Silver Gaps Higher!

July 21, 2020 

* Are the markets rewarding countries that tame the pandemic?

* Currencies, and metals all move higher VS the dollar on Monday

Good day… And a Tom Terrific Tuesday to you! Well, with this being the last Pfennig for 3 weeks, I thought I would write an epistle so that it could last a few days!  HA!  Not really, I didn’t mean to scare you from starting to read the letter!  I’m feeling pretty spunky this morning, and you never know what I’ll say…  So, there, that oughta keep you here and reading! I had a ton of emails in the Pfennig box that I went through yesterday… There was a reoccurring request in the box so I’ll get to that today, along with other things that popped into my mind yesterday…  So, we have all that going for us today, eh? And on top of that, Little Feat greet me this morning with their song: Fat Man In The Bathtub… A great way to start a day!

Well, the currencies inched higher on the day Monday, with the Aussie dollar (A$) leading the way… A couple of months ago, I wrote about the how the A$ was having a stealth-like rally, but I was leery of this rally given the Reserve Bank’s rate cuts, and the pandemic going around the world.  But, the stealth-like rally continued on, and now it’s not so stealth-like any longer…   And with that comes my challenge to come up with a reason why, investors are buying up not only A$’s but also kiwi…

So I began looking… and found some interesting data on the pandemic in these two island nations… It seems they have things under control, and that their economies will be opened up fully, in the next week or two, and people will begin to get back to normal practices, like going out to eat at a restaurant without fear….  And reading this, an idea came to my brain…  I’m thinking that the markets are going to begin to reward countries that tame the pandemic…  Which could be why the dollar is on shaky terra, right now, the markets giveth, and taketh away…

And carrying that idea forward, it explains why the Swedish krona has pulled away from the Norwegian krone. The Swedish version of a crown has really been on the rally tracks VS the dollar in recent weeks, and now we know why!  That is as long as you go along with my premise that the markets are rewarding those countries that are taming the pandemic. 

OK, back to regular programming….  Gold held onto its early morning $7.40 gain yesterday… to  close at $1,817.90… Silver  was pushing the envelope folks…. Silver actually traded over the $20 figure to $20.01 at one point yesterday, but eventually closed at $19.98…   And both metals are moving even higher this morning with Gold at $1.826 and Silver at $20.62… I want to take you higher! I’m seeing Sly Stone at Woodstock with his fringed white jacket pumping his arms in the air, singing, I want to take you higher!  What? You’ve never seen the movie Woodstock? Aye, Aye Aye…  Back in the day at Mark Twain Bank I used to give the Woodstock VCR to all new hires, and them to watch it, for I would be quizzing them eventually….  

OK, a little more from the history pages….   In the 70’s and 80’s you could get people to talk about Woodstock, but not any longer, it’s long gone from most people’s memories, but not mine! Not that I was there, I was only 14 in 1969, but I was in high school, and that’s all the kids talked about every day!

Circling back to Gold… I really did think that once Gold hit $1,800 that the level would be used as a launching pad for higher levels…. Quickly, I might add….    But, it’s proven me wrong, at least for now, I guess I should never underestimate the power of the PPT, or the short Gold sellers….  Did you read the article yesterday in the FWIW section from Alasdair McCleod?

Think about it for a minute, it’s really eye-opening… If we get to delivery day… And Gold has continued to move higher, the short sellers will have to buy to cover at the current price which would represent a HUGE loss, or they could deliver the Gold they sold short…  Ahem… Maybe they don’t have the Gold to deliver, they can’t default on a COMEX contract can they?  Not without repercussions, and deep repercussions at that!

And hearing that there was a default on the COMEX would send Gold skyrocketing, along with Silver because the same scenario applies to Silver…  I’ve long said that the COMEX should have had the cajones to stop Bullion Dealers from selling short more ounces of a metal than is above ground, which is what has been done through the years….  But then I’m not surprised by anything when it come to the U.S. Gov’t and its fingers in the cookie jar…  

Good friend and fellow newsletter writer, Dennis Miller, sent me a note last night and asked me if I thought “they” would allow Silver to close above $20 this week… I told him that in the words of the great James Grant, “You never know”…  but the prevailing winds sure feel like Silver is on a run, and there’ll be no stopping it…  Ain’t no stopping us now! 

Speaking of Alasdair McCleod, he had this to say about Silver’s 3% rise yesterday on Twitter: “Sprott Silver Trust To Purchase $1.5 Billion Of Physical Silver, A Jaw-Dropping 8.8% Of Annual Global Production!

So, do you think that maybe the word is out that Silver is on a run? 

Ok, have I got a treat for you today…. Longtime readers will recall my fondness of the words from James Grant, from the Interest Rate Observer, newsletter. And my fondness of the work of Grant Williams, of Things That Make You Go Hmmmm…  Well, last night I listened to a podcast with Bill Fleckenstein and Grant Williams, quizzing the great Oz… (James Grant)  and I had this thought, there are times when I may sound very “out there” with my thoughts, and the opportunity to have the great James Grant speak so everyone could hear him was there at my fingertips… And this over 1 hour podcast, can be found here…. Enjoy!  https://podcasts.apple.com/us/podcast/the-grant-williams-podcast/id1508585135

So, do you want to see something that befuddles the mind?  $14 Trillion of Government Bonds around the world have negative yields…  That means that some people somewhere have thought that it was better to have the guarantee of  money coming back to them, albeit less than they invested originally, and received money that the Gov’t has debased….   Now when you figure that one out, send me a note and explain the mind set of these investors to me, please…. 

I get it that Pension funds, and other type funds that have strict investment guidelines have to buy Gov’t bonds…  But that’s not $14 Trillion worth….  And to carry this befuddling idea even further, I believe there are $100 Trillion of Gov’t bonds outstanding that have a yield of zero to 1%… Oh, sign me up for that…. NOT! 

Speaking of Gov’t Bonds… U.S. Treasuries continue to tell a different story about the economy than the stock market does…  I was always taught to watch the bond boys…. So, that’s what I do!  Did you know that the Fed Reserve now owns more U.S. Treasuries than is outstanding in investor’s hands?  What does that tell you about the condition of the economy and financial system, when a country’s Central Bank is the country’s largest bond holder? 

I really do think that this is a sign that we should be heading for cover, Shoot Rudy, the bond boys see it, and the Gold & Silver traders see it, I’m waiting for the stock jockeys to wake up and smell the coffee… 

Ok, have I got a treat for you today…. Longtime readers will recall my fondness of the words from James Grant, from the Interest Rate Observer, newsletter. And my fondness of the work of Grant Williams, of Things That Make You Go Hmmmm…  Well, last night I listened to a podcast with Bill Fleckenstein and Grant Williams, quizzing the great Oz… (James Grant)  and I had this thought, there are times when I may sound very “out there” with my thoughts, and the opportunity to have the great James Grant speak so everyone could hear him was there at my fingertips… And this over 1 hour podcast, can be found here…. Enjoy!  https://podcasts.apple.com/us/podcast/the-grant-williams-podcast/id1508585135

OK, the U.S. Senate will finally, vote on the nominations of two new Fed Governors, one of which is Judy Shelton, and all that is supposed to take place today…  the gauntlet that these nominees have to go through is pretty daunting to say the least, but at least they’re almost to the finish line…  It’ll be nice to have the conversations at the Eccles Building spiced up a bit by the new blood to the group…  Maybe, just maybe, cause you never know, the Fed will become new-age thinkers…. HAHAHAHAHAHA! As IF!

The U.S. Data Cupboard is still lacking any real economic data, and it will remain that way for week…  But next week….  OMG there are so many data prints and events that could move the markets, and they are all centered around the Fed’s FOMC Meeting on Wednesday, where they will leave rates unchanged and tell us that things are moving along a little slower than they originally thought they would, but they’re sure that they see some green shoots…   (of course that’s me talking, not the Fed Heads, but we’ll see, eh?) Oh, and the first print of 2nd QTR GDP will be shown to us… 

Back to this week’s Data Cupboard, I see something that’s interesting, and that’s in the Weekly Initial Jobless Claims… The report has been pretty steady the last two weeks at 1.30 Million, but this week the forecasters have upped the number to 1.40 Million, so even the forecasters see that things aren’t so good… 

To Recap… The currencies and metals both moved higher VS the dollar yesterday, and overnight. Chuck explains why he thinks the A$, kiwi and krona, have all rallied in recent weeks…  Gold held onto its early morning gain to close at $1,817, and Silver…. AHH, Silver  gained 55-cents to close at $19.98, but this morning it sits at $20.62…  And Chuck tells us that the Sprott Metals Fund is going to buy a Humongous amount of Silver to match the buying in the fund… Do you think the word has gotten out that Silver is on a run? 

Before we head to the Big Finish, I received quite a few emails in the Pfennig box asking me where they could find the James Rickards forecast of a Reset on January 26th…  The World Economic Forum will meet on January 26th, so I’m sure Rickards is thinking that with all the big shots in one room, 6 feet apart, mind you, that they’ll be talking about the Big Reset…  and for all of you who want to see it in writing, I suggest you go to: dr@dailyreckoning.com.au   I do believe you’ll see it there… 

For What It’s Worth…. Well this is a first for the Pfennig… I’m going to give you the link to an article on the International Man site, long time acquaintance, Doug Casey’s venture…  This is a different kind of article today, as I prepare to get ready to leave on vacation. And when I saw that Ed Steer also printed it, I had to use it!  So, click here for the article: https://internationalman.com/articles/buy-this-pillow-and-change-your-unhappy-life/ 

Or, here’s your snippet: “There’s a popular advert on American television in which a smiling born-again former drug addict clutches a pillow, which he claims will so improve your sleep that your whole life will change for the better.

Of course, in reality, the premise is not at all credible. And the presentation might even be considered to be cartoonish.

And yet the pillows are selling like hotcakes. They are the latest hula hoop, the latest wrinkle cream, “guaranteed” to improve your life dramatically in a very short time.

And of course, this miracle product doesn’t come cheap. It sells for over fifty dollars, whilst a now-outdated shredded foam pillow can be had for less than twenty dollars.

As with all such products, on rare occasion, someone will actually question the claims being made, and there have been those who have cut open the miracle pillows and found that they are filled with… shredded foam.

But of what use is this information to us? After all, with the present upheaval in our world, we have far greater concerns than whether we’re being suckered into a false claim by someone on television. We’re worried about our socio-economic and political future.

But the unfortunate fact is that the same part of our brain that falls for the claim that buying a new product can take all the pain in our existence away is the very same part of the brain that falls for claims by political leaders that buying into a change in the political system can take away all the pain in our socio-economic and political world.”

Chuck again… The article is quite a bit longer, but for space and time I had to cut it, so go to the link to read the entire article, which I believe is quite good… 

Market prices  7/21/20: American Style: A$.7080, kiwi .6610,  C$ .7428, euro 1.1440, sterling 1.2696, Swiss $1.0656, European Style: rand 16.4990, krone 9.1692, SEK 8.9478, forint 306.53,  zloty 3.8756,    koruna 23.0920, RUB 70.73, yen 107.27, sing 1.3887, HKD 7.7515, INR 74.42, China 6.9883, peso 22.34, BRL 5.3333,   Dollar Index 95.75,   Oil $40.81,  10-year .62%, Silver $20.62, Platinum $864.00, Palladium $2,219.00, and Gold… $1,826.60

That’s it for today, and for the next 3 weeks…  If anything really happens that’s big in the markets, I’ll probably tweet my thoughts on it, but that’s it no checking the markets, no taking notes on what to write about, etc. for the next 3 weeks…. I’m so excited!  I’m also excited that son Andrew, his bride, Rachel, grandson Braden and little Evie will be with us for 9 days of the vacation, which means I’ll get to get even closer to little Evie…  I don’t know what the neighborhood guys will do for the next 3 Fridays without me to host a driveway happy hour…  None of us feel comfortable going to our old watering hole, yet… So they’re on their own! HA! Elvin Bishop takes us to the finish line today with a good long song: Traveling Shoes… And with that I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself without me having to remind you to do so for the next 3 weeks!   

Chuck Butler

 

 

 

 

Currencies & Metals Move Higher VS The Dollar

July 20, 2020 

* U.S. economy keeps showing signs of trouble ahead… 

* Is a “Perfect Storm” brewing? 

Good day… And a Marvelous Monday to you! As the song goes… “Oh, it’s a hot one, like seven inches from the midday sun.”…  That was what it was like here this weekend… Shoot Rudy, I even got into the pool! Now that was a sight to see, because, I’ve had my legs compression wrapped for over a year, and while my knees are dark from the sun and sitting outside to read, my lower legs are as white as the fallen snow… So, after my family finally stopped laughing, I did the Nestea Plunge like I always used to do …..  And I didn’t care! Because, with my legs finally healed, I can get in the pool that I paid for and still pay for the maintenance of!  I still have to wear compression wraps, but now they are removable, and do not have to be cut off each week. I cooked outside on my Big Green Egg, both Saturday and Sunday, and standing in front of that hot fire, made the water in the pool feel that much better!  America greets me this morning with their song: Sister Golden Hair…

Well late last week was the tale of two different days… On Thursday, the dollar bugs ruled, and that meant the Dollar Index rallied from its price on Thursday morning, only to see it all wiped out from Friday’s close… The same with Gold & Silver, which didn’t fare wll on Thursday, but rallied back any lost ground in the Friday session… Gold ended the week, after rallying on Friday by $14 and closed at $1,810. Silver had the same thing happen to it, as it got sold on Thursday, and then bought on Friday by 24-cents, and closed the week at $19.32

OK… I’ve got to tell you up front, that I pulled this from Twitter last week, and that it comes to us curtesy of “The Land of Make Believe”….  Here’s Fed Head Evans in a speech last week, “FED’S EVANS: I DO NOT SEE FED FACILITIES AS DISTORTING MARKETS, THE FED”S PURCHASES AREN’T LARGE ENOUGH TO DO SO.” 

Ok, I’m still laughing out loud over this moronic statement from Fed head Evans!   Talk about living in La-La land!  What planet is he from anyway, because here on this planet, you could do a poll of investors who would tell him that they are investing in stocks because, the Fed’s Got their Back!

Remember a week ago when I told you that the Gov’t’s tax receipts were down?  I forgot to mention that the States and Cities will also see a HUGE drop in their tax receipts…  And when that happens, the tax increases will begin to filter through… I had a dear reader send me this last week…. “Just wanted to share with you that Davidson County (Nashville TN) has passed a 34% INCREASE in real estate taxes due to……well it’s hard to say EXACTLY what it is due to but for the sake of brevityI’ll say the virus…

There is now a recall movement to replace the mayor and city counsel. Folks here are plenty mad.”

I hope they do throw these people out! 34% increase?  That’s insane!  But not insane if you can get away with it, and apparently, they are NOT getting away with it! But can you see the county advisors all sitting in a room and deciding to throw the dookie at the wall to see if it stuck?  It’s the same thing as sending out a 34% tax increase!   But I’m pretty sure you, me and the guy down the street that cuts his lawn with his shirt off, will all be seeing huge tax increases from your state, or local taxing authority, so be prepared…

Well, in a bit of upbeat news (NOT!) James Rickards tells us that the date for a new financial system will be January 26th… OK, I knew it was coming, but that seems pretty close in calendar days, doesn’t it?  If you want the skinny on what he’s talking about and why he’s picked January 26th, 2021, I suggest you go t Google, put I his name, and you’ll find it…

Well, the news about the economy could be getting worse as we go along folks…  In Bill Bonner’s letter on Saturday, he said that the money printing and quick rise of the Debt was creating a “perfect storm”…  And that had my mind quickly imagining that litter trawler in the movie “Perfect Storm”, heading up that humongous wave, and thinking that’s our economy right there… 

For Instance, last Thursday saw the Weekly Initial Jobless Claims come in at 1.3 Million.  The total was 10,000 less than the previous week, I have to tell you that this appears to me as the relatively small decline points to persistent stress in the economy… And with businesses looking to cut back again, this is only going to get worse…  

But here’s something that I know you’ve not heard of before. I found this MarketWatch.com and it goes like this: “Some 928,488 new claims for benefits were also filed through a temporary federal-relief program, raising the total for the week to an unadjusted 2.43 million.”

Now, why wasn’t that total talked about in the media? Well, because it doesn’t sell good copy.   So, what the gov’t does tell us has the continuing claims at more than 30 Million…  As I explained last week,  none of this goes into the BLS’s Jobs Jamboree, does it make any difference?  Well, it does for people/ investor that don’t believe the BLS’s bag of lies each month! For we know what’s really going on, and make sure our Gold & Silver allocations are up to snuff… 

We also saw June Retail Sales and like I said last Thursday, I expected the number to be strong… And it was,  at 7.5%, but down significantly from the previous month’s 18.%…  And I believe that’s very significant in that we’re just not the economy we were pre pandemic…  I’m just saying… 

The U.S. Data Cupboard isn’t open for business today, as they’ll have to sanitize all the upcoming numbers! HA!  Seriously, there are no data reports on the docket today, and quite frankly, the rest of the week, is dullsville man…  Like playing solitaire with a deck of 51, or watching flowers on the wall…  

Judging from the earnings reports last week for banks, it seems the banks aren’t trying to tell everyone that the economy is all seashells and balloons… they all have made significant deposits to their loan loss reserve. Does that tell you something, that the Gov’t and Fed isn’t telling us about the economy? I fear they smell the coffee and needed to bulk up their loan loss reserves because the next phase is delinquency and then default… I was reading my fave writer’s newsletter: Grant Williams, Things That Make You Go  Hmmm… And he has this to say about this situation… “Thus far, with the various levels of financial assistance being offered by the federal government and the numerous ‘payment holidays’ which have been put in place, things have held together, but, if history is any guide (and, let’s face it, history is always a guide), we are about to enter the next phase of the cycle: delinquency, and that is something for which few seem prepared: – Grant Williams

Ok, this where, in the letter, we reach the dog days of summer, but get a refill of coffee and come back because this next part is very important, and plays well with what I’ve been telling you….

So… I’ve been doing a ton of reading about things… Things such as there’s a bill racing through Congress right now, that has the new stimulus payment tied to a digital dollar… That’s right to get your money, it will be in digital dollars…  Or this, that the Banking system is looking at a Crete style bail ins… So, if you have over the $250,000 covered by the FDIC, the banks who see large loan losses coming down the pike, will simply confiscate your money that equals the amount over the $250,000 figure.

Now those are two really “pick-me-up” ideas aren’t they now? NOT! And it goes to show you that no one really knows what’s going on….  But if I were a betting man, I would bet on what’s behind door #1, and that is the digital dollar, because….  Just a month or so ago, I told you that the Gov’t would cut rates into negative territory, and don’t tell me they won’t do that, because the economy is showing signs of waking up…  The second wave is going to be worse than the first wave of the virus, and like in Texas and California, they have closed back down, so will most of the American economy once again… So there!  

After going negative with rates, the Gov’t will see depositors making runs on banks to get their cash before the begin to start getting charged for it, and soon the Gov’t would introduce a new Gov’t backed digital currency (Not Bitcoin!) but their own invention, and you’ll wake up one morning to look at your bank account and find that the money in your account is all gone! Instead you see something looking like digital currency…  And that will be the end of what’s left of your civil liberties, my friends….  And wait till you find out how the conversion of your dollars was done, and at what price, etc. 

Wouldn’t that be a kick in the teeth, if we saw both of those ideas come into play?  YIKES! Get me out of here, and like the imitation of the late Great James Brown by Eddie Murphy, when he says, “I don’t want to get in the hot tub, it’s too hot, in the hot tub”…   I don’t want to deal with these things, it’s too damaging to my kids and grandkids futures….

So, let’s move on to something a bit cheerier…. 

Having nothing… I guess we’ll head to the Big Finish!

To Recap…  The currencies and metals lost ground on Thursday last week, but recovered nicely on Friday, and have gained more ground in the overnight markets… Chuck is full of info today, so be sure you got it all, you might need to reread the letter to get it all!  The Continuing claims in the U.S. for Unemployment Benefits is over 30 Million… It will be interesting to see how the BLS treats that in their next Jobs Jamboree.

For What It’s Worth…. Good friend, and fellow writer, Dennis Miller sent me the link to this story last week, and it was so good, that I saved it for today! This is analyst Alasdair Macleod, talking about how all this debt and money printing is going to come to a head by year-end… And it can be found here: https://www.zerohedge.com/geopolitical/probably-year-end-alasdair-macleod-warns-dollar-its-way-zero

Or, here’s your snippet: “ Finance and economic expert Alasdair Macleod says the gold market is “extremely dangerous as far as the bullion banks, swaps and trading desks” that, at some point soon, are going to have to deliver physical gold they do not have.

I find it difficult to see how they can close it… The possibility of a default and the possibility of a ‘force majeure’ is increasing all the time in this current situation. This is a difficult thing to predict, but unless someone can show me there is a way out of this . . . I can’t see how these banks can be rescued.”

So, the only way the banks can be saved is if they can deliver tons of physical gold they likely don’t have? Macleod says, “Which they don’t have, not likely have, they don’t have.”

Macleod thinks failure to deliver gold is coming soon where the contract will be settled in cash and not physical metal. How many times can the gold market do this? Macleod says,“I think it will be the end of the futures market because nobody would trust it as a means of delivering gold. I mean it would have demonstrably failed. So, why would you play with it again? Of course, the failure of COMEX contracts is a very, very serious issue.”

Macleod says stocks, the dollar and bonds all go down together and explains, “That is the lesson of history. Everything just goes away. If you destroy the currency, you destroy all the financial assets that are priced in it. That just happens. It just goes.”

I think the dollar will be destroyed by year end, and the price of gold and silver is infinity. . . . I think the banking crisis could start in a month. Look what’s happening to their balance sheets. . . . I think the collapse is likely to be so rapid that in the absence of any other information, the best thing to do is to hold on to gold and silver as an insurance policy just in case I am right.”

Chuck Again…. The article is long, and I had to cut some things out, so it’s probably better to click on the link above, or copy and paste it into your browser, and read the whole article there…. It’ll be worth your time…

Market Prices  7/20/20: American style: A$ .7000, kiwi 65.67, C$ .7375, euro 1.1460, sterling 1.2621, Swiss $1.0660, European Style: rand 16.6750, krone 9.2555, SEK 8.9950, forint 307.59,  zloty 3.8942,   koruna 23.2146, RUB 71.82, yen 107.11, sing 1.3896, HKD 7.7514, INR 74.57, China 6.9912, peso 22.48, BRL 5.3847,  Dollar Index 95.78,  Oil $40.58,  10-year .62%, Silver $19.43, Platinum $841.00, Palladium $2,094.00, and Gold… $1,817.00

That’s if for today… Well, last Friday, I hosted another driveway happy hour, and this time 3 of my former colleagues attended… It was super great to see Danielle, Aaron, and Michelle, along with hubby Kevin….  The rain stayed away, although it was all around us, but God’s country was saved from the storms for Friday night!  Grandson Braden, and his little sister, Evie, stayed the night with us Saturday night… I continue to be entertained by that little girl of 9 months now… She makes me laugh with joy, and make me thankful  I’ve been able to keep the cancer wolf at the door, and get to see her now… my other granddaughter, Delaney Grace, will turn 13 this summer… Can you believe that? I’ve been doting on her for as long as I’ve had cancer…  3 more years and she’ll be ready to drive, although she might need a booster seat to see over the dashboard, she’s so short! But I love her to pieces no matter how vertically challenged she might be!   OK…  Firefall takes to the finish line today with their song: So Long… I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler

The ECB Leaves Rates Unchanged…

July 16, 2020 

* The dollar bugs bite back at the currencies

* SNB Jordan talks intervention, and the franc gets sold…. 

Good Day… And a Tub Thumpin’ Thursday to you… They say that you can teach old dogs new tricks, but I was beginning to wonder about that, with me being the old dog… But then I found the secret recipe to go what I’ve done below. So skip ahead to see it if you like… But remember to come back here to start your day….  The Eagles greet me this morning with their song: Seven Bridges Road…  A very good morning song, I must say! 

Well, let’s see… We start the day with the dollar bugs biting away at the gains the currencies have racked up in the past few trading days. The euro has held the 1.14 figure through this dollar bug uprising, but the Aussie dollar (A$) has fallen back below the 70-cents figure it held yesterday morning.   The European Central Bank (ECB) met this morning and have already announced that they are not making any changes to their negative deposit rate.  ECB President Lagarde will speak at a press conference soon, but probably not before I finish this letter this morning. 

Besides, what’s she going to say that would move the markets this morning? She already left rates unchanged….  Well, I’m not going to wait for her, I’m moving on… 

Yesterday, I told you about Swiss National Bank Gov. Jordan was talking about currency intervention to keep the Swiss franc from getting to strong, and it looks like that thought was very timely, as the franc got sold last night and brought back below the $1.06 figure, to $1.0576…  

Gold gained a whopping 70-cents yesterday, closing at $1,810.50…   Well, it was up to $1,819, but that was before the Boys in the band showed up with their usual arms full of Gold short trades… And so the shiny metal had to settle for a 70-cent gain on the day… This morning in the early trading, Gold has given back $4, to start the day on rocky ground… 

Not the terra firma that Silver is enjoying these days… Silver finished the day yesterday at $19.43, up 18-cents on the day, and in this morning’s early trading Silver is up to $19.65…  Terra Firma indeed! 

So… I’ve been doing a ton of reading about things… Things such as there’s a bill racing through Congress right now, that has the new stimulus payment tied to a digital dollar… That’s right to get your money, it will be in digital dollars… Or this, that the Banking system is looking at a Crete style bail ins… So, if you have over the $250,000 covered by the FDIC, the banks who see large loan losses coming down the pike, will simply confiscate your money that equals the amount over the $250,000 figure.

Now those are two really “pick-me-up” ideas aren’t they now? NOT! And it goes to show you that no one really knows what’s going on…. But if I were a betting man, I would bet on what’s behind door #1, and that is the digital dollar, because…. Just a month or so ago, I told you that the Gov’t would cut rates into negative territory, and don’t tell me they won’t do that, because the economy is showing signs of waking up… The second wave is going to be worse than the first wave of the virus, and like in Texas and California, they have closed back down, so will most of the American economy once again… So there! After going negative with rates, the Gov’t will see depositors making runs on banks to get their cash before the begin to start getting charged for it, and soon the Gov’t would introduce a new Gov’t backed digital currency (Not Bitcoin!) but their own invention, and you’ll wake up one morning to look at your bank account and find that the money in your account is all gone! Instead you see something looking like digital currency… And that will be the end of what’s left of your civil liberties, my friends…. And wait till you find out how the conversion of your dollars was done, and at what price, etc.

Wouldn’t that be a kick in the teeth, if we saw both of those ideas come into play? YIKES! Get me out of here, and like the imitation of the late Great James Brown by Eddie Murphy, when he says, “I don’t want to get in the hot tub, it’s too hot, in the hot tub”… I don’t want to deal with these things, it’s too damaging to my kids and grandkids futures….

So, let’s move on to something a bit cheerier….

OK… here’s what all the hub-bub was about above…  I finally figured out how to get a graph from the FRED!  The FRED is what the St. Louis Fed’s research div. is called, and I belong to their research, and each month they send me tons of data, and graphs… And this one caught my attention this morning… It’s a graph of the tax receipts by the U.S. Gov’t.   Now you may think that there’s nothing to see here, just move along…  but take a look anyway, ok? 

Image

Well, let’s see… you can really tell when we’ve had tax cuts, now can’t you? And the deep dive this year, is basically because of the pandemic shutting down the economy… But the really interesting part is the forward looking line continues to go downward…  

And why not? Look, folks, there are no green shoots, (remember that term?) and there are no rainbows, and butterflies, and seashells and balloons, with this economy… We’re going to suffer the effects of debt, and a pandemic for years to come… The Great Depression lasted over 10 years, and this new Depression is going to last about as long…  The only difference between then and now is the Fed’s money printing that’s saving the bell for many a zombie corporation, but the bankruptcies keep piling up in spite of the Fed’s attempt to play God… 

In yesterday’s Data Cupboard, the June Industrial Production beat the expectations and rose 5.1%, but come on… don’t get all ga-ga about what looks like on the outside a recovery… Industrial Production is still 10.9% below the pre pandemic trend…   I know… Let’s see what MarketWatch had to say about the IP print…  here’s MarketWatch… 

“Industrial production is still down 10.9% compared to pre-COVID-19 trend and production fell at a 42.6% annual rate in the second quarter, the largest quarterly decline since right after the end of the second World War.

What happened: Manufacturing rose 7.2% in June. Auto production jumped for the second straight month but remains nearly 25% below its February level. All categories of production rise except for mining, which includes oil production.

Big picture: Manufacturing is slowly recovering from the sudden stop in March and April but there is a wall of worry facing the sector, economists said, including weak demand, supply chain disruptions, and historically low oil prices.”  -MarketWatch.com 

Today’s Cupboard has June Retail Sales…  I would have to say that the BHI (Butler Household Index) says that June Retail Sales will be strong…  But again the data is coming from such depressed levels that it would strange if it didn’t show strong numbers…  

I don’t think you should bypass the words from MarketWatch just like that….  They said, that “a wall of worry that includes weak demand, supply chain disruptions, and low oil prices, are among the things we should be worried about recovering”…    I’m of the opinion that they left out quite a few things that belong on that list…. But I appreciate their contribution to the letter this morning nonetheless… 

Do you know who kept the busiest in industry during the shutdown? The Amazon Prime Delivery people!  Just think about that for a minute… People are in their houses they have nowhere to go, nothing else to do, but surf the internet and find “bargains”, and click away!  Click, click, click… and the boxes show up at your door! 

And Again…. I say that the second wave of the virus is causing states to consider shutting down again, as Texas and California have already done…  Not complete shutdowns like before, but putting a halt on their progress in opening up…  And soon the gloom and doom will spread once again… 

I know this has nothing to do with markets, but I’m worried about high school age kids being kept at home, away from their social interactions with friends… Will this kids begin to become depressed?  I’m no pediatrician, or infectious disease doctor, but I did stay at a Holiday Inn Express and so I’m going to play one this morning….  I say open up the schools….  Go ahead get mad and send me an email, but that’s my position, and it’s not going to change… 

To recap….  The dollar bugs bit back yesterday, and the currencies’ recent run to higher grounds, was stopped, for a day at least…  Gold was only able to gain 70-cents on the day, and Silver is on what Chuck calls Terra Firma these days…  Chuck tells us about some things he’s been reading about, which aren’t very upbeat… And Chuck proves that you can teach an old dog a new trick! 

For What it’s Worth…. I received a notice from the good folks at GATA yesterday, that I thought was definitely FWIW worthy stuff, but I wouldn’t be able to send the readers to the GATA site if they aren’t members. But then this morning Ed Steer highlighted it and gave readers the URL link so I thought what the heck, I’ll give it a try!  This article is written by a  researcher who believes the U.S. Gov’t and Fed are now behind Gold, and it can be found here: http://www.gata.org/node/20289 

Or, here’s your snippet: “Equity Management Associates Managing Partner Lawrence Lepard’s second-quarter report for the firm’s gold fund, published this week, brilliantly itemizes the circumstances working in favor of the monetary metal and the companies that mine it.

But the report may be most interesting for its speculation that the U.S. government’s Federal Reserve and Treasury Department are attempting a controlled retreat with gold and now are “sort of” on the side of gold investors.

Lepard writes: “It all comes down to faith in the stewards of the currency — the Federal Reserve and by extension the U.S. Treasury. If faith in them increases, gold will fall in price. If faith in them diminishes, gold will accelerate in price.”

“Because they are in a sovereign debt crisis/trap, I believe the Fed knows that the only way out is to inflate. The alternative is a deflationary collapse that they would view as infinitely worse.”

“I believe that they will attempt to have a managed retreat. That is, they know they need inflation and a higher gold price. They just don’t want it to happen too quickly or in a disorderly fashion, because if that occurs, Gresham’s Law will kick in and the dollar will fail.”

“So as investors in gold and gold mining equities, I believe we now have the government on our side — sort of. We have to be prepared for them to take actions to attack gold if its price begins to accelerate too dramatically.””

Chuck again…  Well, now, wouldn’t that be akin to changing horses in the middle of a stream?  Paul Volcker won his war with inflation back in the day, but his war wasn’t just with inflation it was with the soaring price of Gold at the time…  But if this report is true, then I’ll all for it!  

Market Prices  7/16/20: American Style: A$ .6987, kiwi .6546, C$ .7391, euro 1.1410, sterling 1.2554, Swiss $1.0576, European Style: rand 16.6473, krone 9.3062, SEK 9.0665, forint 310.30,  zloty 3.9360,   koruna 23.3936, RUB 70.90, yen 107.12, sing 1.3979, HKD 7.7543, INR 75.01, China 6.9913, peso 22.33, BRL 5.3624,  Dollar Index 96.13,  Oil $39.75,  10-year .61%, Silver $19.65, Platinum $836.00, Palladium $2,048.00, and Gold… $1,806.60

That’s it for today…  Man some damaging storms moved through here yesterday… It was raining cats and dogs…  I once told the story of why people say it’s raining cats and dogs to my grandsons, and they both looked at me like I had a third eyeball! They said, “you’re making that up!” and so I said, believe or don’t!  Kids… They think they know everything! I’m sure my parents and their parents all said the same thing!  Well, two more Pfennigs and then I’m off on my annual summer vacation!  I had a friend say, “why do you call it vacation when you’re retired”… I don’t know, it’s just  old habit I guess!  The Doobie Brothers take us to the finish line today with their song: South City Midnight Lady…  I absolutely love this song…. There are songs that I like, like a lot, and then love… and this is one of those that I love!   And with that, I hope you have a Tub Thumpin’ Thursday, and Fantastico Friday tomorrow, and will Be Good To Yourself!

Chuck Butler

It’s Tax Day!

July 15, 2020

* Currencies, led by the euro continue to rise… 

* Both Gold & Silver had good days on Tuesday… 

Good day… And a Wonderful Wednesday to you!  Well, today is Tax Day… not that most of you waited to pay your taxes this day, but it is the last day to file them, and usually on April 15th, I do this, but since it’s July 15th this year, Pfennig Tradition calls for this: f you drive a car, I’ll tax the street
If you try to sit, I’ll tax your seat
If you get too cold, I’ll tax the heat
If you take a walk, I’ll tax your feet

‘Cause I’m the taxman, yeah, I’m the taxman – Beatles…

Thinking of taxes….  I’ve paid my fair share through the years, I can tell you that! I really get upset when someone says you didn’t pay your fair share…  If I were a young man, when my temper was always ready to be set loose a the drop of hat, I would have hit the guy before he got the last words out…  But I’m not 19 any longer, and besides, that way of life wasn’t getting me anywhere, so I calmed down, and changed, pulled my temper inside…  Most people I know have no idea what a roughneck I was at that time… Good thing I found God…  I’m just saying…

OK… well, the fed’s got their backs again, as stocks rallied yesterday…  Ok, riddle me this Batman….  One day Tesla announces that they’re going to have to drop the price on one of their model cars due to slow sales, and then the next day Tesla stock rallies… Where’s the common sense here?  Chalk that one up along with buying Hertz stock, and others that have filed for bankruptcy….  I’m glad I don’t have to explain this moronic thinking to a group of people… No wait! That’s what I’m trying to do here!  But I can’t! I really can’t!

I realize that even more than ever with the loss of jobs and businesses that many feel that they have to find a scheme to get them some money fast… And so they turn to the stock market, because, well, they don’t have anywhere else they can go to spend $50 and buy slices of 5 different stocks, like I see you can now do…  I just see this all coming crashing down in an awful heap, taking no prisoners, not passing Go and collecting $200, and leaving just devastation everywhere….  But then that’s me, what do I know?  Well, as I explained yesterday that’s 47 years of being associated with the markets talking….

So… The currencies continued to shave more of the dollar’s armor off it, yesterday, with the euro trading above 1.14 once again… I read the other day that a chartist called 1.16 the line in the sand for the euro… In other words, if the euro reaches 1.16, then the weak dollar trend will officially be over, with the euro leading the way once again…   I’m sorry, but I just can’t get excited about the euro these days… The Eurozone has more problems than you can shake a stick at, and I just can’t see the euro rallying like it did in 2003…  But… as I’ve always told you, the euro is the offset currency to the dollar, so when traders want to begin selling dollars, the euro will be the beneficiary of that dollar selling, whether or not the euro deserves it!

There weren’t great moves in the currencies yesterday, just moves upward….  The price of Oil remained steady Eddie, and Gold gained $8 to close at $1,811, and Silver gained 24-cents to move higher within the $19 range…. Silver continues to get my interest here… And I’m sure glad that I own Silver…

I used to tell the folks on the desk about how I bought two Silver coins, one for each kid at the time, and spent $23 each for them… They are specially minted coins, so they cost a bit more than spot, but still, Silver in the early 70’s was over $20… And then back in 2005 I would tell them that story, and say, “I’m still waiting for Silver to have a gain for me”… And then it not only reached $23 once again, but continued onto $50….  I recall being asked to be interviewed for an article where I called Silver “the new Gold”…  But then it wasn’t… and hasn’t been even really thought about since 2011…. Until now!

Gold is up $7 in the early trading this morning, so we start the day with Gold at $1,817…  The Boys in the band are going to continue to attempt to bring the price of Gold (& Silver) back down, but from my view in the cheap seats, there’s just too much momentum building in these two metals , and selling them short is like throwing yourself in front of a moving bus…  But that doesn’t stop the Boys in the band…  My wish for them is that they experience many deep losses from their short trades… 

And the Swiss National Bank (SNB) Gov. Jordan, was up to his old tricks yesterday. He had this to say about the rise in the Swiss franc… “Even though we still have scope for further interest-rate cuts, the fact remains that one cannot lower interest rates indefinitely, “Swiss National Bank President Thomas Jordan said in a lecture for the International Monetary Fund on Tuesday. “For this reason, interventions in the foreign exchange market, in which we buy foreign currencies and sell Swiss francs, also play a central role in our policy mix.”  I was sent that from the good folks at GATA yesterday… 

Oh have you heard the news? There’s good rockin’ at midnight! No wait….  What I really wanted to talk about was the news from yesterday that the U.S. Treasury has decided to simply cancel the checks they sent to dead people….  Recall I talked about this error by the Gov’t, and the steps they were taking to get the checks returned. So after all this time, and effort in getting the checks back, someone in the back of the room raised their hand and said, “What if we just cancel the checks?”   I don’t know about you, but I made myself laugh at that thought!

OK, now for some upbeat words from Ron Paul, whom I admire by the way…. “A coming crisis will likely be triggered by a collapse in the value of the dollar’s value and a rejection of the dollar’s world reserve status.”  And I couldn’t agree with him more!

And the GATA folks sent me an article that explained how the Chinese foiled a “spoofing” attempt by what is believed to be U.S. banks in the Shanghai Gold Market…  The Chinese should be sure about who was the attempter and then banish them from doing business on the SGM…    If this was a Gold market in Japan, they would be showing how-to films for falling on a sword…  And if it was found in the U.S. they would get a slap on the hands, and a monetary fine that comes nowhere near the amount of money the “spoofing bank” made in their “spoofing”…. I’m just saying!

The U.S. Data Cupboard finally gets something besides the stupid CPI to print today… Oh, by the way, the Gov’t tells us that consumer inflation as measured by CPI, rose .06% in June, which was almost double the expectations. I guess those so-called experts making the expectations, forgot about all the stimulus checks that were sent out, and how, for the most part they finally got spent in June. 

Yesterday we had the two speeches by Fed Doves, Brainard, and Bullard. Of the two Brainard had the best quote when  she expressed worry about the economy, and said, that” There May come a time’ when yield-curve controls may be needed.”  Bullard mentioned something to the tune of the stock markets optimism has been correct… Brother, can we ever get a real truthful speech from a Fed Head? 

Today’s Cupboard has the June prints of Industrial Production and Capacity Utilization… Both had seen recoveries of some sort in May, and the continuation of those recoveries are expected in June….  That is unless they waited until later in the month to compile the data, after the economies of Texas and California were shut back down….  Just something to keep in mind should the data weaken, and if it doesn’t, then something to look for next month. 

To recap….  The euro is really pushing the currency envelope into the face of the dollar bugs… The single unit has reached 1.14, and the chartists say that 1.16 is the line in the sand… Much like I used to say about Gold getting past $1,750…   Gold added $8 yesterday, and is up another $7 in the early trading today. Silver added 24-cents to its value, and moved higher into the $19 handle.  And the U.S. Treasury finally came up with a novel idea to simply cancel the checks they sent out to dead people…  This has become the cancel country, so why not carry that on to the checks that were sent in error…

Oh! and one more thing before we head to the Big Finish… The U.S. Current Debt has already passed $26.5 Trillion, with the $500 Billion being added in a blink of an eye…  As longtime readers you know that I have stomped and hollered about the rising Debt in this country for years, and we used to have to play a game with the debt ceiling folks, but not any longer, this debt just keeps pushing toward the $30 Trillion I said it would reach this year, and no one seems to care….  except me, and maybe you… 

For What It’s Worth…. Well, it’s times like this that I need a dose of longtime friend, and publishing guru, Bill Bonner….  And today Bill is talking about fake money and it can be found here: https://www.rogueeconomics.com/bill-bonner-diary/government-spending-has-created-a-country-dependent-on-fake-money/ 

Or, here’s your snippet: “But it isn’t that simple. Both President Trump and presidential candidate Joe Biden say they aim to make America great again. But neither seems to have any idea what ails it.

A thoughtful person would spot the damage done by the war on drugs… the war on poverty… the war on terrorism… the war on COVID-19… the deficits, fake money, false interest rates, debt… the Swamp… and the Deep State.

An honest candidate for president would want to put an end to them.

Instead, both Democrat and Republican aim to double down.

Donald Trump came out at the end of last week claiming that Joe Biden had knocked off his great – it’s beautiful, really – economic plan. Biden “plagiarized” him, he said.

This is not surprising. When you have a winning election hustle, both parties are likely to want to use it. Here in Argentina, for example, the election strategy that works is pretty simple:

Destroy the economy with taxes and regulations… make people dependent on the government… and print money to provide giveaways to the urban masses.

Former Argentine president Juan Perón proved that it worked in the 1950s. Since then, hardly anyone has won the Pink House (the Argentines’ version of the White House) without following the program.

The appeal of free money was so strong that competing parties quickly collapsed. Instead, Perón’s ruling party split into two factions – right-wing Peronists and left-wing Peronists.

One pitched its program to culturally conservative elements. The other aimed for the more liberal market. But both stuck to the essential playbook – promise, print, go broke.

Illusion and Fraud
And now, in both Trump’s plan and Biden’s proposal, we see the ghost of Juan Perón.

We also see that former governor of Alabama George C. Wallace was ahead of his time with his comment that between Republicans and Democrats, there wasn’t “a dime’s worth of difference.”

Both aim to seduce the common marginal voter with an illusion and a fraud: that the federales can make people better off by rigging the economy as they please… and passing out printing-press money.”

Chuck again… As usual only Bill can put his thoughts down for everyone to read and understand… He’s truly a master wordsmith… 

Market Prices  7/15/20: American Style: A$ .7009, kiwi .6567, C$ .7365, euro 1.1435, sterling 1.2627, Swiss $1.0640, European Style: rand 16.6055, krone 9.3264, SEK 9.0562, forint 309.05,   zloty 3.9095,   koruna 23.2770, RUB 71.00, yen 106.91, sing 1.3885, HKD 7.7518, INR 74.97, China 6.9969, peso 22.31, BRL 5.3915,  Dollar Index 95.94,  Oil $39.75,  10-year .63%, Silver $19.35, Platinum $832.00, Palladium $2,034.00, and Gold… $1,817.00

That’s it for today… Already, it’s the middle of the month! Time sure flies when you’re having fun, eh? HA!  Well, I got to watch some real live baseball last night, as the Cardinals played an intrasquad game that ended in a scoreless tie after 5 innings… The main concern everyone has for the Cardinals this year is how will they score runs?  And if last night is any indication, I would say that everyone’s concerns are real….  Ok, we’re getting close enough to the time that I will talk about about it… Next week, there will only be two Pfennigs, and then none for the next 2 1/2 weeks, as I will be on Chuck’s summer vacation!  So, get all of me while you can! HAHAHAHA!  I’ll be here tomorrow though, God willing, and the Creek don’t rise! Oh, I saw that 9 out of 10 native Americans say they didn’t pay any mind to the Washington Redskins name, and it didn’t bother them… I shake my head in disgust of what’s going on folks…  Well, with that bit of upbeat talk from me,  Marvin Gaye takes us to the finish line today with his song: Mercy, Mercy…   I hope you have a Wonderful Wednesday and will continue to Be Good To Yourself!

Chuck Butler

 

 

U.S. Federal Budget Deficit Hits $863 Billion For June!

July 14, 2020 

* Currencies, led by the euro , continue to add to gains

* The Wolf is always at the door for Gold & Silver…. 

Good Day… And a Tom Terrific Tuesday to you! Another nice very warm day here yesterday, with nothing but blue skies and sunshine…. I love days like that! I tried to work a crossword on my iPad outside, but the iPad got too hot! Sensitive little bugger I guess…  So, I had to find some shade, which is easy to find in my backyard, as we have large Trees all around us!  Well, tonight I finally get to see some live baseball, albeit an intrasquad game, but live pitching and hitting nonetheless! It seems like a year ago, I was sitting in the warm sun, in my primo seat at Roger Dean Stadium, watching Spring Training games… And it was 4 months ago! Kansas greets me this morning with their song: Play That Game Tonight…  For a couple of years there in the 70’s Kansas was as hot as a firecracker…

Well, it was another “nothing” day in the currencies and metals yesterday… Traders have got to be the most confused people on earth right now, and they have no idea what’s around the corner, or behind the wood shed… they want to push the dollar downward, but just can’t come to grips with the actual decision to do so… They know in their heart of hearts, because they learned all these things while training to be a trader, that money printing equals currency debasing, that zero interest rates equals currency debasing, and no concern for debt levels equals currency debasing…  But they just won’t pull the trigger… 

The euro was one of the few currencies that inched higher on Monday, gaining about 1/4 of a cent, but most of the currencies lost an inch or two on the day to the dollar. But since the euro is so dominant of a component of the Dollar Index, the Index dropped from 96.61 at the start of the day to 96.52, and that drop in the dollar helped Gold to offset sellers, and the shiny metal closed down 40-cents… 

Silver found a way to hold onto the $19 handle that looked so good yesterday morning, and brought about images of sugarplums that were dancing in my head, in anticipation of even higher levels for Silver, but then I was awoken by a bad dream of monsters showing up at the COMEX with their arms full of short Silver trades….  The wolf is always at the door for Silver… that’s for sure!

Speaking of the wolf always being at the door….  I was remiss yesterday in not telling you what the oncologist told me last Thursday… After reviewing my bloodwork, and climbing all over me, she said that I was doing well, and that I should keep doing whatever it is that I’m doing…. She talked to me about my jaw, and wants me to contact a surgeon to find out the procedure to removing a jaw, for she believes that the process has to be better than what was described to me back in 2011…  

OK, back to the markets…  There is something I want to point out with Gold…  According to Kitco, Gold climbed to 1,841.00 yesterday before coming face to face with arms full of short Gold trades…  The Boys in the band were very active yesterday, and brought Gold back to 1,803 to close on the day, up $3 on the day…  Well, I hope these short Gold trades get huge margin calls, and have to be closed out ahead of time with HUGE losses! 

Longtime commodity guru, and friend, Rick Rule, told Kitco that he thought that Gold had run up in price too quickly, and that a return to fill in the gaps would probably happen, but then Gold would take off again… 

And then you had longtime analyst, Peter Schiff, tell an audience that the Gold chart looks great…  So… I know that you don’t read my letter to get information from other folks, and with that in mind, I’ll just say, once again, that I think $1,800 is the launching pad to higher prices for Gold… 

Well, the Federal Monthly Budget Deficit printed yesterday for June…  Sit down, folks, this is incredible!  The June Federal Budget deficit was $863 Billion! A new record amount to boot!  Now if I were in math class, circa 1972, the instructor would as me what the annualized deficit would be given the June number…. And I would have multiplied 863 x 12 and gotten….  are you ready for this?  $10,356,000 Trillion!  

OK, I know all too well that annualizing numbers can be deceiving, so let’s just say that $863 Billion is HUGE, and that we can’t continue to go on like this, can we?  Well, if there’s one thing that I’ve learned in my 47 years in “markets” it is that something may be evident, but it’s not imminent, until it is….    

You know, I just did that math on how long I’ve been associated with the markets, and even I was surprised at how long I’ve been at this… Shoot Rudy, I’ve been writing the Pfennig, since 1992…  that’s 28 years for those of you keeping score at home…  I have T-shirts that are older than 28 years, not that they would come close to fitting me any longer! HA! 

So, when I say that “I remember how things were long ago” I mean “long ago!” I’m just saying… 

Well, I was looking at the stock market yesterday, and noticed that it was up big, until it wasn’t yesterday… And this thought crossed my mind… I guess the idea that the Fed has your back, only works when the Fed does… I really don’t get the stock jockeys… The U.S. prints a record high Budget Deficit for June, and the number of cases of infected people with the virus, here in the U.S. continues to rise, and stocks just keep going higher… 

Oh, and maybe the stock jockeys haven’t gotten the message yet, but the Fed has begun to pull the punchbowl away from the table… Yes, their last 4 weeks of data have them reducing the Bond buying…   It’s been a real stealth move by the Fed, but one that t.hey told us would be the case… Remember them saying that they would go the full nine yards with Bond buying and then pull back when things looked better…   

It’s a crazy, mixed up world, folks…  And at the end of each day, I only have one question for you…  Got Gold? 

The U.S. Data Cupboard today has the stupid CPI for June… I would find it difficult to believe that anyone in the world would pay much attention to what CPI says….  This data has a long history of being massaged and cooked. So long now that the CPI chefs, couldn’t change now to save their lives!  

We’ll also have two speeches by Fed Heads,  first up is Lael Brainard, who is a dove, inside and out, and then St. Louis Fed President, James Bullard will speak… Bullard carries a bigger stick than Brainard these days, as it was once thought that Brainard had the ear of former Fed Chair Janet Yellen…   Yes, it was the Fed’s three headed monster, of Dudley, Yellen and Brainard…  That’s all changed now… thank goodness! 

I had a dear reader ask me to rethink what I said yesterday, in regards to talking about the state representative from W. Virginia, who wants to remove the taxation from sales of Gold & Silver…   He asked me if I thought it was a good idea to reduce taxes received in a time when tax receipts are way down to begin with, due to the economic shutdown.  

I would think that there could be some give and take here…  If you reduce tax receipts from one place, then you have to increase them in another place… And that place, in my mind, would reducing the loop holes in Corporate taxation…  There! See?  Now why can’t our elected representatives think like that? 

To recap… The currencies led by the euro pushed the envelope VS the dollar yesterday and overnight. Gold was following suit, until it wasn’t… and finished the day up just $3….  Silver held on to the $19 handle, and visions of sugarplums danced in Chuck’s head….  The Fed Budget Deficit for June was $863 Billion!!!!  COVID-19 infections are rising , the Budget Deficit is soaring, and yet, the stock jockeys are still dancing in the street…  It’s a crazy, mixed up world, folks…  Got Gold?

For What It’s Worth…  This past weekend, it was announced that Wells Fargo is laying off 10,000 workers…. I was talking to a good friend who works at a Big Bank, and I said that it won’t be long before the other banks follow suit, as its a game of monkey see, monkey doo with the banks….  and then… I read this article in my local paper about the GM plant here and that’s the gist of the FWIW article today… You can find that article here: https://www.stltoday.com/business/local/gm-lays-off-third-shift-at-wentzville-plant-citing-workers-covid-19-concerns/article_0731934b-1002-5c49-8628-737c52434827.html#utm_source=stltoday.com&utm_campaign=%2Fnewsletter-templates%2Fbreaking&utm_medium=PostUp&utm_content=a12874506a3b5805dded6c95af30d7173df7c77a 

Or, here’s your snippet: “General Motors will temporarily lay off a shift of workers at the company’s Wentzville Assembly Plant.

Darin Gilley, financial secretary for the United Auto Workers Local 2250 in Wentzville, said there are about 1,200 workers on the third shift. The plant employs about 3,750 hourly workers in total.

Dave Barnas, a GM spokesman, said the layoffs are scheduled to begin July 20. They are temporary, he said, but it is too early to give a definitive timeline.

 “We believe, in the short term, a two-shift operating plan will allow us to operate as efficiently as possible and accommodate team members who are not reporting to work due to concerns about COVID-19 in the community,” Barnas said.
 Gilley, of the UAW, said some third-shift workers may be able to work on the first or second shift during the layoff period if they so choose. Gilley said some workers have stayed home due to concerns about COVID-19, and that there have been at least 23 cases at the plant.
 GM did not confirm the number of cases, citing employee privacy concerns.”
Chuck again…  Remember the talk after the 2008 financial meltdown about “green shoots”?  Well, those “green shoots” turned brown and wilted, and so will all the talk of signs of recovery…. I’m just saying… 
Market Prices  7/14/20: American Style: A$ .6955, kiwi .6532, C$ .7340, euro 1.1371, sterling 1.2520, Swiss $1.0642, European Style: rand 16.7980, krone 9.4235, SEK 9.1402,  forint 312.37,  zloty 3.9414,   koruna 23.4679, RUB 70.75, yen 107.40, sing 1.3932, HKD 7.7509, INR 75.17, China 6.9974, peso 22.60, BRL 5.3462,  Dollar Index 96.46,  Oil $39.88,  10-year .62%, Silver $19.11, Platinum $832.00, Palladium $2,043.00, and Gold… $1,803.00
That’s it for today…  A little shorter than usual, but still chock-full-o-the info you crave! HA! So, are you getting excited about the start of Baseball? I am! We’ll  have the dash to the pennant going on in Baseball, the rigged up playoff system for hockey going on, and the NBA’s experiment with a bubble… After 4 months of no live competitions on TV other than Golf, we’ll be inundated with games, and I can’t wait!  My beloved Cardinals will play an exhibition game VS the Royals next week…  Chicago takes us to the finish line today with their iconic rock classic song: Does Anybody Know What Time It Is?  This is one of few songs that my old band allowed me to sing…  And with that… I hope you have a Tom Terrific Tuesday, and will Be Good To Yourself! 
Chuck Butler

 

It’s Silver’s Turn To Shine Bright!

July 13, 2020

*Currencies end the week on a strong note… 

* And Start the week on an even stronger note! 

Good Day… And a Marvelous Monday to you! What an absolute beauty of a day yesterday, here where I spend my summers and falls… The humidity dropped like a rock, and so did the temperature, and there was a nice pleasant breeze blowing all day! I was in heaven sitting outside…  Well, I hosted another driveway happy hour on Friday, and even Chris Gaffney stopped by to say hi!  I like these driveway happy hours better than the Zoom ones we did when it was still cold outside… Those seemed to be cold inside too!  We honor distancing standards, everyone brings their lawn chair, and a small cooler, and we always have a ton to talk about… We all seem to be on the same wavelength with our thoughts too! And so far no one has asked me a question about the economy, stocks, or Gold. I guess, by now, they all know better! HA!

The talk around town sure has shifted from a “stocks will rally forever”, to a “stocks won’t rally the rest of this year!”  Longtime readers know that I don’t spend much time talking about stocks, not because I don’t understand them, I held three licenses in the stock business…. But because for years, I was associated with a bank, and because I held those licenses I was unable to talk about specific stocks, so I thought it was sufficient to just say, stuff like the stocks are up are down… Everyone can get news on stocks… I prefer to bring you news that you can’t get that easily, that will have something to do with investments.

The Currencies late last week inched higher going into the weekend, with the euro rising back above 1.13, and all others falling in line behind the euro.  Gold didn’t end the week as strong as it started the week… A brief pause for the cause, which the cause would be all the procrastinating buyers of Gold that have finally gotten the message…  International yields are negative, and here in the U.S. when you factor in inflation they too, are negative…   Gold doesn’t pay a yield, but you do have to pay to have it stored, unless you have safe in your house! But with yields negative and you having to pay the Gov from which your bond was issued from, to hold the bond, those storage fees make holding Gold an even draw….  And remember those stocks we talked about above and how they’re rallying? Well, as I told you last week, since 1999 the Dow has lost 66% VS Gold… 

So, all you stock jockeys out there, why don’t you tell your clients that one? I know why… Because your bosses won’t let you! And because your brokerage outfit doesn’t have Gold offerings! And that’s why I keep telling you dear reader to call Tim Smith at 1-800-926-4922 and listen to what he has to offer you! Because as I read this weekend on Twitter, that “one day you’re going to wake up and find that Gold has gapped up $200 and then the next day it does the same thing, and at that point, you can call a Gold dealer, but he won’t have any Gold to sell you, and you’ll have missed out …. 

And don’t look now, but Silver is on a run to higher ground… finally!  I know I’ve quoted this info previously, but here I go again… in the last bull market for Gold & Silver, it was Silver that outperformed Gold, on a percentage move basis, 7 of the 10 years…  I’ve got more info on what Silver is doing in the FWIW section today, so don’t leave home without reading that! 

Ok, I’ve talked about this state representative from West Virginia, before, but in case you missed class that day let me introduce you to someone who’s on your side with regards to Gold & Silver… Surreptitious intervention in the gold market by the U.S. government is the target of legislation introduced in the House of Representatives by Rep. Alex X. Mooney, R-West Virginia.

Mr. Mooney has introduced a bill HR 2559, Mooney also has introduced legislation to protect Americans against the Federal Reserve’s steady devaluation of the dollar — legislation to forbid federal taxation on the sale of gold, silver, platinum, and palladium coins.

In a letter to colleagues seeking support for his Monetary Metals Tax Removal Act, H.R. 1089, Mooney writes: “The Internal Revenue Service does not let taxpayers deduct the staggering capital losses they suffer when holding Federal Reserve Notes over time, so it is unfair to assess a capital gains tax when citizens hold gold and silver to protect them from the Fed’s policy of currency devaluation.”

Chuck again…  Man, I sure wish that guy was from my state, so I could be proud of my state representative!

I don’t want to be the bearer of bad news, but come on, you’ve go to admit that things just aren’t as rosy as they used to be, and even though, as a country we would tightened out belts, and worked through a bad stretch, without the Fed’s money printing and checks from the Gov’t. We didn’t need the Gov’t interference this time, we didn’t need it previously, and we won’t ever need it… As President Reagan said, “the scariest words you’ll hear, is: I’m from the Government and I’m here to help”…

I don’t see how the financial system that we all know and has been in place since 1971, is going to be able to withstand this siege on it by the Feds and Treasury…  QE1, QE2, QE3, Operation Twist, zero interest rates, and now more QE, which has been going on since last September, and all the while the country’s debt continues to reach new record highs about every 6 months….  You will recall me telling you about a month or so ago, that one day all this debt in the world, will have to be written down, and off, and it’s then that the financial system that we know, will come crumbling down….  John Mellencamp has a song where he sings: “when the walls, come crumblin’, come crumbling down” It’ll be something like that!

And I say that just looking at history…. There are cycles for everything folks… Business, economies, financial systems, etc. And they especially cycle faster when you don’t take care of what’s in the cycle, and we haven’t taken good care of our economy or financial system for a long time now….

While we’re on this subject, do you wanna know what I believe was the beginning of the end for our economy and financial system?  Remember back in 1994, when then Fed Chairman Big Al Greenspan said that the stock market was brimming with “irrational Exuberance”?  But then did nothing to stop this “irrational exuberance”….  It was his job to administer Fed Margin rates…. And I wrote back in 1994, that I didn’t understand why he didn’t just increase the Fed Margin rate, to calm down the stock market?   Look, I’m so old that when I first started in a margin dept, the Fed Margin rate was 65%, but then was lowered to 50% in the early 70’s… The first test I took the questions centered around the 65% margin rate, not 50%…   

So, that’s when the Fed became fans of the stock market, thinking that as long as the stock market was going strong, the masses would think the economy was too….  And that was not true then, or now!

My friends always ask me, how do you know all this history?  I simply say, “Because I lived it!”

OK, enough of this, that and the other thing!  Let’s talk about something else….  Well, last Thursday, the Weekly Jobless Claims were printed for the previous week, and they showed that 1.31 Million filed for Unemployment benefits in last week’s holiday shortened week. So, given another day, and the total would have been 1.40 as expected.  

The continuing claims and total number of people receiving benefits is now nearly 33 Million…  That’s 23% of the workforce folks….   So, wouldn’t that be the Unemployment Rate? And not the bag of lies that BLS tries to give us each month, like last month when they said that the Unemployment Rate was 11%? 

I know the BLS is just doing their job and trying to make everyone think that things aren’t as bad as they really are….  The U.S. has seen over 1,200 bankruptcy filings in just the last two months, and the list keeps growing day after day, another big name corporation files for bankruptcy…  But don’t worry about those last two things I just pointed out, everything is going to be just peaches and cream…. NOT!

Well, it’s not all gloom and doom this morning…  I read this weekend that the Treasury Dept is looking into a new type of Treasury that’s Yield is equal to GDP… So if GDP rises so does your yield on this bond…  Now, if things are going as bad as I believe them to be going, then you would be paying the Gov’t 8% for the 8% drop in GDP in the 2nd QTR, that’s yet to be printed by the way, so I’m just using my usual logic to come up with that figure…. But you’ve got to figure that GDP won’t be negative forever, and it will rise again to average 2.1% like it has for the last 10 years!    So, not exactly great news, but not gloom and doom news, with a little satire on the side…

In my daily skip to my Lou through Twitter yesterday, I came across this from David Rosenberg on his Twitter feed: “ I saw a promoter on bubblevision saying we’re definitely in a new bull market. Industrial conglomerates: -23%. Autos: -31%. Advertising: -34%. Consumer finance: -37%. Regional banks: -37%. Energy: -36%. Casinos/gaming: -43%. Hotels: -52%. Airlines: -55%. Sure thing.” – David Rosenberg

The U.S. Data Cupboard this week builds to a crescendo this week, starting out very lacking, and by Wednesday and Thursday will be producing real economic data, like Industrial production, Capacity Utilization, and Retail Sales… But remember with all data prints these days, they have been massaged and cooked to look like what the Gov’t wants us to believe they are… 

To recap… The currencies finished last week on an up note, and have continued to rally in the overnight markets last night VS the dollar. Gold didn’t finish the week as strong as it started the week, but it’s back on the rally tracks this morning, no worries, and Silver is kicking tail and taking names later…. Lots of other things in today’s letter, better make sure you go back and reread it! HA! 

For What it’s Worth….  Well, I mentioned Silver above, but this article really paints a better picture of what’s coming for Silver than I ever could…  I want to thank Ed Steer at www.edsteergoldsilver.com for highlighting this in his Saturday letter….  If you don’t subscribe to Ed’s letter, you should, there’s nobody that works as diligently as Ed does to bring you information about the precious metals! So, anyway…. Here’s the link to this article about Silver: https://www.silverinstitute.org/silver-investment-demand-10-percent-first-half-2020/

Or, here’s your snippet: “Silver’s role as a valued investment was broadly on display during the first half of 2020, as investors actively accumulated silver in the first six months of the year, leading to a 10 percent gain in investment demand. Paving the way was remarkably strong growth in silver-backed exchange-traded products (ETPs), which have posted successive all-time highs this year, together with solid silver coin and bar investment.

The silver price averaged US$16.65 through to the end of June. Having fallen sharply in mid-March, the silver price has since recovered strongly, rising by 56 percent to reach US$17.84 at end-June; it has since broken through the US$18 barrier. The gold:silver ratio – the quantity of silver ounces needed to buy an ounce of gold – fell since its multi-decade high of 127 in March, and at end-June stood at 97.8, which is still very high by historical standards, and may signal that silver is undervalued relative to gold.

Silver Investment

Retail and institutional inflows into silver ETPs have been impressive this year. As of June 30, global holdings reached a fresh all-time high of 925 million ounces (Moz), which is roughly 14 months of mine supply. The ETP growth in the first half 2020 of 196 Moz comfortably surpassed the highest annual inflow of 149 Moz set in 2009. North American listed funds accounted for some 90% of the ETP inflows since March.

Retail bullion coin sales jumped by an estimated 60 percent year-on-year. Silver bar and coin sales surged in response to a deteriorating economic outlook linked to the global COVID-19 pandemic, leading to some supply-chain disruptions. This saw dealer stocks for several silver investment products quickly depleted, resulting in extended delivery lead times and higher premiums.”

Chuck again….  Well, if you didn’t get the message above, in Chuck parlance… “Silver is on a run and going higher!”

Market Prices  7/13/20: American Style: A$.6975, kiwi .6676, C$ .7373, euro 1.1333, sterling 1.2600, Swiss $1.0614, European Style: rand 16.7365, krone 9.3986, SEK 9.1538, forint 312.01,   zloty 3.9478,    koruna 23.5023, RUB 70.69, yen 107.10, sing 1.3891, HKD 7.7505, INR 74.97, China 7.0003, peso 22.47, BRL 5.3217,   Dollar Index 96.50,  Oil $39.88,   10-year .64%, Silver $19.10, Platinum $840.00, Palladium $1,936.00, and Gold… $1,810.00

That’s it for today… I want to wish all my former colleagues good luck with their decisions due today…  Well, starting tomorrow night, we’ll finally get to see some baseball, albeit  intrasquad games, but at least it will like watching spring training on the back fields…  The return of Baseball in just 11 days away for Cardinals fans, and 10 days away for Baseball fans…  I can’t wait to see the young kids around the league, like Fernando Tatis Jr., Vlad Guerrero Jr., Pete Alonso, Tommy Edman, and more get to show that they are stars too…  Heartsfield takes us to the finish line today with their song: Racin’ The Sun…  And with that, I hope you have a Marvelous Monday, and please Be Good To Yourself!

Chuck Butler 

 

Gold Crosses $1,800, Better Hold On From Here!

July 8, 2020

* Currencies didn’t rally or get sold later yesterday… 

* You do know that the Bill of Rights are not just recommendations? 

Good day… And a Wonderful Wednesday to you! We’re not even into the dog days of summer, and I can already feel the slowdown in energy each day… I had a nurse ask me last week how my energy level was, if I got out and did stuff… I told her, that 45 minutes per leg each day on the leg pumps, and 3 hours a day with my feet at hip level, and a cat nap, doesn’t leave me a lot of time to “get out and do stuff”… She laughed, and said, “ I guess you’re right”! I loved it! I was told I was right! Do you know how many times even here at home that I’m told I’m wrong? That made my day, along with the fact that I didn’t have to return to the wound center! Just a friendly Spiderman reminder that there will be no Pfennig tomorrow. I get to go see my oncologist… The Guess Who greet me this morning with their rock classic song: These Eyes…. Watched you bring my world to an end… Very appropriate wording, eh?

Well, the currencies didn’t rally during the day like they have been lately, and they didn’t get sold during the overnight session either, so the trend has come to an end…. I didn’t like the trend any way…. So, the dollar bugs fought back yesterday, and gained some ground for the dollar…. But that sure wasn’t what happened with Gold…. The dollar lost $10 to Gold, as it closed at $1,795… I don’t really consider myself a Gold Bug, but I do believe that if you do NOT own Gold at this point, you had better figure out a way to buy some, because from $1,800 I believe Gold will leap from to $2,000, in the blink of an eye…. I could be wrong, but if inflation is in our future,( more on that in a couple of minutes) with debt up to the country’s eyeballs and the economy in shambles, I just don’t see how Gold won’t move upward from here…

And in the early morning trading today, Gold has moved past $1,800, so strap yourself in, and keep your arms and legs inside at all times, this ride is going to go from zero to 60 in a flash…. Here we go! 

Did you know that since 1999, the Dow is down 66% VS Gold? I read that yesterday, and about fell out of my chair! Well, I don’t see Gold stopped there either! So, either you need to buy your first ounces of Gold, or you need to buy more for your portfolio I would suggest that you get off your collective duffs and get to it!

In my daily perusal of Twitter, I came across a couple of Tweets that caught my attention, and should catch yours too, I believe…. First up is Danielle Di Martino Booth and her Twitter feed said, “Via DB’s Reid “This is only 10th time that YoY money supply growth has gone above 20% in the US. On all previous occasions nominal GDP soon moved comfortably into double digits, mostly through inflation” Are we, in theory & grounded in historic precedent, prepared for inflation?”

And then this from Sven Heinrich who had this to say on his Twitter feed: “Screw sanitized Fed minutes. Fed meetings should be on public live feed. The public has a right to know as this privately owned organization controls so much of their economic lives.”

And that ends today’s walk through Twitter….

I do want to touch on something that was in Danielle Di Martino’s Tweet…. That Money Supply is over 20%, and that the only times in the past that it has reached 20%, we had had soaring inflation…. Look, as opposed to the Paul Volcker years, when he crushed inflation, these Fed Heads want and need inflation badly… And the thing that gets me is that they actually think that they can stop inflation at 2%…. I’ll bet you a shiny quarter that they can’t…. I’m just saying…

You may ask, “why does the Fed need inflation?” Well, obviously you haven’t been in class in the past when I explained this, so here goes…. Inflation brings about higher GDP…. It also helps to pay off debts, which is what their main goal is all about…. There’s some research out there that counters the age old rhetoric of low inflation and low interest rates, spur consumer spending… Their research shows that when inflation is rising, consumers get out their check books and plastic cards and get to spending!

Another thing I want to talk about today is debt…. Yes, I’ve been the boy crying wolf about debt for over 20 years, but I think given what we have today, with no economic growth, that the chickens have come home to roost on that subject….

And then there’s also this…. Recall how I’ve blasted the Fed over and over again, ever since the Greenspan put, that the Fed doesn’t allow the economic cycle to run its normal course, and to have a recession where all the excesses get cleared out, bad corporations fails, and new corporations take their place for the next upward movement in GDP…. So, if there’s never a period where the economic cycle starts over, how can it ever get moving upward again? That’s my position on this, and you won’t change my mind! The Fed is at fault for just about everything that’s wrong with the economy, with some major boosts from Congress who continues to deficit spend as if it’s the cool thing to do…

Of course it took a pandemic and economic lockdown to finally have a recession, and now we will be able to eventually move forward and upward again, but then there’s always that debt thing dragging us down… You can’t win for losing in this environment folks… 

You know how people will give up their civil rights in a heart beat? Think back to the Patriot Act? And then the stay at home, economic lockdown… We all listened, (well mostly ) and may jobs were lost, many lives were lost during the lockdown, I believe in social distancing, I believe in wearing a mask in public, but I don’t believe the Gov’t should have told us to stay at home, not go to work, and closed down the businesses….

Speaking of losing their jobs…. On Tuesday this week, it was reported that there were 5.4 Million Job Openings…. Now that’s all fine and good, except…. That there are still 25 Million people looking for a job! See? The math doesn’t work, and just like I told you when the lockdown began, a lot of companies aren’t going to be coming back, and if they do, they won’t be at the employment levels they were previous to the pandemic. I read yesterday that the iconic clothier Brooks Brothers, who outfitted several presidents over the years, got themselves into deep debt, and have no way out, but to file bankruptcy…. Another one bites the dust….

And this just in, this morning, it’s being reported that the operating company that owns Ann Taylor, will file for bankruptcy…  Who’s next? 

The U.S. Data Cupboard continue to lack anything that would move markets, and today’s flavor of a 2nd tier report, will be Consumer Credit (read debt) for May… And it won’t be reported until this afternoon, so the morning trading is all open for Trader Sentiment to take it somewhere… 

Tomorrow’s Data Cupboard has the usual Tub Thumpin’ Thursday fare, and that’s the Weekly Initial Jobless Claims.  Did you know that there are still 1.50 -ish Million claims being filed weekly? Yes, the weeks were 6 Million claims were filed, but still… 1.5-ish Million?  That’s each and every week folks…. There’s no V for the recession / economy, and if anything we might see a W… 

And in the next downward move for the economy, and stocks, we’re going to see even larger money printing numbers…. With each downturn, the money printing numbers grow higher than the previous downturn…  I know the Fed thinks they are doing the right thing, here…. But, in my mind, I don’t see how the financial system can deal with more Trillions all at once… 

And here’s another thing that crossed my mind yesterday reading about Trillions of dollars being used for this, that and the other things…  Think back to 2007-08, and that financial meltdown, the Trillions number wasn’t used… Remember TARP? $750 Billion…  But this time we broke out the Trillions numbers, and what will be for the next downturn? 

Before we head to the Big Finish today: Well, The devil may have gone down to Georgia, but an angel went to heaven… I was so saddened to hear that one my all time favorite musicians, Charlie Daniels, had died…. Just as a tribute to him, I played the Saddle Tramp album last night, every song… R.I.P. Charlie Daniels…. You made my life richer… 

To recap… The currencies didn’t rally during the day, and they also didn’t get sold overnight, so it was a nothing day all around for the currencies. Gold on the other hand gained $10 on the day, and in the early trading this morning it has crossed over the $1,800 level…  Chuck thinks you had better keep your arms and legs in for this ride…  And Chuck goes on to talk about Civil Liberties… Did you know that the Bill of Rights is not just recommendations? I’m just saying…

For What It’s Worth…. Thanks to the good folks at GATA for sending me this link to this article, about a coming crisis at the COMEX…. It’s written by Alasdair Macleod, and it can be found here: https://www.goldmoney.com/research/goldmoney-insights/a-potential-crisis-in-comex-gold?gmrefcode=gata

Or, here’s your snippet: “We are all used to the bullion banks covering their shorts on Comex by waiting until the speculators are over-bullish and vulnerable to mark-downs that trigger their stops. Algorithmic traders go from long to short in a heartbeat as well, and they dump contracts into a falling market, speeding up the decline. We should say at this juncture that the Managed Money speculators are short-term, attracted by futures leverage, and their gold position is often part of a wider risk strategy deployed by hedge funds. They do not intend to stand for delivery. The wider investment world taking strategic portfolio decisions does not often get involved with gold, so the Comex gold contract has been a secular play.

In the non-speculative category, the bullion banks (Swaps) had 56% of the shorts and the Producer/Merchants 44%. Mark-to-market value of the Swaps net short position was $25bn. Of the speculative longs, the managed money category (hedge funds) held 69%, and at 296,106 long contracts it was almost a record. There was a high level of bullishness; easy pickings for the bullion banks, who by the following December drove the price down to $1120, reducing their net shorts to under 50,000 contracts.

It was a game that evolved out of Comex futures being used simply to offset long bullion positions at the LBMA. Over time, bullion bank traders increased their trading position limits, as opposed to their pure hedging activity, making easy money jobbing the other side of Managed Money trades.

Now look at the current situation, with the gold price at decade highs ($1775) and open interest at 561,628 (30 June).

Bullion banks are between a rock and a hard place. For years they’ve been playing the hedge funds as an angler hooks and plays a fish. That game has ceased and there is no easy way for them to get level. For the moment they are trying to put a lid on the price, but the cost has been rising open interest, and therefore rising mark-to-market positions.

The August active contract runs off the board at the end of this month and bullion banks are likely to be forced into large delivery volumes again. Furthermore, the exchange for delivery arbitrage facility between Comex and the LBMA is broken, allowing Comex premiums to London spot to go unchallenged.

It is increasingly possible the gold contract is evolving into deep crisis, and that force majeure might have to be declared if, as seems increasingly inevitable, a wider banking crisis ensues.”

Chuck again, yes, I know it’s a long one, but well worth it when you get to the end conclusion, that extrapolated, means the short sellers won’t be able to cover their shorts without HUGE losses… YIPPEE!!!!

Market Prices  for 7/8/20: American Style: A$ .6949, kiwi .6550, C$.7360, euro 1.1288, sterling 1.2557, Swiss $1.0626, European Style: rand 16.9871, krone 9.4631, SEK 9.2373, forint 314.89,  zloty 3.9641,   koruna 23.7005, RUB 71.63, yen 107.51, sing 1.3947, HKD 7.7498, INR 74.78, China 7.0154, peso 22.70, BRL 5.3563,  Dollar Index 96.90,  Oil $40.65,   10-year .65%, Silver $18.50, Platinum $840.99, Palladium $1,942.42, and Gold… $1,803.88

That’s it for today, and this week…  I realized something as I was writing this morning, regarding my energy levels… It’s been 3 months on the new chemo cocktail I take each night, the accumulation effects are beginning to work on me… So… I have that going for me! Aren’t I lucky? They used to joke on the trade desk that I was Mr. Lucky…  Well, my beloved Cardinals were back on the field to work out yesterday, after having their workout cancelled on Monday because of a delay in Test results…  This is the new norm? I sometimes think, why didn’t they just wait until next spring? But I would miss the game too much…  OK… onto the oncologist tomorrow, just an opportunity for the doc to get to see me! HA!  OK, here’s a treat for good friend Rick B., The group A-ha takes us to the finish line today with their song: Take Me On…    I hope you have a Wonderful Wednesday, and rest of the week, and please Be Good To Yourself!

Chuck Butler

 

 

Indian Rupee Is Best Performer Overnight!

July 7, 2020

* Currencies rally during the day, but lose ground overnight

* Gold gains $10 gives back $7… Same-0, same-0, for the shiny metal!

Good Day… And a Tom Terrific Tuesday to you! Well, I may be finished with the wound center on Thursdays but…. I still have my monthly visits to my oncologist, and those happen to fall on Thursday mornings too… So, going forward, (I hope) I’ll only be gone 1 Thursday every month… So, you’ve got that going for you! HA! OK, my beloved Cardinals were called off the field on Monday, because…. They hadn’t gotten the test results back yet… So, riddle me this Batman, Major League Baseball says it’s going to check players twice a day, for temperature, and every other day with a COVID test, but if they haven’t gotten the test results back from the previous test, how are they ever going to tell what’s up? Just a viewpoint from the cheap seats…. The band, Yes, greets me this morning with their song: Long Distance Runaround…. I’ve said this before, but it bears repeating, the recordings of the band, Yes, is what headphones were made for!

I guess there were more Traders getting back from the Hamptons yesterday, because there was little movement in the currencies. I checked them last night, and they were bang on what I had reported for their levels Monday morning! Gold on the other hand had a good day, gaining $10VS the dollar, or the dollar lost $10 to Gold, same thing, but somehow it gains more attention to people if you say the dollar lost $10 to Gold…. I have a dear reader who always reminds me of this, so I wanted to give kudos to Bernard….

As has been the trend of recent trading nights, the overnight markets saw some slippage in the currencies, so their lofty levels of yesterday have been shaved a bit…  And Gold has given back $7 of its $10 gain yesterday… 

See what happens when everyone is in their places with bright shiny faces?  When the boy in the band reassemble and the maestro, (JPMorgan) taps the baton on the podium, well then it’s time to start manipulating the markets…  Why? Well, you simply can’t have free flowing markets, for these investors don’t know what they’re doing, they have to leave it up to us Big Boys, for we all know what the markets need… 

I’m so jaded by the Big Casino Banks, folks… They are my arch enemy, although I’m sure that one day, my bank account will be held by one of them.  Yes, I’m afraid that the smaller regional banks are going to be bought out by the Big Casino Banks, especially after hearing and reading that they received the bulk of the stimulus bailout money, instead of the smaller regional banks…  Was that done on purpose?  

Well, my conspiracy blood is tingling again… And I’m sure that there was some pre-disposition of the money meetings that went on to decide who got what… I’m just saying…  

The price of Oil lost 26-cents yesterday closing at $40.37… There’s BIG news on the Shale Producers in the FWIW section today, you won’t want to miss that! The BIG news is also BAD news, and I don’t want to spoil the entrée, so I’ll leave it at that!

And… I’m getting out of the business of giving people writings from G. Edward Griffin…  (author of the Creature From Jekyll Island) He’s simply trying to give people information that they haven’t heard, but sometimes he reports things that are questionable… So, I apologize for yesterday’s FWIW article, I know that, for me, you’ll all be saying, why does this COVID treatment cost so much in the future, but so be it….

I had one dear reader, say to me, Chuck why don’t you fact check things before you write about them?  Oh, brother! Look… I do this for free… I don’t have research teams, I don’t have the wherewithal, to invest in more computers to do research, it’s just little old me, here, hoping to spread some information to make better investment decisions… If that’s not good enough then, fine, I truly don’t have any idea why I wake up each morning early, that is, to write, for free, again I might add…  

I know that some of you are saying, Oh, come on Chuck, what else do you have to do?  Oh, don’t get me started on that!  And I do want to say that I feel real bad when something that I’ve put out there comes back to bite me, but I could just quit putting FWIW articles out there… But I won’t do that! 

OK, back to the markets….  I read this morning, didn’t do a fact check, but I believe it to be true, that Russia has added to their FX reserves, which is interesting in this time of a pandemic, but shows to go ya, that the Russian Central Bank Gov. knows what she’s doing, and that’s fact Jack!   For the last 10 years, Russia has foregone buying FX for their reserves, and bought Gold instead… At first the other countries that weren’t seeing their currencies bought by Russia, made fun of Elvira Nabiullina for her insistence on buying Gold, but after the dollar went on a long term strong trend, and those currencies lost value, those same countries were touting the Russian Central Bank Gov. for her strategic move….

So, I wonder what she’s telling us now? That the dollar’s strong trend is nearing an end, and owning the foreign currencies again is in vogue?   Well, I don’t know the answer to that question, but should they continue to add to their FX reserves, one will have to be paying attention, right? 

The Best performance overnight goes to the Indian rupee!  Wow, it’s probably been a year of Sundays since I last said those words!  Every morning when I do my rundown of the currency prices, I get ready to jot down 75 for Rupees… But not this morning… It seems that some large inflows into the Central Bank, and the news that the Central Bank is no longer buying dollars,  got rupee traders all wound up and the currency ended up having the best performance of the night for the currencies! 

Again, is this another sign to us? India is no longer buying dollars…. The signs are beginning to add up, right? 

You know the bond boys continue to speak their position on the U.S. economy, as the 10-year Treasury trades around .70%, and has for some time now…  I was taught many years ago, to always pay attention to what the bond boys are saying about the economy, and while things have changed for many of the rules I learned in my years trading, bonds, and currencies, this one remains strong in my mind, as to how much it should be paid attention to… 

I told you yesterday that the economic data from last week, all beat expectations, but that it was coming from such lows. And later in the day I had this thought… That all the data prints were doing was showing that the deep plunge is over, for now, that is, not that we’re doing great! 

Keep in mind the news I have you yesterday, and no I didn’t fact check it, that bankruptcies in the U.S. during May skyrocketed to 722 from 562 in April…  Now April was the worst month ever, think about that one… 

The U.S. Data Cupboard this morning doesn’t really chalk up the real economic data prints, but they do have the current Job Openings in the U.S. not that this data does anything for the markets… But it prints nonetheless…  I told you yesterday that the Data Cupboard had little in the way of real economic data for us this week…  

To recap…  The currencies and metals had a good day going for it yesterday, but in the overnight markets we’ve seen some slippage, as if the dollar bugs just won’t give up the king of hill routine.  Chuck goes into the plan to buy out the smaller regional banks, by the Big Casino Banks, well in his mind anyway!  And Chuck thinks that if what he’s writing about isn’t good enough, then so be it! 

For What It’s Worth… Well, I mentioned this above today, but saved the real meat for the FWIW section today… This is about the pulse of the shale Oil business, and it doesn’t look good folks…. It all can be found here: https://srsroccoreport.com/chart-of-the-week-the-collapse-of-the-u-s-oil-drilling-rig-count-spells-big-trouble-ahead/

Or, here’s your snippet: “U.S. Energy Independence that lasted for less than one year, is over. With the collapse of the domestic oil drilling rig count, U.S. shale oil production will begin to fall off a cliff in the next 3-6 months. This should also destroy the notion of a “V-Shaped” economic recovery once and for all.

According to Shaleprofile.com, U.S. shale oil production peaked at 8.3 million barrels per day (mbd) in November 2019 and declined to 7.8 mbd by March this year. However, the oil rig count from November to March was about the same, 683 rigs. During these five months with the oil rig count about the same, shale oil production declined 500,000 barrels per day.

Unfortunately, since mid-March, the domestic oil rig count has collapsed from 683 to 185 today (Source: Baker Hughes). That is nearly a loss of 500 oil drilling rigs:

Again, with the U.S. oil drilling rig count down 73% in just the past four months, watch for a significant decline in shale oil production over the next few months. Even if the shale oil industry starts to add more drilling rigs, the damage is already done.

As I have stated several times, I believe the U.S. economy will be in serious trouble in the second half of the year, and especially during Q4 2020. But, it won’t end there. The economic situation will likely continue to weaken in 2021.

Investors better start considering protecting some of their wealth in physical Gold & Silver.”

Chuck Again…. Remember when I told you that the Saudis were attempting to run the Shale Producers out of business? I bet they’re all jumping with joy over in Saudi-land… But we’re not here, now I’ve never been a fan of fracking, but if it took fracking to get us independent of Middle East Oil, then that was a game changer to me… I know this guy that wrote this article sounded a lot like me, but it goes to show ya, that more and more people are waking up and smelling the coffee….

Market prices   7/7/20: American Style: A$ .6940, kiwi .6538, C$ .7370, euro 1.1291, sterling 1.2521, Swiss $1.0608, European Style: rand 17.0850, krone 9.4285, SEK 9.2637, forint 313.07, zloty 3.9550,   koruna 23.6272, RUB 71.58, yen 107.71, sing 1.3950, HKD 7.7498, INR 74.57, China 7.0284, peso 22.57, BRL 5.2992,  Dollar Index 96.88,   Oil $40.41,  10-year .68%, Silver $18.12, Platinum $829.95, Palladium $1,932.50, and Gold… $1,777.97

That’s it for today….   I almost didn’t answer the bell this morning… You see most mornings I wake up on my own before the alarm goes off, but this morning the alarm went off, much to my chagrin, and I dozed back off, thus the reason for the lateness of the letter this morning! If sports don’t come back soon, I do believe I’ll go batty! I’m searching for anything that is a competition, and on Saturday, there I was watching the National Cornhole Championships!  Now I know that things have sunk to new lows, when I’m getting into watching men throw bags, something we do in the back yard!  Oh well… got to get going this is running late…  REO Speedwagon takes us to the finish line today with their song: Riding The Storm Out…   with that, I hope you have a Tom Terrific Tuesday, and will continue to Be Good To Yourself!

Chuck Butler

What Are Zombie Corporations?

July 6, 2020

* Currencies push the envelope VS the dollar… 

* JP Morgan thinks stocks will rally forever…. 

Good day… And a Marvelous Monday to you! WOW! What a great long weekend for yours truly! Starting on Thursday with my last visit to the wound center! Yes, I said my last (Hopefully I don’t ever have to go back!) visit to the wound center… After 15 months I’m finally 100% healed! , and now my challenge is to keep my legs from swelling up and putting strain on that new skin… I finally got in our pool on Saturday! First time since the summer of 2018! But I caused the water level of the pool to rise too high, and had to get out! HA! It may be against the county law to shoot off fireworks, but people around me didn’t care, and the loud bangs went late into the night on Saturday… Good for them! The great Johnny Rivers greets me this morning with his song: Summer Rain….

Well… while the U.S. grilled hot dogs, brats, and hamburgers the rest of the world was open for business on Friday, but most of the action for the week, was on Thursday, with skeleton crews only on board for Friday, for if the U.S. isn’t around, there’s no liquidity, and no reason to go out on a limb… So, on Thursday, we saw the currencies claw back at the dollar and end up with some nice gains for the day… The euro gained 2/3 of a cent, the Aussie dollar (A$) gained 3/4 of a cent, and so on… All those gains were held on Friday, with little to no change in the currencies’ levels.

And in a change of direction, the overnight markets last night didn’t buy dollars and sell the currencies! In fact, the currencies continued to move higher VS the dollar overnight. The euro is back above 1.13, for instance… 

Gold didn’t have such a good week, and ended the week up $3 from where it started the week, but in between there was some back and forth, that had Gold closing the week at $1,774.40. Friday’s Gold trading was a joke… with just 34,000 contracts traded on the day, and the price was down one thin dime on the day… So, we start today, with Gold up in the early trading today, by $5…  so we have that going for us, eh?

One of the things that keep me dazed and confused is this price difference between the current spot price of Gold $1,778, and futures contract to the nearest expiration date, of $1,787…. So, basically, if you want to buy Gold in the futures market, you’ll have to pay $1,787…. So why would anyone do that, when the spot price is $9 cheaper? But they do… and they have their reasons, and it’s those reasons that keep me dazed and confused!

Well… I received a call from Dennis Miller over the weekend, Dennis was putting together a letter, in which he talked about the zombie corporations… OK… I’ve mentioned this before, publishing guru, Bill Bonner talks about zombie corporations all the time, but I thought to myself, have I ever really explained what a Zombie Corporation is? A Zombie company is one unable to service its debt through current profits and is either paying interest only or rolling over its borrowing to stay in business.

The U.S. Government allows this to continue, because…. Well, so many Americans would be out of jobs if these Zombie Corporations were allowed to fail… But what if I told you that these Zombie Corporations are failing anyway? In May Bankruptcies soared to 722 just in May, and that beat April’s number of 562! I told you last week about the operator that owns Pizza Hut and Wendy’s  (NPC) filing for bankruptcy and while sitting in the waiting room at the wound center on Thursday, I heard that Cirque Du Soleil had filed bankruptcy with $1 Billion in debts…. What’s a Fed to do in a case like this?

And then in reading my fave letter, Grant Williams’ Things That Make You Go Hmmm… He found this from Forbes: (Forbes): The federal government may be worried about a lot of things, but officials don’t seem to have their eye on the retail ball. It appears that their primary concern (from a federal perspective), only relates to big labor or to big business. Anything in-between is apparently not ringing their bell. Republican talking points favor large corporations or payroll tax cuts. Democratic talking points extend to unemployment benefits and health care. Someone needs to realize, that if retail workers don’t have jobs because their companies are strapped for cash, then all the benefits they want to provide (in preparation for reopening) are meaningless…

And so ends my diatribe on Zombie Corporations… They existed before the pandemic, and with the pandemic they’ve become a major sticking point for the economy…

Speaking of the economy… I read this weekend that the IMF has stuck their toe into the economic forecasting waters… The IMF said that the global economy will shrink this year by 4.9%, which is worse than their previous forecast in April of a 3.2% decline.

The problem with this is that the U.S. has the largest Economy in the world, so that means that a large part of that decline will come from us…

Hey! Remember when the Congressional Budget Office (CBO) told us earlier this year that the deficit in the U.S. would be $1 Trillion for 2020? Well, they had to go back to the drawing board and add in some new deficit numbers, which now they say the U.S. deficit for 2020 will be $3.7 Trillion and $2.1 Trillion in 2021….

Of course that doesn’t count any new stimulus deficit numbers… And we all know they’re coming, because…. Well, it all goes back to the Zombie Corporations… The Fed seeing these soaring Corporate Bankruptcies will have to come ups with some new Alphabet lettered plan to bail out the small businesses too!

Well the news on the virus continues to amaze me… Texas has the virus counts mounting, and New York, the former epi-center of the virus, as the counts falling.. Florida is seeing their counts mount too…  But the thing I lie to point out is that the death tolls are falling… Which means…  I don’t know, nobody knows, but the deaths are falling and that’s a good thing! 

I really can’t believe this damn virus is still causing problems… And until there’s some kind of change in this spread, or a medicine that can attack the virus, I would think that the economy is on a ride on the slippery slope, and everything that goes along with this virus is on the upside of the slope. I had previously thought (wrong it turns out!) that once the sun warmed up it would bake the virus away… But that obviously hasn’t happened…  By the end of this week, it’s supposed to be 100 degrees, but I guess that doesn’t help… UGH!   

JP Morgan issued a report on stocks that was interesting… They opined that given the strength of the virus, and no cure-all around, that the Fed would have to continue to provide liquidity with their alphabet named stimulus programs and that all means that interest rates aren’t going higher, and in the end, they believe that all of this will be good for stocks going forward.  I would have to agree with them, to a point…  It’s all good until it isn’t…  

The U.S. Data Cupboard was busy in last week’s shortened work week, and all of the data was better than expected, but one must remember here that these data prints are comparing data to the previous month, which means they came from such large holes….  Take the Employment data… Yes, in the last two months we added back over 6 Million jobs, and that’s good, but in no way does it make up for the over 30 Million jobs that were lost… I’m just saying… 

This week’s Data Cupboard doesn’t have much for us in the way of real economic data, so it will be second and third tier prints all week, and I doubt the markets even take a peek at them.  So, the dollar is on its own this week, I have to wonder if that’s a good thing or bad thing… But it doesn’t matter what I think here, because Trader Sentiment will rule the roost once again… 

To recap…  The currencies ended the week on a high note, and continued to push the dollar bugs into a hole, in the overnight markets last night. Gold only gained $3 on the week, but is up over $5 in the early trading today, so maybe Gold can get back on the rally tracks more firmly this week.  Chuck explains Zombie Corporations, and why they are allowed to continue to take up space. And there’s lots of talk about how deep of a dive the economy will go…. The IMF, The World Bank, and Forbes all contribute this morning… 

For What It’s Worth… I sometimes listen to The Bridge on Sirius XM and they run a commercial for the station by playing an artist, and then saying that “The Bridge was built on songs like that”… Well, receiving news like I did last week reminded me of that slogan, and so therefore, “it’s articles like this that The FWIW was made for”…. This is about medicines to treat COVID-19, and how one is being warehoused, (because it’s cheap), and one is going to cost us an arm and a leg to have it administered… Guess which one is moving to the top? All that can be found here: https://needtoknow.news/2020/06/faucis-remdesivir-costs-9-per-dose-will-be-sold-at-3000-per-treatment/?utm_source=rss&utm_medium=rss&utm_campaign=faucis-remdesivir-costs-9-per-dose-will-be-sold-at-3000-per-treatment

Or, here’s your snippet: “The Association of American Physicians and Surgeons filed a lawsuit against Department of Health and Human Services and the FDA for “irrational interference” by the FDA with timely access to hydroxychloroquine (HCQ), which has shown great success in treating Covid-19. HCQ is being sidelined despite having been approved for malaria in 1955, it is reported to be 91% effective in treating COVID-19, and it is inexpensive, costing only $1 per treatment to manufacture. All but four states have imposed restrictions on outpatient use of this drug. Major pharmaceutical companies (Novartis, Bayer, Teva, and others) donated nearly 50-million doses of HCQ to the Strategic National Stockpile, but most of it still sits in warehouses because state governments are preventing its use.

Dr. Fauci has been promoting remdesivir, which has only shown modest results with COVID-19 patients, despite taxpayer funding $70-million to Gilead pharmaceutical, the CDC, and the National Institutes of Health to develop it as a treatment for Ebola, which flopped due to severe side effects and almost zero curative effect. Patients must be hospitalized in order to receive remdesivir. Bloomberg reported that the cost to manufacture remdesivir is $9 per treatment, but Gilead said it will cost over $3,000 for a six-vial treatment. Gilead spent over $5-million in lobbying Congress in 2019.”

Chuck again… I’m beside myself over reading this article! I’ve always been aware of Big Pharma, and their stranglehold on people that are sick, needing medication, and knowing that there are natural remedies out there that are for free, but doctors cannot prescribe them… And, I fully understand that it takes years of research, to develop a drug, and then even longer to get it approcved by the FDA, and that Big Pharma have to recover their costs… But come on! And now this… $9 to produce the drug, cost to the patient: $3,000… I shake my head in utter disgust….

Market prices  7/6/20: American Style: A$ .6966, kiwi .6540, C$ .7381, euro 1.1310, sterling 1.2505, Swiss $1.0630, European Style: rand 17.0495, krone 9.4017, SEK 9.2765, forint 311.89,  zloty 3.9511,   koruna 23.6083, RUB 71.39, yen 107.53, sing 1.3915, HKD 7.7498, INR 75.33, China 7.0608, peso 22.26, BRL 5.3112,  Dollar Index 96.76,  Oil $40.62,  10-year .69%, Silver $18.23, Platinum $823.97, Palladium $1,921.20, and Gold… $1,777.24

That’s it for today…  There was something else I wanted to talk about this morning, and I didn’t jot it down so I would remember it, and well, I forgot it… I know it’s something good, but… Oh well, it will come to me  at some point today! Well, did you have a Incredible Independence Day Holiday? Ours was low key, but I had fun any way! There was a lot of yummy food around, and so I ate it! Well, Summer Camp started last week for Baseball Players… I’m not sure they’ll get to play games this year with this virus spreading again…  I sure hope so, I could use some baseball games right now! I really truly want to see Jack Flaherty pitch again! Still can’t remember what I wanted to talk about, so I’ll end this with  the Allman Brothers singing their song: One Way Out….  And with that, I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler

Good Riddance To The 2nd QTR!

July 1, 2020

* Currencies rally in daylight, get sold overnight

* Gold trades to $1,804 before the boys in the band show up… 

Good Day… And a Wonderful Wednesday to you!  and welcome to July…  Pfennig tradition calls for this…  There I was on a July morning, looking for love, with the strength of a new day dawning, and a beautiful sun…  Those lyrics come curtesy of Uriah Heap, the band, not the Dickens character! Another day of rain and clouds yesterday, and this morning, but by noon, it’s all supposed to leave us and bring us back our sunshine and blue skies! But it IS that time of year, when the days heat up, and bring about a Thunderstorm, and then leave us with hot and humid days… So… We carry on! I slept through most of yesterday, as the daylight hours without a nap finally caught up with me!  Jonathan Edwards greets me this morning with his classic song: Shanty… Now all you old time rockers will have that song in your heads all day today… not that that’s a bad thing!

 We sat around last night and talked about face masks, who’s wearing them, and who isn’t, should we continue to wear them when out, and all sorts of things virus related. The conversation started when I informed Kathy that she had to self quarantine for two weeks… That blew over like a led balloon!

OK… Well, the BIG NEWS yesterday, was that Gold reached $1,800 for the first time since 2011… Then in news not covered, the price manipulators brought Gold back to $1,780 to end the day… But it won’t be long now before Gold moves past $1,800 and to infinity and beyond! Slowly, but surely, the sheeple will get the memo that says the economy isn’t coming back any time soon, and that Gold is going to outperform every asset class…. Silver didn’t see the late selling that Gold did, and was able to move above $18 and remain there for the day, closing at $18.24… It was last summer that we saw Silver begin to really move higher, and the thought then was that first we would see $20 and the $25, in Silver… But then the rug was pulled out from under Silver, and it’s taken nearly a year for it begin to look like it’s going to move higher again.

Back to Gold for a second…  I loved the way Ed Steer explained the price manipulation, in his letter this morning that can be found here: www.edsteergoldsilver.com, here’s how he explained it, “. A serious rally began at that point – and it really began to soar at the 10 a.m. EDT afternoon gold fix in London. ‘Da boyz’ were forced to step in a few minutes before the London close, as the market was about to go ‘no ask’. About fifteen minutes later it began to get sold quietly and unevenly lower.”

So Gold was allowed to hold onto $7.5o of its gain on Taco Tuesday, to close at $1,780…   

The dead men walking, the currencies, found a way to push the dollar bugs aside, and rally on the day, with the euro reclaiming the 1.12 handle, and all other currencies falling in behind the single unit. One day rally, next day sell, the next day rally, the next day sell… I told you all that this is how the last weak dollar trend began in 2002… But seriously, here, do traders really take this long to make up their minds on which way the dollar is going to go?

For the record, there’s still more money printing to be done by the Fed, folks… There’s still more debt to be added to the current debt of 26+ Trillion, as more stimulus checks seem to be on the way… I know that some of you were with me back in the mid 90’s, but this is what this reminds me of… Japan… By 1995, Japan’s stock market had gone to hell in a hand basket, and the economy was suffering big time, and Japan’s answer to it all was stimulus…. And then zero interest rates, And then quantitative easing, and then share buybacks, to the point that the Japanese Gov’t is the stock markets largest holder of stocks now… And what has it gotten them? Well, they’re still around, they haven’t collapsed, but… they’ve had deflationary economies year after year, with no growth… Now ask yourself this… “does this sound a lot like what we’re going through here?” Man, if in two decades, we’re still wallowing around in the mud of no growth…. Maybe someone will say, hey! Remember that guy, Chuck Butler who used to sing the Violent Fems song: I’m turning Japanese, yes, I really think so… I wonder what he would say now?

If, in fact we are beginning a new weak dollar trend, that’s going to be bad news for a lot of countries, because their respective currencies will be going up in value VS the dollar, whether they need them to or don’t! Take Japan, during the last weak dollar trend, we saw yen go below 100… (it’s a European priced currency, so that means as the price goes down, the more value it returns when buying dollars) that was the last thing they needed at that time, and it will be the last thing they need at this time, but being a secondary offset currency to the dollar, with the euro being the main offset currency to the dollar, yen is going to rally… The Bank of Japan (BOJ) will first attempt to jawbone (threaten the markets with intervention) , and when that doesn’t have any lasting power, they will turn to intervention, but the trend is not going to be their friend!

And that resistance to stronger currencies by the countries that own them has been illustrated both overnight markets this week, with last night seeing the currencies being brought back down after a day of rallying… I really dislike this back and forth stuff, I would much rather see a trend put in place and have them either move higher or lower consistently… 

Ok, a quick perusal through Twitter yesterday found this little ditty… First the Tweet, then my take, ok?
“The #BISInnovationHub is pleased to announce a strategic partnership with
@federalreserve
@NewYorkFed
to further the development of fintech initiatives for the global financial system” – from Twitter 6/30/20

OK… for those of you not following along in class previously… Remember when I told you that all the crypto currencies didn’t mean a thing in the long run, because once the Gov’t came out with their version of a C.C. it was all over for the other guys… Well, now you have to the two most powerful Central Banks in the world,  (the Fed & BIS) joining together to come up with their own C.C…. Go ahead and laugh you Bicoiners… The last laugh will be on you!  You see the steps that I laid out for you on how this current financial system will all come to and end, come together, and you start to think… “Hey, maybe Chuck was onto something”… 

In another Tweet that made me smile… here’s Lyn Alden regarding Gold on her Twitter feed.” Pretty much every currency in the world has devalued by at least 10% relative to gold since Ray Dalio infamously said “cash is trash” at Davos in January of this year.” Lyn Alden’s Tweet 6/30/20

I had said at the time of his comment, that Gold had set new high records against nearly all currencies in the past year, and in 2020, it was time for Gold to set its new record high VS the dollar… Well, in inflation terms… Gold was there yesterday briefly, as I explained above…

 

The U.S. Data Cupboard yesterday was interesting even though it didn’t really have market moving data… The Case/ Shiller Home Price Index for April moved higher… Hmmm…. And the Chicago PMI (manufacturing index) moved higher in June from 32 in May to 36 in June… Not exactly what everything thought it would be (higher)… There’s no sign of a V-shaped recovery there… And in the stupid Consumer Confidence data it not only moved higher in June, it soared! CC was forecast to rise to 90… it came in at 98! So, everyone is confident that things are going to work out just rosy, eh?

Well, I suggest they don’t tell the folks a shale pioneer, Chesapeake Oil, for they filed bankruptcy the other day, and don’t tell Shell Oil, who is inching toward a write down of $22 Billion in debt… Hmmm… And what’s this that 87% of the people polled on who they would vote for, said they were not happy with the direction of the country… But don’t worry about it Consumer Confidence is flying higher!

And this news just came across my screen this morning… The operator of Pizza Hut and Wendys is going to file for bankruptcy…   Come on Fed, why didn’t you buy their debt to help them out? What? you don’t like a frosty, or a meat lovers pizza? 

The U.S. Data Cupboard will be busy today, as the data reports are plentiful today. Leading off today is the ADP Employment Report for June… Not to be confused with the stupid BLS report of lies, I mean of jobs that will print tomorrow. Batting second will be the June ISM (manufacturing index), which for the previous two months was below the 50 line in the sand…  then up third will be Construction spending for May, and then batting clean up will be the Fed’s Meeting Minutes from their last meeting, and finally, Vehicle Sales for June will print…  

All of the June prints seem to be suggesting that the opening of the economy has made a difference, wrapped a tourniquet around the bleeding if you will, but do not suggest that the economy has recovered… but come to think of it the economy wasn’t much to talk about before the pandemic, so the bar isn’t exactly raised to a level out of reach!  I’m just saying… 

To recap… Gold rose to $1,804 yesterday, a record high in inflation terms, but just about when Gold was ready to go “no ask” the price manipulators arrived and took Gold back to $1,780…  The currencies rallied nicely VS the dollar yesterday during the day, but once again they were sold in the overnight markets… Chuck explains why…    Silver is back above $18…. Hmmm….  And the Fed and BIS are joining forces folks to design a crypto currency… and the steps to an end of our financial system have begun… 

For What It’s Worth… Well, you knew that eventually that the grim reaper for home owners was going to show up. The home owners received a reprieve when the Covid-19 virus came about, and prohibiting foreclosures for non payment of loans until July 25th…. Well, today is July 1st… And no one on Capital Hill seems to be talking about an extension… That’s what this article is about, and it can be found here: https://thehill.com/policy/finance/505139-millions-fear-eviction-without-more-aid-from-congress

Or, here’s your snippet: “ Millions of tenants are at risk of receiving eviction notices in late July as protections from a major coronavirus stimulus program are set to expire.

The coronavirus relief bill, signed as the CARES Act in late March, included a moratorium on evictions for tenants in units with federally backed mortgages or other assistance who were unable to pay rent.

But with no agreement in Congress on an extension of the moratorium, families hit hard by the coronavirus pandemic may soon have to make new living arrangements.

“There are now only 25 days left before the federal eviction ban expires on July 25,” said the Financial Services Committee, on Monday.

“When it does, many families who have been unable to pay their rent because of the COVID-19 pandemic will face eviction and the devastating consequences that evictions have on families, particularly children,” she added.

The federal moratorium only applies to housing being paid off through federally backed mortgages or insurance, so it only applies to about a fifth of renters.

But because many of the government programs are aimed at keeping costs down for low-earners, those renters also tend to be among the most vulnerable.”

Chuck again… I see an 11th hour agreement to extend this coming on July 24th… But until then there will be lots of nervous people wondering if they will get an eviction notice or not….

Market prices  7/1/20: American Style: A$ .6885, kiwi .6448, C$ .7360,  euro 1.1200, sterling 1.2389, Swiss $1.0550, European Style: rand 17.2605, krone 9.6047,  SEK 9.3575,  forint 316.35,  zloty 3.9787,   koruna 23.8040, RUB 70.73, yen 107.48, sing 1.3955, HKD 7.7503, INR 75.32, China 7.0682, peso 22.97,  BRL 5.4296,  Dollar Index 97.54,  Oil $39.84,  10-year .68%, Silver $18.21, Platinum $813.50, Palladium $1,925.13, and Gold $1,781.26

That’s it for today and this week… I hope everyone has a safe and fun Independence Day Holiday weekend! I have no plans, like most people, who are adhering to the guidelines…  I know that I’m a “high risk” person, given my health situation, so I take zero chances!  Well, the 2nd QTR is finally over! I think that was the longest quarter on record!  So, long, and don’t let the door hit you  in the rear, as you leave, 2nd QTR! I’m really ready for some sunshine, and blue skies, I have to admit I don’t know how the folks in the Northwest deal with rain all the time… but I guess if that’s what you’re born into, you know of no other weather! But still… I would be fitted for a white suit if I had to live there!  OK… The good reverend Al Green takes us to the finish line today with his song: Love And Happiness… I love the music in this song!  Ok, with that, I hope you have a Wonderful Wednesday, and Incredible Independence Day Weekend! Please Be Good To Yourself! 

Chuck Butler