 50-cents in the early trading. And overnight, the euro was sold to bring the single unit to the brink of falling below 1.17…   I have to think that the failure to come up with another stimulus deal has given the dollar bugs a lot of confidence… But that’s to be short term right? Because another stimulus is coming… We just don’t know when… 

I really don’t see this pattern of the price manipulators taking chunks out of Gold and Silver’s prices as we head to the end of the year…  But… the other day, when I was talking to the Great Mogambo Guru, I realized that I had nothing to complain about with Gold & Silver… Gold has outperformed everything since 2000… And this past year it has put the stock market to shame…. So… It shouldn’t matter to me that Gold was above $2,000 a couple of times this year, only to see it settle in around $1,900… It’s still better than anything else!

You know, I recall back in the early 2000’s I was reading Bill Bonner’s letter one day, and he said that the trade of the decade was to sell stocks and buy Gold…  I immediately made my first buy of Gold and began telling anyone that would listen to me that they should buy Gold…  Well, his trade of decade turned out to be bang on! And while technically it ended in 2010… We could say that adding another decade still makes it bang on!

Well, the currencies didn’t see the light that Gold & Silver was shining on them yesterday, and the while the euro basically traded flat on the day, the Aussie dollar lost more ground, and the Russian ruble, which had recently gained back a big chunk of the value it lost recently, can’t stand prosperity, and lost major ground on the day.. Just because the price of Oil slid below $40?  No, there’s more at play here folks…. And maybe the recent upward move was too far too fast…  I’m just saying…

It was nice to see the U.S. Postal Service announce that they were going to reverse the recent changes they made that slowed down mail delivery, ahead of the glut of mail that will need to be delivered before the election…  Good move…

OK, I was content to get this out the door short-n-sweet this morning, but then along came a spider and sat down beside me, and whispered in my ear that I needed to include these quotes from Fed Heads… So, I guess I will do just that, and you’ll see why I the spider wanted me to include them this morning, I’m sure….   Here we go! 

Yesterday, San Fran Fed president Mary Daly made a stunning admission: just in case there was any confusion, the Fed knows that it has – and continues to blow – an asset bubble making “a few” who own stocks uber-rich, but the economy is now so reliant on the Fed liquidity fire hose that the moment the Fed threatened to pop this bubble, which some have estimated to be around $90 trillion in liquidity, would result in economic devastation and leave millions without a job.

I am not willing to trade millions of jobs for people who need a ladder rung up in order to keep the stock market from going up for a few who have those holdings,” Daly said while answering questions following a speech on – what else – racial inequality at a virtual event Tuesday hosted by the University of California, Irvine.

Just one day after Daly admitted that the Fed is trapped, the Fed’s Vice Chair for Supervision Randal Quarles, made an even more shocking – or rather “shocking” admission, when he said that “the Treasury market is now so large that the U.S. central bank may have to continue to be involved to keep it functioning properly.”

Chuck again… I got those off an article on zerohedge.com  that Ed Steer also highlighted this morning…  So, the Cartel, I mean the Fed Heads know that they are manipulating the markets, and now are so brazen about it they talk about it in public?  In the words of my good friend, the Great Mogambo Guru… “We’re Freakin’ Doomed!” 

The U.S. Data Cupboard finally has something for us to view this morning, and right out of the starting blocks this morning we have the Weekly Initial Jobless Claims, which have already printed, and look bad… 898,000 claims were filed last week, that’s up by 53,000 from the previous week… This data set is heading the wrong way isn’t it?  of course it is… I don’t like being right when the thing I’m right about is so wrong for the country’s economy, but… I do believe that this data set pretty much tells us that there was no V recovery, and we’re in the beginning stages of a down and dirty depression… 

To recap…  Gold & Silver found a way to hold on to most of their early gains yesterday, but are back on the selling blocks this morning…  The currencies keep getting whipped by the dollar bugs, and Chuck thinks it all has to do with the confidence the dollar bugs have now that there is no stimulus deal…  And then a spider whispered in Chuck’s ear and we found out that the cartel, I mean Fed Heads are now talking about how they manipulate the markets…  UGH! 

For What It’s Worth…  Ok, you all know that I have no love for JPMorgan and Jamie Dimon their CEO, as he seems to be Teflon coated as the 5 felony counts against his firm have been filed…  So, when I read the title of this article: “If You’re Baffled as to Why JPMorgan Chase’s Board Hasn’t Sacked Jamie Dimon as the Bank Racked Up 5 Felony Counts – Here’s Your Answer”… Now doesn’t that want you to read the article too? Ok, it’s on the Wallstreetonparade.com site, but here’s the actual link to the article: https://wallstreetonparade.com/2020/10/if-youre-baffled-as-to-why-jpmorgan-chases-board-hasnt-sacked-jamie-dimon-as-the-bank-racked-up-5-felony-counts-heres-your-answer/

Or, here’s your snippet: “For years we’ve been trying to figure out why JPMorgan’s Board of Directors hasn’t sacked its Chairman and CEO, Jamie Dimon, as the bank racked up two felony counts in 2014 for its failure to alert U.S. regulators to glaring red flags in the bank account it held for Bernie Madoff’s Ponzi scheme; one felony count in 2015 for rigging foreign exchange markets; and two more felony counts just last month for rigging the precious metals and U.S. Treasury market. (The bank admitted to all five counts.) In addition, the bank came under another criminal investigation in 2012 and 2013 when it lost $6 billion of its bank depositors’ money gambling in credit derivatives in London (the London Whale scandal).

Turns out Jamie Dimon has been taking very good care of the Directors on his Board and they have been taking very good care of Dimon – turning him into a billionaire, notwithstanding the worst criminal record of any major  bank in the history of the United States.

The JPMorgan Chase Board of Directors has a stunning number of incestuous conflicts of interest, few of which have not been properly spelled out to shareholders. Others have never been mentioned to shareholders.”

Chuck again… The article goes on to describe the relationship between JPMorgan and the head of NBC Universal, which owns Comcast… it’s pretty hairy folks… And a long read to allocate enough time if you are curious about this whole incestuous set up….  I was curious and curiouser!

Market  Prices 10/15/20: American Style: A$ .7067, kiwi .6588, C$ .7568, euro 1.1705, sterling 1.2918, Swiss $1.0940, European Style: rand 16.6876, krone 9.3750,  SEK 8.8645,  forint 311.47,  zloty 3.8890,  koruna 23.3520, RUB 77.25, yen 105.22, sing 1.3615, HKD 7.7487, INR 73.35, China 6.7300, peso 21.48,  BRL 5.5650,  Dollar Index 93.77,  Oil $39.58,  10-year .69%, Silver $23.87, Platinum $846.00, Palladium $2,370.00, and Gold… $1,897.00

That’s it for today…  Well, in the past week, I’ve had my oncologist tell me to continue what I’m doing, and my heart doctor the same, so I guess that’s what I’ll do!  No seriously, I need to lose weight, but I’ve found that that’s near impossible these days, so… I’ll just grin and bear it, I guess… The Wound Center sent me a box of supplies to change the dressings on my legs, and the box was so heavy! I was hoping that they got mixed up and instead of Silver Alginate pad, they put Silver bars in the box! HA! Now that would BE a HUGE MIX UP, eh?  The temps fell out of bed here, and it’s chilly outside once again… time to get the woolies out, as my friend in Perth Australia, Tina, used to say…  Lynyrd Skynyrd  takes us to the finish line today with their song: The Ballad of Curtis Lowe…  I hope you have a Tub Thumpin’ Thursday and Fantastico Friday tomorrow, and I ask you very seriously, to Be Good To Yourself!

Chuck Butler

 

Traders Finally Pick A Lane, But They Pick The Wrong One!

Rocktober 14, 2020 

* Currencies, metals, Oil, stocks all get sold yesterday

* If inflation rises, how does a Central Bank Combat that? 

Good Day… And a Wonderful Wednesday to you!  We’re in our second day of warmer than usual weather today, and then the bottom falls out tomorrow… So, I’ll need to get outside today to soak up some warm sun before the cold front comes through…  I’ve always said that the Fall weather was the best weather we get here in the St. Louis area… And so far, I’ve been bang on with that thought once again!  But… even though the weather is nice now, I would rather be in a warm climate, so I can go outside each day, read a book, or listen to music, or nature, and enjoy not having to have a jacket or sweatshirt on…  But If I were away, I would miss things like my granddaughter, Evie’s first birthday! So, I tough it out here until I go to Florida for the winter…. The Guess Who greet mee this morning with their song: No Time….   I think I’ve said this before, but in case I didn’t… Burton Cummings the leasd singer of the Guess Who, is one of my all time favorite singers!

OK… I guess when I kept harping at traders to “pick a lane” I should have stipulated that I wanted them to move ahead, and not drop back, after they picked their lane… In case the coffee hasn’t tricked your mind into believing you are awake… I’m talking about the up one day, down the next, trading we saw for over two weeks, and I said that I would tell the traders to pick a lane, if reference to me commenting on drivers that can’t decide what lane to choose… 

The reason I should have stipulated which way they should go after finally choosing their lane is that yesterday should have been an up day, that is, if we were keeping with the trading trend of the last two weeks… But something not too funny, happened on the way to the forum, and the trend ended, just like that! Gold lost $30 on the day, Silver lost nearly $1 (at .98-cents), the euro dropped further downward, and stocks got sold… The price of Oil slipped downward, but…. U.S. treasuries rallied! But I have to say, that I really don’t want to seed yields go any lower…  There are over  $15 trillion of government bonds worldwide, or 25% of the market, now trading at negative yields, I don’t want to see that being the case here… But in reality, our Treasuries are trading with negative “real yields” that arrived by taking the rate and subtracting inflation…

Speaking of inflation… The stupid CPI printed yesterday, and it only showed a .2% gain in September, bringing the YTD figure for inflation to 1.4%…  Which is below where we were last year at this time, when inflation was 1.7%…   And that WAS BEFORE THE FED ANNOUNCED THAT THEY WERE TARGETING HIGHER INFLATION….   

Yesterday, I made big deal out of the increases in inflation that I’ve already seen… As always I say that you may not have experienced these same inflation increases… But overall… this is very interesting as it is the beginning of higher inflation… but is it really the case of too many dollars chasing too few goods, or… it it just a case of a lack of supply, without the spending demand?  Recall that at last check, Personal Spending was not so hot…

So… What’s it going to take to get inflation going higher the way the Fed Wants it to go?  Because if this all we get in terms of higher inflation, from all the money printing the cartel, I mean the Fed, has done, then, we need to go back to square one….  So, will the next stimulus, whenever it does get passed create greater inflation?  I doubt it…. We will see it blip higher, but it’s not sustainable, until there’s a message sent to consumers that this is not a one and done deal, that more stimulus is coming…. And to me that’s a real slippery slope folks…

Because once you get consumers primed for a regular stimulus check, bad things can happen…  And  one of them is the Universal Basic Income (UBI)….  Tax receipts are already falling very short for this year, like they did last year, which means that the difference goes to the national debt… And if our leaders, whomever they might be, decide to go with the UBI, who’s going to pay for that?  Not taxpayers because they’ve already paid…  Just more debt will be added, and added, and added, until the weight of the debt causes the financial system to collapse… 

And upon further review…  the offense was offside…  No wait! I’m going to be very serious here so don’t let that little ditty confuse you!  I was thinking yesterday, about the cartel’s, I mean the Fed’s desire to get inflation rising… But there’s a caveat here that I don’t think they’ve thought about, or maybe they have and they are just playing with fire, like little kids, and you know what they say when you play with fire, right? You get burned!   OK… so we’ve established that they want inflation rising, but… what does a Central Bank need to do to combat inflation that begins to get out of hand?  Yes, they need to raise interest rates, right?  

Well this is where it gets really ugly folks… for if the interest rates are brought higher, so does the cost of servicing the debt, paying interest on bonds, and issuing new bonds with higher rates… Uh-Oh!  I’m dead serious here folks! This is not a good scenario… And brings me back to the question of, Did they think about this before they began their campaign to increase inflation? Because, to me, it sure looks as though they didn’t…  I’m just saying… 

And readers of both the Pfennig, and Dennis Miller’s newsletter, will know that we both feel that the repeal of the Glass-Steagal Act is the root cause of the casino banks needing bail out after bail out…  Well, I received news yesterday that there’s a new book out, titled: Taming The Megabanks, and is about why we need to reinstate the Glass-Steagal laws that prohibit the Banks and Brokerage Houses to merge…  I think that this will be my Prime Day purchase! 

Boy, I’m sure full of good news for happy times ahead aren’t I? NOT!  All my education, in school and on my own has never covered what we’re doing as a country with our fiscal and monetary policies… So, we are in uncharted waters folks…  Better put your lifejackets on and hold on for dear mercy, because this is going to be rough waters ahead, and it’s not going to be clear sailing like it has been for sometime now…

OK, I’ve got to move on to something else before I blow a gasket!  So… The euro has seen better days, and worse days as a matter of fact, but for this thought we’ll just focus on recent times…  Can you believe they are still going through BREXIT negotiations?  I think that having those negotiations hanging over the Eurozone like the Sword of Damocles, is playing into the euro not being ready for prime time and move forward…  Because I know in my heart of hearts that Traders want to sell dollars right now, they know that they should be selling dollars right now, but they aren’t…. But, I believe they will eventually come around to doing so…  Economist, Stephen Roach believes that too, you may recall me highlighting a thought by Roach regarding the dollar collapsing …

In the overnight and early trading markets today, we see that Gold is up $11, and Silver is up a quarter (25-cents)…  Maybe the traders got their up, down days mixed up yesterday? HA!  The aforementioned, euro,  is inching higher this morning, but sterling has lost the 1.30 handle, and is looking peeked…   The Japanese yen, which last week looked as though currency traders had finally come back to thinking straight, and were selling yen, has returned to the 105 handle, and has fallen back in favor with traders…  I just can’t get the song by Leslie Gore out of my head…  Cause now it’s Judy’s turn to cry, cause Johnny’s come back… to me… 

Now see if you can get that little melody out of your head today! 

And what do we have here? Lola, aka Goldman Sachs, has issued a buy for its clients… They say buy Silver…   Well for once, I’m not going to punch holes in one of their buy signals…  And remember, what Lola wants, Lola gets….  I’m just saying… 

The U.S. Data Cupboard is still wanting economic data prints today, as only the PPI (wholesale inflation ) will print…  taking the stupid CPI into consideration, tells me that PPI will be weak…  

To recap…  The traders finally picked a lane, but it was the wrong one! As everything but Treasuries got sold yesterday… In the overnight markets Gold, Silver and euros have rallied, so we’ll see what happens the rest of the day today.. Maybe traders just got their up, down days mixed up? You think? HA! Did you know that the Eurozone and UK are still in BREXIT negotiations? No wonder the euro is tethered to the 1.18 handle!  And Chuck goes all nuclear on the cartel, I mean the Fed, regarding their desire to see inflation rising… 

For What it’s Worth…  Well, first longtime reader Bob, sent me the link for this article, and then another reader sent it to me, so apparently its something that everyone needs to see! And I believe it is! This is an article about the real unemployment numbers, and it can be found here: https://www.axios.com/unemployment-numbers-doubts-claims-backlog-california-5c9621d2-d285-4626-8657-655b43052b11.html 

Or, here’s your snippet: “More than 25.5 million people were collecting unemployment benefits as of mid-September, and nearly 1.3 million people filed first-time jobless claims last week — more than 800,000 for traditional unemployment and 464,000 for the Pandemic Unemployment Assistance program.

The state of play: That number excluded any new claims from the largest state in the country, California, which paused its program to implement fraud prevention technology and comb through a backlog of claims that had reached nearly 600,000 and was growing by 10,000 a day.

The big picture: California isn’t the only place where issues with unemployment claims are rising.

  • The persistently high number of claims drive an uneasy contrast with the continued decline in the unemployment rate and improving numbers on the Job Opening and Labor Turnover Survey to the point that University of Oregon economist Tim Duy says, “We should be more skeptical about the initial claims data.  If the claims data is deeply corrupted, the conventional wisdom is just plain wrong. I keep saying the same thing: This isn’t the 2007-09 recession or the 2009-2020 recovery. It’s something different.”

Chuck again…  Ok, first things first… did you know that California’s jobless numbers weren’t included, because I didn’t until reading this article…That’s a real game changer there, folks…  But then I wouldn’t expect things to be transparent and fully explained to us by the BLS would you? 

Market  Prices 10/14/20: American Style: A$ .7175,  kiwi .6664,  C$ .7614, euro 1.1750, sterling 1.2998, Swiss $1.0941, European Style: rand 16.4996, krone 9.2090, SEK 8.8203,  forint 309.30,  zloty 3.8850,  koruna 23.2382, RUB 76.92, yen 105.29, sing 1.3570, HKD 7.7497, INR 73.20, China 6.7220, peso 21.36,  BRL 5.5428,  Dollar Index 93.46,  Oil $40.05,  10-year .71%, Silver $24.47, Platinum $879.00, Palladium $2,404.00, and Gold … $1,904.00

That’s it for today…  Well, I have another appt. today, this time it’s with my cardiologist or heart doctor is easier for me to say and type!  You know, I never in all my years prior to 2017, ever thought that I would have a “heart doctor”… The doctors would listen to my heart and tell me that my heart was not something I needed to worry about…  Now I have AFIB, and a Pacemaker, and a monitor that reads my heart numbers and transmits them to the doctor…  I still can’t believe that me… Chuck Butler, has this problem… but it is what it is…  I like my heart doc… but he is a Cubs fan, and always likes to rub their success against the Cardinals, in to me… But he’s good…  So, I’m hearing that a lot of places are cancelling Halloween… Wait, What?  That’s not right!  Don’t do that authorities!  You’ve already taken away nearly a year of their childhood social growth! Ok, Emerson , Lake and Palmer (ELP) take us to the finish line today with their song: Lucky Man…  Which is what they used to call me… “Lucky”…  HAHAHA, I hope you have a Wonderful Wednesday, and will Be Good To Yourself!

Chuck Butler

 

Tired Of Up One Day, Down The Next?

Rocktober 13, 2020

* Yesterday was a down day for the currencies & metals

* China puts the kyboshes on further renminbi appreciation, for now… 

Good day, and a Tom Terrific and Manfred the Wonder Dog day to you! Looky there, I remembered! Amazing things happen every day, and me remembering something from last week, is one of them! I can recall things that went on 10 years ago, but I can’t even begin to tell you what I wrote about last week! UGH!  Well, as I told you yesterday, I have lymphedema in my legs, and they’re going to send me to a lymphedema therapist… this is getting crazy folks! As I was telling my good friend, Dennis Miller last night, the deck is stacked against me once again… But the dealer doesn’t know who he’s dealing cards to! Man, have I got a treat for you today!  Yes, you’ll have to get through the letter to the FWIW article today, but trust me, you’re going to want to get there! Jack Johnson greets me this morning with his song: Drink The Water… 

Well, Friday was an up day, and Monday was a down day, what will the markets bring us today? Wait! I don’t mean to say the “markets” for they couldn’t bring us anything any longer, it’s all manipulated… Stocks, bonds, currencies, metals, have all lost their price discovery and so what we’re left with is trader sentiment, that is heavily influenced by the price manipulators…

At first glance this morning, I’m seeing some signs that the back and forth, up one day down the next trading could be coming to an end… Unfortunately for non-dollar holders that’s not going to be a good thing!  Gold which was down $8.70 to close at $1,922 is flat to down a buck or two  in the early trading today… Silver closed at $25.19, down 4-cents on the day, but is also failing to launch this morning, and is down 14-cents to $25.05…  

But these are small amount that can be reversed easily to turn out to an up day that we’re all expecting given the recent trading trend… 

The euro had clawed itself back above the 1.18 handle during the day yesterday, but in the overnight markets has fallen back below the 1.18 figure… When will traders all get the memo that inflation is coming, and it will eat away the value of the dollar, and that they should be getting rid of them as quickly as possible?

One quick note here on the euro… I read a note from Christine Lagarde the head of the ECB, where she mentions that the “ECB is seriously looking at the creation of a digital euro…  She also mentioned that the new digital euro wouldn’t replace “ever” replace the euro, just be a supplement to the the cash euro…. ”  

This has got to be another blow to the Bitcoiners of the world… Since the pandemic, we’ve had the U.S. and China both say they are developing their own respective digital currencies, and now the Eurozone has joined them…  

It’s really been so long, and I mean a long time since we saw real inflation, like we’re seeing now… And while it’s still climbing higher, people aren’t seeing it… and I’m wondering why?  How can you not see that inflation is creeping higher?  Oh, you don’t do the grocery shopping, you don’t write the checks for insurance, or tuitions, you haven’t priced a new car, or anything like that, for that’s the only way you could be oblivious to this rising inflation…

Oh, you won’t see it in the stupid CPI (Consumer inflation index) because, well, I know I’m going to sound like a broken record here, but people need to know what the gov’t is doing to pull the wool over your eyes…  This all goes back to the mid 90’s when Clinton was the president, he called then Fed Chairman, Allan Greenspan to his office and inquired as to why interest rates were so high?  Greenspan replied, because inflation is high… Clinton responded, then it’s your job to figure out how to get inflation down so that interest rates can be reduced, and housing can be afforded by all!

Greenspan hired the Boston Commission to figure out to deal with inflation…  And they came up with what I call an hedonic adjustment…. Inflation before the mid 90’s was forever and a day calculated by taking the same items in a basket and pricing them each month… the hedonic adjustment the Commission recommended was to “substitute pricy items with less pricy items, and voila! Inflation was no more, and interest rates came down, which began the root system of the Housing Crisis in 2008…

Ok, back to today….  So, did you hear what China did? The put the kyboshes on future renminbi appreciation…  Now, why did they go and do a thing like that?  Because, they can… And they don’t need to hire a PPT to do the dirty work… the renminbi’s appreciation in recent weeks, has gotten ahead of itself, and this is just a way to temper the expectations of more appreciation…

And that news will also put the kyboshes on the Sing dollar’s appreciation… Well, as long as these two maintain their current levels, that’s a good sign… 

The Euro-Wannabes, Polish zloty, Hungarian forint, and Czech Koruna have been champing at the bit to go into rally mode…  But the euro wallowing around 1.18 and not making a strong move higher, has held the euro-wannabes back for now…  Remember what I’ve always told you, that you can tell a rout on the dollar is on the docket, when these three currencies get in gear…  

Not that the price of the euro doesn’t give you that indication, it’s just another confirmation to use, that’s all…  The Dollar Index could be used if it wasn’t for the fact that it’s so heavily weighted with euros…  I know there are other “dollar indexes” out there now, but I’m an old dog, that can’t be taught new tricks, so I stick with the Dollar Index that I’ve used for nearly 30 years… 

Well, looky here! I was talking about the stupid CPI above this morning, and what do we have to see in the U.S. Data Cupboard today? That’s right! it’s the stupid CPI!  And that’s it! The Data Cupboard is a real bore early this week, as witnessed by the stupid CPI print today… 

So, don’t expect to see any sign of rising inflation today folks… Or wholesale inflation tomorrow when PPI prints… These data sets have been so mangled for so long now that they can’t, even if they wanted to, be normal…  I’m just saying! 

To recap today… With Friday’s up day, yesterday was a down day for the currencies and metals… Today is starting out iffy, for being a down day, but we’ll see what happens as the day goes on, eh?  China has decided to put the kyboshes on renminbi appreciation for now, and the ECB is seriously thinking about the creation of a digital euro…  Gold is down a buck or two and silver down 14-cents as we start the day today…

For What It’s Worth… OK, I gave this top billing above, and I doubt it will disappoint!  It’s my good friend, the Mogambo Guru speaking his mind and longtime readers know that when the Mogambo speaks his mind, well, you have better grab the kids and dogs and hide out in the basement! HA  Ok, you can find the whole Mogambo Guru piece in the link below, and the snippet I have for you today is pretty short compared to the article so be sure to check it out….  And I don’t like to send you to a company’s website that I don’t know about, for your safety that is… But this is OK, so click here: https://goldsilver.com/industry-news/

Or, here’s your snippet: “I could see where this was going, which was my wife grinding me into the ground, picking at me because of my many faults, real or imagined, usually about the damn kids. Usually some jibber-jabber along the lines of her sweetly saying “You know, dear, that the kids and I would love it if you _____ (insert one): paid attention to them, asked them how their stupid day went, stopped being such a jerk, remembered their stupid names, or all of the above.”

So I tried to change the subject from talking about her pet peeve, which is me, to my pet peeve, which is price inflation, the dreaded Deadly Thing That Destroys Economies, since it means that relatives will soon be knock, knock, knocking at my door, begging for a handout just because they are homeless and hungry, and who get really snotty when I tell them to either get lost or drop dead, depending on my mood.

I mean, if I don’t give cash to my own family who endlessly whine about needing to go to the doctor or the dentist or the grocery store, why in hell do they think I would give it to them and their grubby little brats?

Trying to lighten the mood, I delightfully and entertainingly went on about how the government lies to us about price inflation by adjusting actual price increases back down by using hedonic measures, meaning discounting the higher price to reflect some secret extra satisfaction you get from the product or service. For example, suppose a car costs twice as much as last year’s model, but it now comes equipped with fancy hubcaps.  Abracadabra, the government reports that because you love those snazzy hubcaps so much that you are willing to pay as much for them as the price of the car itself, inflation in car prices is not 100%, but zero! Zero inflation in price! Zounds!

By this time I am really on a roll, and I am icing the conversational cake by relating that bit of degrading government dishonesty to the ugliness of inflationary reality as reflected in the Chapwood Index showing annual price inflation running at a blistering 10% (which, by the Rule of 72, means prices will double in 7.2 years).

Or, alternatively, you can adjust your Mogambo Inflate-O-Meter (MIOM) with the calculations at ShadowStats.com, showing that price inflation is running at 6%, meaning that prices will double in 12 years (=72/6).

The fancy math is rolling off my tongue like honey, and I foolishly thought that this impressive display of raw mental power by me, an aging but still-studly “hunka-hunka burning love”,  would impress her so much that she says “Take me in your muscular arms, my irresistible manly Mogambo, my darling enemy of price inflation, with that wonderful 1,000-horsepower brain!” – The Great Mogambo Guru

Chuck again…  I truly admire this man! Years ago, I was supposed to have lunch with the Mogambo Guru when I was in St. Pete, near his home, and my cell phone rang in my hotel room as I was getting to meet him…. Now, my cell phone rarely rings, so I wondered who it was that was calling me. When I answered I heard, “Hello, Chuck, this is Mrs. Mogambo, and he’s not going to be able to meet you today, as he’s had a heart stroke, and is in the hospital..”  A couple of years later we did finally get to meet over lunch the last time I was in St. Pete…  And every now and then my phone lights up and it says that he’s calling me! I get so amped up!  I’ve got another story about the Mogambo and a fruit basket that I’ll tell you some other time…

Market  Prices 10/13/20: American Style: A$ .7187, kiwi .6655,  C$ .7629, euro 1.1789, sterling 1.3029, Swiss $1.0983, European Style: rand 16.4804, krone 9.1489, SEK 8.7734,  forint 305.65,  zloty 3.8017,  koruna 23.2025, RUB 76.88, yen 105.50, sing 1.3580, HKD 7.7498, INR 74.24, China 6.7156, peso 21.19,  BRL 5.5294,  Dollar Index 93.22,  Oil $40.38,  10-year .76%, Silver $25.05, Platinum $875.00, Palladium $2,404.00, and Gold… $1,921.60

That’s it for today… I can’t begin to express my happiness in reading the Mogambo Guru again… His writings used to be discussed on the trade desk every time he would get published. My former colleague Ty Keough and I would be in stitches laughing!  I know he’ll get a kick out the FWIW article today…  Well, I’m going to be getting a new doctor’s office to visit, as I’m now signed up for lymphedema therapy, which my son the Physical Therapy doctor tells me is a lot of messaging…  I received my new glasses in the mail on Saturday, and brother what a difference in my sight! Not that this is a promo for them, but I ordered them through Warby Parker, and everything was very enjoyable about the whole process…  OK… time to get this out…  The great Billy Squier takes us to the finish line today with his song: My Kinda Lover…  and with that, I hope you have a Tom Terrific and Manfred the Wonder Dog Day today, and Please Be Good To Yourself! 

Chuck Butler

 

Is The Stimulus On Or Off?

Rocktober 12, 2020

* Currencies & metals rally on Friday… 

* With Friday being an up day, today must be a down day, eh? 

Good day… And a Marvelous Monday to you! What a weekend! First, my beloved Missouri Tigers beat LSU on Saturday! And then on Sunday, it was my darling granddaughter, Evie’s, first birthday… I told you about 10 days ago how she was finally taking her first steps, well, now she’s a real pro at walking and even rounded the corner inside out house at running speed!  She is growing up, already… UGH!  But it wouldn’t be right if I didn’t give a great Big Shout Out to Evie! Happy Birthday, Evie! May you have many more!  On Thursday I visited my oncologist, and she told me to keep doing what I’m doing… When I told her that means nothing… She laughed and said, Ok, keep doing nothing!   The wound center on Friday was different, and the doctor there wanted to know what I had done to have 3 spots on my legs open up…  After examination, she told me I had lymphedema in my legs…  I went home and looked up what caused lymphedema… And it’s a reaction to cancer treatments…  And I thought… I’m damned if I do take chemo, and I’m damned if I don’t take chemo!  Not a happy day for me, but, then Saturday came, and it was all seashells and balloons!  On Friday, I felt like I was being treated like the title of this song that greets me this morning… It’s the Allman Brothers and their song: Whipping Post… Because sometimes, I feel like, sometimes I feel, like I’ve been tied to the whipping post!  

Well, after a down day on Thursday, it was time for an up day in the currencies and metals on Friday… Gold rose $36, to close at $1,930.60, and Silver followed with an increase of $1.28 (which if you’ve been paying attention in class is a HUGE move in Silver)… , to close at $25.22 And the euro which started the week at 1.18, but then saw its value shrink to less than 1.18, finished the week at 1.1820…

So, let’s see, if Friday was an up day… today must be a down day, and it sure looks as if the overnight and early morning trading markets is going to keep that stupid trend going, as Gold has given back $5 in early trading and Silver is basically flat, while the euro lost the 1.18 figure again in overnight trading…   This back and forth stuff is really getting old with me folks.. As I’ve said before… Come on Traders, pick a lane! 

So what got Gold & Silver all lathered up on Friday? Well, remember when I told you that last week the President has Tweeted that there would be no stimulus until after the election, and that had taken the wind out of Gold and Silver’s sails? Well, before you could say, “what the hell is going on here?” The President changed his mind and said that he was ready to sign whatever stimulus bill had been negotiated…  And hearing those words, Gold started moving higher, and by the end of the week it was trading higher than it had the week before…  If the U.S. is going to go willy nilly on adding more debt, to the tune of over $2 Trillion dollars in one fell swoop… Then dollar traders arent’ going to stand around and look like idiots… They sold dollars so fast the dollar bugs didn’t have time to get back behind the wall boards they cam out of…

I needed some sanity on Saturday as heard that the stimulus is back on the table… And so I pulled up Bill Bonner’s  Rogue economist email to see what Bill had to say… And this is from his letter that can be found at www.rogueeconomics.com… Here’s Bill… “But on the horizon is the biggest crash of all. Like a freight train loaded with debt… the U.S. is about to get slammed by $237 trillion worth of “unfunded liabilities.”

The boomer elite did not merely look out for itself in the past and the present… It promised itself pension and medical benefits, literally, from now until Kingdom Come.

There are 76 million boomers. None is eager to get to the grave. But every one of them hopes to get there before his Social Security/Obamacare benefits run out.

Many believe it’s a sure thing… They think there is a “trust fund” with money tucked away to pay for their care. But there is no “trust fund,” no savings, no pot of money anywhere.

Here’s what former Federal Reserve chairman Alan Greenspan had to say about it:

The term Social Security “Trust Fund” is nonsense… It is a mandatory outlay and there is a 0% chance that outlay will not get made. When the fund runs out, there is no chance anything will change. The U.S. has committed to pensions it cannot pay…

Greenspan is right. There is another head-on collision coming, much more serious than the Democrat-Republican game of chicken. There is zero chance that the payments won’t be made.

But there is also zero chance that the funds will be there to make them.”

Chuck again… you know I used to say, back when I was around 50, that “I didn’t expect to receive anything from Social Security…  And then I turned 65, and started receiving payments on the money I had contributed to S. S. for nearly 40 years… And thought, OK, I guess I was wrong… But was I? Well, I did actually receive something from S.S., but for how much  longer? 

Well, today used to be a holiday, for me… But I guess since they took down the Christopher Columbus statue here in St. Louis, I would think that I would be stirring up a hornet’s nest to say I was taking the day off for Columbus day…   I used to joke about how this was the day we celebrated his discovery of the West Indies…  But as time has gone on, I feel he got a raw deal… Was he not, at the time the greatest explorer of that time?  And that’s all I have to say about that!

The U.S. Data Cupboard is empty today in celebration of Columbus Day…  Late last week, we saw that the Weekly Initial Jobless Claims continued to be a very higher number… In fact it beat the estimates of 825, 000 and instead came in at 840,000, which means that for every week since March the Weekly Initial Jobless Claims have been above 800,000…   The Continuing Claims fell the prior week, but that could simply mean that the the time had passed on the claims, and they were dropped from the list… There are still 25.5 million workers collecting some form of benefits, more than half of whom fall under special benefits set up during the pandemic.

I’m got a great piece from John Mauldin, who quotes my fave economist, David Rosenberg, about all this , so I won’t spoil your appetite here… Just make sure you stay tuned in for the FWIW section today…

We won’t see much in terms of economic data prints this week, until we get to Friday when Retail Sales, Industrial Production and Capacity Utilization for Sept will print… Thursday will have the usual fare of the Weekly Initial Jobless Claims, and other than that there’s really not much…For instance, tomorrow will have the stupid CPI (consumer inflation) for last month, which is only expected to print at a gain of .2%… Bollocks!  I love that word! I got it from reading my Cormoran Strike novels, which take place in London…  I don’t think I have to explain the meaning of the word to you… So, we’ll just move along here…

To recap… Friday was an “up day” after Thursday’s “down day”… And Gold gained $36 on the day, and silver added $1.28 to its value… The euro climbed back above the 1.18 handle, and even stocks had a good day! The talk that there could, after all has been said and done, be a stimulus package…  I wouldn’t hold my breath that that would/ could happen before the election… But Traders seem to think it’s a done deal. And so the strength of the rallied on Friday…

For What It’s Worth…  Ok… I didn’t now this before I read this article, but longtime friend, John Mauldin is now contributing to Forbes, which is where this article can be found, and it’s about how David Rosenberg believes that we are in a depression…  and it can be found here: https://www.forbes.com/sites/johnmauldin/2020/10/09/rosenberg-we-are-in-a-depression/#24536c1115bf

Or, here’s your snippet; “Disney is laying off 28,000 workers. American Airlines and United Airlines plan to cut 31,000 workers. Last week’s disappointing unemployment report shows that we have a long way to go. Perhaps a lot longer than we think.

I’m going to quote at length from my friend David Rosenberg, who I believe is absolutely spot on:

“You tally up these sectors and before the crisis, they supported 32 million jobs, or about a third of the private sector workforce, and it looks to me as though half of them are not going back to their old jobs.

“And I’m not sure many people understand that amusement parks, airlines, hoteliers and restaurants cannot stay in business at 50% capacity (or even 75% in the case of restaurants).

“… As it stands, the U.S. Chamber of Commerce said that 25% of small businesses have already shut down. Another survey by Ipsos concluded that two-thirds are still nervous about leaving their homes; 59% say they intend to remain locked down on their own until signs emerge that the virus is ‘fully contained.’ A YouGov/CBS poll concludes that 85% of American households say they wouldn’t get on an airplane even if they could. That’s why the industry needs a bailout!

“A Washington Post/University of Maryland poll shows that only 56% of consumers across the nation intend to shop at the supermarket, which I suppose is a continuous bullish data point for delivery services but that’s about it. Just 33% say they are comfortable entering a retail store. And a mere 22% say they are willing to dine in a sit-in restaurant.

“All these polls say basically the same thing – it will not be ‘business as usual,’ as the bulls will try and convince you, and the best we can hope for is a partial recovery. I mean, at best. What we had on our hands was a vertical down economic decline with job losses an order of magnitude higher than anything we have witnessed since the Great Depression. So, even as the stock market is telling you it has it all figured out, I can assure you that what we face at this very moment is a very uncertain economic future. And unfortunately, most of the longer-term risks are to the downside.

“We are in a depression – not a recession, but a depression. And I think the dynamics of a depression are different than they are in a recession because depressions invoke a secular change in behavior. Classic business cycle recessions are forgotten about within a year after they end – the scars from this one will take years to heal.”

Know this: That which can’t go on, won’t. We can’t keep piling on debt at this rate forever, and we can’t repay what we have.”

Chuck Again… You tell ‘em Dave!  I love the way he pulls no punches when he talks, and he’s always spot on with this forecasts, and thoughts… I’ve told you all before how John Mauldin and I are friends from a long time ago, but I’ve never met David Rosenberg at a conference or other places, and I guess my chances at doing that are slim and none, and Slim left town! 

Market Prices  10/12/20: American Style: A$ .7212, kiwi .6647, C$ .7616, euro 1.1797, sterling 1.3033, Swiss $1.0984, European Style: rand 16.5316, krone 9.1475, SEK 8.8079,  forint 302.30,  zloty 3.7959,   koruna 23.0181, RUB 76.72, yen 105.42, sing 1.3568, HKD 7.7498, INR 73.21, China 6.0927, peso 21.26,  BRL 5.5306,  Dollar Index 93.21,  Oil $40.11,  10-year .78%, Silver $25.24, Platinum 888.00, Palladium $2,512.00, and Gold… $1,926.30

That’s it for today… What a great victory for my beloved Tigers on Saturday! The first time they’ve beaten a ranked team since 2018!  At the end the LSU team had driven to the 1 yard line with time running out, and I said, “I’ve seen my Tigers lose so many games through the years on the last play of a game, I don’t think I can watch this…” But the defense held, and the only thing missing was a rush of fans to the field, to take down the goalposts… What a rush that used to be to walk through the town after the game and see students with cut up pieces of goalposts holding them up high so everyone could see them!  So… Little Evie is walking now, I love watching her get around… She’s a fast learner too, as she was shown a couple of times how to negotiate the sunken living room that we have, and soon she was coming and going over the step down as if it was second nature!  My “other girl” Delaney Grace was here too…  My girls are so damn cute!  Triumph takes us to the finish line today with their song: Fight The Good Fight… Which is what I always try to accomplish here… And with that, I hope you have a Marvelous Monday, and please continue to Be Good To Yourself!

Chuck Butler