Author: admin

August 18, 2020 

* Currencies & Metals both rally VS the dollar on Monday

* Chuck takes us back to 2002…. 

Good day… And a Tom Terrific Tuesday to you!  Another beautiful day yesterday was spoiled around dinner time with a rain shower…. Oh well, at least the day was great! My darling granddaughter, Delaney Grace celebrated her 13^th birthday (which was last week) with some of her friends in our pool…  She made sure she sought me out when it was over, to come inside and give me a great big hug, ask me how I’m feeling, and tell me she loves me…  Ever since the day about 7 years ago, I sat her down and explained cancer and what it does to people to her, she has always made sure she stops to give me a hug, and ask me how I’m feeling….  I just love her to pieces! The Cards and Cubs split their doubleheader yesterday, with the Cardinals giving away the 2^nd game late….   Our Blues  won 3-1 and evened their playoff series at 2-2…  Paul Carrac and the Squeeze greet me this morning with their 80’s song: Tempted….

The day in the markets yesterday was a good one for non-dollar holders, as both the metals and currencies took liberal swings at the dollar bugs all day long!  Gold ended up $38 on the day, but was up to a $44 gain at one point in the day… And the Dollar Index dropped a chunk on the day of its value, which means the euro continued to rise through the 1.18 handle, and the A$ traded over 72-cents, while the Swiss franc continued to defy the Swiss National Bank (SNB) and moved higher once again… 

In the overnight markets, the euro has been lifted to the 1.19 handle, and the Dollar Index fell further….  While I’ve been crushed by so many false dawns in the past couple of years, I’m hesitant to call this the beginning of a weak dollar trend. We saw last week that the Plunge Protection Team (PPT) can be formidable foe, and squash many a rally. So that has to remain in the back of my mind, but the euro passed 1.16 a while ago…. Which was supposedly a psychological level, and even with the Aussies closing down their opened economy again, and issuing a warning that anyone caught not adhering to the protocols, will be fined, the A$ still moved higher on the day….

We will know for sure that it’s the beginning of a weak dollar trend, when we keep hearing stories like the one from Australia yesterday, but still see the respective currency rally….  Like we saw yesterday, but… as I always used to say, one swallow doesn’t make a summer,  and one bad apple won’t spoil the whole bunch, so we’ll have to see more of these types of stories, that will etch in stone that it’s a new weak dollar trend…  If I were a betting man, I would put money on the call that it IS a new weak dollar trend….  I’m just saying…

So… how many of you recall the beginnings of the last weak dollar trend that began in February 2002? It too, had humble beginnings, and there were questions of whether or not it was real…. But since I had written a white paper at the end of 2001, titled: The Decline of the Dollar…  I was on board early with the call that this was the new weak dollar trend…  But that was 2002, and this is 2020… A year that I think everyone would just as well forget about, but…. I do believe that we’ll look back and see that the weak dollar trend began in July 2020, which means 202o will have something other than a pandemic to be talked about! 

OK…  So the U.S. economy was shut down for a couple of months, after it was originally supposed to be 2 weeks, that were extended to 2 more weeks, and so on…  A lot of jobs that were there when the economy shut down didn’t come back… And now people of all sorts of training and jobs, are looking for work to support their families, or maybe just themselves…  The $600 per week in unemployment benefits was nice while it lasted…. 

On a sidebar here, what mental genius (NOT!) thought up the idea to pay people more in unemployment than they made in their regular jobs?   Hey! Don’t look at me!

I still chuckle when I think of the Gov’t sending out stimulus checks to dead people….  What a bunch of dolts in the government, eh?   Ok, back to the point I was about to make before I got sidetracked….  It’s going to take some time before we get back to where we were before the shutdown, and even that wasn’t great!  But 2.1% economic growth is better than a sharp stick in the eye, right?  Especially now that our GDP in the 2^nd QTR was negative! 

I was talking to some of my family a while back, and we were talking about McMansions, and I said, “aren’t you kids glad that I didn’t go for a McMansion back in the day, and instead saved my money so we could have this nice beach place in Florida?”  Save for a rainy day…. OR when you want to buy something, make sure you’ve saved the money to do so…. Those are a couple of lessons I learned many years ago from my dad….  And while I don’t believe I’ll make many friends, by telling them they don’t need that latest iPhone, or 80-inch Smart TV, if they have to borrow to buy them…. So, I write in the Pfennig, and hope that they get the message!

Wanna know what I’m really bummed about these days?  We had to cancel the Butler Annual Labor Day BBQ, this year….  We’ve been hosting this BBQ since 2001….  Even in the year of my cancer surgeries of 2007….  I’m still going to put the Big Green Egg to work that weekend, but it will be cooking for my family mostly, and not the 50-60 people that are usually here! UGH!

Well, in La-La Land, where….  Stop Chuck, you don’t want to say that!   Ok, in California, they have come up with an idea to impose a Wealth Tax on the Ultra rich….  I hear some of you saying, “it’s about time!” but wait…. Once California does this, other states will follow, and when those states find that taxing the Ultra rich isn’t as lucrative as they thought it to be, guess who’ll they’ll come after next?  Yes, the good old Middle Class, and what’s left of it, will be called on to do their patriotic duty and buck up…. 

Back in 2011, when the debts of Greece were discovered, I kept harping on the fact that Greece’s economy was about the size of Kentucky’s and that California, being the 8^th largest economy in the world, had bigger debt problems, and wondered why no one was looking at California, New York, or Illinois, for they all have debt problems up to their eyeballs, and no way other than increasing taxes to help them from defaulting….  Remember when I broke the news to you that it had been Goldman Sachs, aka Lola, that had shown the Greeks how to hide their debts, and got them to issue even more bonds ….   But did Lola get called to the carpet for that? No….  

And thus we began the cycle of these casino banks getting into hot water, and the tax payers bailing them out….  And the regulators looking the other way, and no one goes to jail…. 

The U.S. Data Cupboard is still in a “wanting” mode, for real economic data, but until we get there later this week, we can see other lower tiered prints, like yesterday’s Empire Index, which is the NY region’s manufacturing index, and remember last month when it reversed the rot on the vine that was seen in the index during April and May, and came in with a 17 .2 print?  The markets and the dollar bugs rejoiced that the economy was reversing its downward course….  Well, I hate to be the one to buts their balloons or step on their seashells, but…. The July print was only 3.7…. A Big drop, and what do we hear from these same rejoicers now? Crickets….. 

So, when I began to write this morning, I said, “There’s no way the letter will as long as yesterday’s was” And so with that, we’ll head to the Big Finish from here… 

To Recap…. The day for the dollar bugs yesterday was one they would like to forget, as bot the currencies and metals took some pent up frustrations out on the dollar bugs. And both have continued their rallies in the overnight markets so we start today with the dollar reeling, stumbling, fumbling and about to fall on its face. Chuck thinks that this will be looked back on as the beginning of the new weak dollar trend…. A bold statement from someone that has been wrong about this a few times already, eh? 

For What It’s Worth….  So, I began to talk about how badly the economy is doing since the shutdown earlier this morning, and I went off on another tangent. So, I’m picking it up here with this article on Zerohedge.com about Mortgage delinquencies and it can be found here: https://www.zerohedge.com/markets/fha-mortgage-delinquencies-soar-record-60-q2-hit-all-time-high-157

Or, here’s your snippet: “Last month we quoted from Wolf Richter to remind readers of something we discussed several months ago when we went over the details of the forbearance process and why so many banks have chosen to use it instead of rushing to admit their balance sheets are hammered with a record surge in delinquencies and defaults. As a reminder, “mortgages that are in forbearance and have not missed a payment before going into forbearance don’t count as delinquent. They’re reported as “current.” And 8.2% of all mortgages in the US, some 4.1 million loans, are currently in forbearance according to the Mortgage Bankers Association. But if they did not miss a payment before entering forbearance, they don’t count in the suddenly spiking delinquency data.”

Everything changed in April when there was a sudden onslaught of delinquencies according to CoreLogic, which came after 27 months in a row of declining delinquency rates. These delinquency rates move in stages – and the early stages are now getting hit, with the Transition from “Current” to 30-days past due suddenly soaring.

To wit, in April, the share of all mortgages that were past due, but less than 30 days, soared to 3.4% of all mortgages, the highest in the data going back to 1999. This was up from 0.7% in April last year. During the Housing Bust, this rate peaked in November 2008 at 2% (chart via CoreLogic):

Fast forward to today, when the dam of pent up mortgage delinquencies cracked some more, with the Federal Housing Administration reporting that its mortgages which represent the affordable path to homeownership for many first-time buyers, minorities and low-income Americans, now have the highest delinquency rate in at least four decades.

The share of delinquent FHA loans rose to 15.7% in the second quarter, up a whopping 60% from about 9.7% in the previous three months and the highest level in records dating back to 1979, the Mortgage Bankers Association said Monday. The delinquency rate for conventional loans, by comparison, was 6.7%.”

Chuck again… Yes, folks… the bank are in trouble… for they carry most of these delinquent loans…  I just don’t get the beating around the bush and the cover up of these numbers…. Call an elephant and elephant and go on with your day! 

Market  Prices 8/18/20: American Style: A$ .7235, kiwi .6561, C$ .7598, euro 1.1902, sterling 1.3161, Swiss $1.1050, European Style: rand 17.3993, krone 8.8248, SEK 8.6760, forint 293.78,  zloty 3.6876,    koruna 21.9543, RUB 73.31, yen 105.82, sing 1.3652, HKD 7.7500, INR 74.52, China 6.9365, peso 22.05, BRL 5.4511, Dollar Index 92.55,   Oil $42.60,   10-year .67%, Silver $28.23, Platinum $963.00, Palladium $2,161.00, and Gold… $1,982.00

That’s it for today…  Well on Friday night things looked bad for our Blues, as they were down 0-2 in games in their playoff series. But fast forward to today, and they are back in the hunt at 2-2!  They finally played “Blues hockey” last night, and so we can hope that they continue that play that was so crucial to their Stanley Cup Win last year… Looks like another chamber of commerce day outside this morning… I can’t wait to get out there! I just finished reading Book 4 of the C.B. Strike series. Book 5 will be coming to me next month… These are 350 page books, and it takes me a week or so to get through them! I have two books that I’ve also started: Thomas Jefferson, and Kurt Vonnegut’s Slaughter House 5… So, I’ll flip a coin as to which one I continue reading!  So, apparently, I didn’t tick off too many of you yesterday, so that’s a good thing!  Blackfoot takes us to the finish line today with their song: Highway Song….  A good song to have playing when you’re on a long drive!  I hope you have a Tom Terrific Tuesday, and please Be Good To Yourself!

Chuck Butler

 

 

August 17, 2020

* Gold & Silver get sold again on Friday! 

* But Currency traders are selling dollars hand over fist! 

Good Day… And a Marvelous Monday to you! Man… did the weather here change for the better in the past few days, and from what I see it should remain that way for the rest of this week!  It was such a beautiful Sunday morning yesterday, as I sat out back listening to my symphonic music station… I began to sing this song… Blue skies… following me, nothing but Blue Skies, do I see… Blue Bird singing a song, nothing but Blue Skies from now on…  I bet I had a few of you singing along, eh?  That reminds me of my last visit to Vancouver for the Agora Symposium. I got nearly everyone in the audience to sing along with me: Trini Lopez’s Lemon Tree…. If you were there that day, send me a note, and let me know what you thought…. For it was the first time anyone at the then famous Agora Symposium, had the nerve to not only sing on stage, but also get everyone in the audience to sing along! Our Marketing guru, Suzanne Lee, recorded the event on her phone…  Which was a good thing… Because, Frank Trotter, the big boss, didn’t believe what he had heard I had done! I used to have a fair singing voice, with a wide vocal range, but 13 years of chemo has left my voice to have no range, and sound very low…. Elvis greets me this morning with his song: Are You Lonesome Tonight… Don’t laugh, I grew up with Elvis playing on the record player….

Well, the markets on Friday were interesting in that the dollar bugs won out for the week with regards to Gold & Silver, and they lost out for the week regarding the currencies…  The boys in the band had their way with Gold & Silver on Friday, after the two metals had rallied strongly on Thursday… But the overall week for the two metals was not one to write home about… Corrections, short sales, profit taking, they all played a part in the ups and down of the two metals this past week.  I had just told you last week before the big selloff, that Gold & Silver needed to go back an fill the gaps they jumped over on their way higher, and once that was done, then we could move forward… I had no idea that the selloff was going to be more than $100…. I would say that all the “gaps” have been sufficiently filled at this point, but I won’t say that the boys in the band have gone home…. They are like the proverbial wolf at the door for Gold & Silver…. 

In the early trading this morning, Gold is down another $16 to 1,944…  One step forward, two steps backward, is what this feels like to me… Thursday, Gold was up, and Friday and today its down….  UGH!…. Oh well, we all know that in the end, the boys in the band will get what they deserve, but why do we have to wait so long for that to happen?  Life…  patience is a virtue, and good things come to those who wait, and all that… 

So, we know that Gold & Silver have still booked some heady gains so far this year, ever since March I should say… And since I started today’s letter off talking about Gold & Silver, I thought that this would be a good place for this quote I found on Grant Williams’ Things That Make You Go Hmmmm…. Letter yesterday…. Check this out: “”Gold and silver, like other commodities, have an intrinsic value, which is not arbitrary, but is dependent on their scarcity, the quantity of labour bestowed in procuring them, and the value of the capital employed in the mines which produce them.”– David Ricardo

And then there’s also this from TTMYGH….. “”It’s important to highlight that both periods of extremely depressed commodities prices (1970 & 2000), were accompanied by overvalued equity markets and related investment bubbles – a situation that exists once again today.”– Leigh Goehring & Adam Rozencwajg

WOW….  Those things really hit the nail on the head as far as I’m concerned…  Just think of the currency printing that just keeps getting larger and larger by the day…. And then think about what a debasement for a country’s currency that all that currency printing will do….  The currency traders see it, and they have begun to unwind their long dollar positions…  And like I said last week, this couldn’t come at a worst time for the countries with currencies that are rallying…. These countries don’t need strong currencies interfering with their respective attempts to bring back their lost economies….  But guess what? Currency traders don’t care….  And if a foreign country’s currency rises because Currency traders are selling dollars, then so be it….

So, what we’ll end up seeing is these foreign countries attempting to squash the rise of their currencies VS the dollar, with intervention… First they’ll attempt jawboning their currencies lower, but when the doesn’t work, they’ll resort to intervention…  In the old days, I would say that Central Banks that can print as much currency as they want had bigger pockets than the markets… But these days, I have to wonder, for these Central Banks of foreign countries have used a lot of the arrows in their respective quivers….  At some point, and this includes the U.S., the markets will begin to choke on the amount of currency they are being dealt with…. And when that happens, we’ll find out that the markets have deeper pockets than the Central Banks…

We saw the euro climb back above the 1.18 figure last week, and remain there as the books all closed on Friday…  I know there’s been a lot of gyrations with the currencies, and just when it appears the dollar is about to fall off a cliff, something happens to revive the dollar… But then a few days later,  we’re looking at the dollar the same way as we did previously, and Chuck will say, “we could be seeing a weak dollar trend beginning”  only to have egg on his face once again…. But one of these days, Alice…. To the Moon!

It wasn’t that long ago that we as a country passed $26 Trillion in current Debt….  Last night I checked the Debt Clock and found that we’re well on our way to $27 Trillion in current Debt…  (%26.648 Trillion) We’ve moved into the 130% of GDP (not using the Covid-19 GDP numbers) And the Bank for International Settlements (BIS) told us many years ago that “When government debt exceeds 85% of GDP, economic growth slows.” Which is something I’ve said for many years now, and that is when the debt level grows too large, the economy has to slow down…. And for the last 10 years we’ve only averaged 2.1% GDP….  And as the debt grows, and it will grow, trust me on that one folks….  First of all our current President has shown he’s no match for the spending habits of our Congress, and if the new guy gets in, I can’t even imagine how quickly the debt will grow….  I’m just saying…. 

So, it’s no surprise to me that currency traders are taking their shots at the dollar bugs…. We saw last week that the PPT (Plunge Protection Team) can be formidable foes…. But is this a game that they want to keep playing? Because currency traders have been known to stay until the end of the game, no matter the score of the game….

And al this does is move up on the calendar all the chaos I told you about that was going to happen, for if these countries have a soaring currency that’s going to just add to all their woes, and will probably bring about their collective announcements of debt default….   I’m just saying…

The Fed? They’re playing with fire folks, and you know what they’ve said about people who play with fire, they end up getting burned….   The Fed as I told you last week, is hell bent and whiskey bound to see inflation rise, and they, the Fed heads, believe that they know when to pull away the punch bowl that’s feeding the inflation….  Well, I’m from Missouri, and the Fed Heads are going to have to show me that they have chutzpah to pull away the punch bowl, once they’ve given everyone a heaping cup full of inflation….  

I’m not a betting man…. Oh, I’ll bet a shiny quarter but other than that, I worked long hours for the currency I have, I don’t want to lose it in a betting game!  I used to play nickel, dime poker, but even then, if I had a losing night, I was devastated….  But I said all that to say this…. I doubt seriously that the Fed Heads can perform in the batter’s box, when Bob Gibson, or Nolan Ryan, or Sandy Koufax is about to come home with their best pitch….

So, how are you doing with Covid-19?  You know I’ve been around my family off and on since this began, and so far so good… I even have driveway happy hours with distancing and no masks, as we’re outside, with my neighbors and friends….   I’m not saying this virus isn’t real, but I’ll go to my grave with the thought that we should have done this differently… We should have identified those of us at risk, and quarantined us, and allowed everyone else to go to work….  Sure there would have been large numbers of positive cases, but….  Then the herd immunity would happen….  

Longtime Congressman and author of a few books, Ron Paul, of whom I’ve always admired as someone who didn’t allow himself to get tainted with the deficit spending paint that every other congressman allows themselves to be painted with….   So, when Ron Paul speaks about something I listen….  And here’s his take on the pandemic….  (I know a lot of you won’t agree with this, but please listen to what he has to say)

“But what’s happening in America right now is being taken advantage of by those who want to profit politically from the panic.

To them, it’s a perfect chance to steal more of our constitutional freedoms and set America up for a socialist future.

If that sounds too extreme, just consider:

•   The Department of Justice recently asked Congress for the ability to detain Americans—without trial—during “emergencies” like this…

• Others have proposed we “eliminate all political borders”…
• And according to a recent story in Politico, the White House Coronavirus Task Force is considering creating a national surveillance system to track Americans’ health information – essentially a healthcare Patriot Act!

Chuck again….  Yes, just like the Patriot Act that got shoved down our throats under the guise of “We need this to protect us against terrorists”….  The powers that be will use this pandemic as an opportunity to take more of your civil liberties and freedoms away from you….  

That’s my 2-cents worth, and everyone that doesn’t agree me and Ron Paul, please don’t unsubscribe, for I’m sure that I’ll say something that you agree with soon…

OK…. The U.S. Data Cupboard last week, ended the week with some real economic data prints…. July prints of Retail Sales, Industrial Production and Capacity Utilization…. So, let’s go through them, eh? 

July Retail Sales showed only a 1.2% gain, when 2.0% was expected, and June’s print was 8.4%…. Oh, if had a nickel for all those that said last month that the 8.4% increase was proof that the economy was rebounding, I would be able to play poker again!  Industrial Production also disappointed, showing only a 3% gain in July VS the 5.7% gain in June…. Once again more nickels for Chuck’s poker game!  The one piece of data that was surprisingly strong was Capacity Utilization… which rose from 68.5% in June to 70.6% in July…  I would venture to say that all the re-closings that have been going on, will bring that number back down in August… We shall see, eh?

One print that was also interesting was the Initial Jobless Claims on Thursday last week, that showed for the first time in 21 weeks, that the Claims for the week didn’t total more than 1 Million…. Instead it was 963,000….  Not exactly a strong number for a recovery, but still not 1 Million or more!  The Continuing claims also fell to 28.3 Million…. So, some people either falling off the rosters of those receiving checks each wee, or a smattering of people going back to work… Which is tenuous at best, right?

To recap…. Gold & Silver were up on Thursday, down on Friday, and down for the week… The currencies were up for the week even with a midweek selloff, VS the dollar…. Chuck talks about all the currency printing going on around the world, and at home, and points out that the Fed can’t print Gold & Silver….  He also prints some quotes he found on TTMYGH…. And then he goes nuclear on the moves that the powers that be are attempting to get approved that takes away more of our civil liberties and freedoms….  You may not like him much after that, but it had to be said….

For What It’s Worth….  A couple of times through these past couple of years, I laid out what I see happening in the future, with regards to the end of cash currency, and see it replaced with digits…. Well, I was glad to see my good friend Dennis Miller, write about this subject. So, his article can be found here: https://milleronthemoney.com/say-no-to-the-fedcoin-scheme-its-a-trap/ 

Or, here’s your snippet: “At the local convenience store, my wife Jo handed the clerk a $5 bill and waited for her change; finally asking for it. The clerk said, “We have a coin shortage. We have to round things to the nearest dollar.” Screw that! She dug in her purse, cobbled together the correct change and demanded the clerk give her a dollar back – while the line of “social distanced” customers behind her grew long.

The next day she bought a fountain Coke, normally $1.00 plus tax. The clerk said, “$1.00 please.” The merchant absorbed the tax. There are signs in the local stores saying they have a shortage and will buy rolled coins.

My BS meter went into full alert. A government capable of putting a man on the moon could solve a coin shortage in a matter of a few weeks. If there is a shortage, it’s because some politicos, or bankers want to create one.

Sure enough, Ron Paul’s article, Fedcoin: A New Scheme for Tyranny and Poverty, appeared.

“If some Congress members get their way, the Federal Reserve may soon be able to track many of your purchases in real time and share that information with government agencies. This is just one of the problems with the proposed “digital dollar” or “fedcoin.”

…. Some progressives have embraced fedcoin as a way to provide Americans with a “universal basic income.”

Both the Senate Banking Committee and the House Financial Services Committee held hearings on fedcoin in June.

…. Fedcoin would not be an actual coin. Instead, it would be a special account created and maintained for each American by the Federal Reserve. Each month, Fed employees could tap a few keys on a computer and – bingo – each American would have dollars added to his Federal Reserve account.”

Chuck again… Well, like I said above, I’ve talked about this several times now, the end of cash, and after my last tirade against this move, I even pointed out that the U.S. Gov’t was already looking into their own version of digital currency…. 

P.S. I don’t know if you’ve noticed this or not, but in the past week, I’ve stopped referring to the dollar and currencies as money, and instead calling them “currency”, because that’s what they are…. Real money is Gold & Silver, or a currency that’s backed by either of those two metals….

Market  prices 8/17/20: American Style: A$ .7186, kiwi .6526, C$ .7558, euro 1.1853, sterling 1.3085, Swiss $1.1013, European Style: rand 17.4310, krone 8.8710, SEK 8.6942, forint 293.57,   zloty 3.7058,    koruna 22.0363, RUB 72.84, yen 106.28, sing 1.3700, HKD 7.7500, INR 74.68, China 6.9491, peso 22.01, BRL 5.4215, Dollar Index 92.99,  Oil $41.92,  10-year .68%, Silver $28.40, Platinum $982.00, Palladium $2,179.25, and Gold… $1,944.00

That’s it for today…. Well, the weekend began with a driveway happy hour and I was giddy with surprise when a couple of my former colleagues showed up that I was not aware of their intention to come…. It was great to see Danielle, Christine, Aaron, Mike and Kristin….    Then the weather began to get nice on Saturday, and Sunday was just gorgeous! And I got to play with “my girl”. Little Evie was here, and we had a good day together! And…. The Cardinals got back on the diamond for the first time in 17 days, with a double header sweep of the Pale hose! Both games were played during the day, and longtime readers know I absolutely love day baseball games!  Sunday they took one on the chin, but still they were playing again, and I was so happy!  Now they have to play 5 games in 3 days VS the Cubs…. I doubt either team has enough pitching for that onslaught of games, so we’ll have to see who has more pitching depth, eh?  And very late last night, our Blues won in OT to stay alive in their defense of their Stanley Cup Championship last year…  The Beatles take us the finish line today with their song: When I’m 64….   Will you still need me, will you still feed me, when I’m 64?   I hope you have a Marvelous Monday, and will Be Good To Yourself!

Chuck Butler

August 12, 2020 

* Gold & Silver are taken down by HUGE amounts… 

* The dollar bugs fight back! 

Good Day… And a Wonderful Wednesday to you!  Well, no reason what-so-ever to beat around a bush today… I’ve never, ever seen a one day move like I saw yesterday in Gold… It’s a real shame folks… For this move was downward, and at one point in the day it totaled $100!!!  One sale begot another one, and so on… But as Neil Young sang, I won’t let it bring me down, for it’s only castles burning….  There! I got that off my chest!  Now back to regular programming….  Day one of Chuck and Alex being on our own, went fabulously… A very damaging storm had come through the night before, and some people in Missouri were still without power… And our pool was covered with small twigs and leaves… I’m just beside myself today, still reeling from the onslaught of selling that Gold had to go through yesterday… In the meantime, Seals and Crofts greet me this morning with a song from my high school years: We May Never Pass This Way Again…

So… what on heaven and earth brought about the massive selling of Gold yesterday?  I told you in the morning that it was already down $48, and the sellers were pointing to the idea that the infection numbers for the COVID virus were coming down, and that Russia was reporting that they had a vaccine ready to administer. But come on!  I can tell you that some of Gold’s rise in price was generated by the second wave, or first wave that we never got through… But not all of it, and as I explained yesterday, all the reasons for Gold’s rise were still in place… zero to negative interest rates, negative yielding bonds, money printing out the yahoo, and an economy teetering on collapsing…

The Kitco.com website has an interesting chart each day, they show what the price of Gold that was affected by the dollar trading, and then they show the amount of movement that was affected by “sellers”…   Yesterday, the move in Gold that was caused by dollar strength, was $1.00…  That alone should tell you that the boys in the band backed up their truck full-o-short trades, and unloaded them…. 575,000 contracts were traded in Gold yesterday… That’s unbelievable to me… But then when the boys in the band want to take something down, they don’t mess around! 

The total damage done to Gold at the close of the day, was $117.90!!!! Leaving Gold at $1,910….  The good news is that maybe the boys in the band used up all their bullets yesterday, as Gold is up $25 in the early trading today… 

And Silver was treated as badly as Gold, but Silver’s loss of around $4.00 was a larger percentage downward move.  And Silver closed at $24.76, with around 350,000 total contracts traded… 

And during all this engineered takedown of both Gold & Silver, there was not a peep from the CFTC, or the COMEX,  or any other entity that should have been saying things like, “we’re going to investigate how this happened”…  So, as Ed Steer said in his letter today, “a pox on them all”… 

Silver, like Gold has bounced this morning and is up  a dollar to $25.92…. 

Well, Gold & Silver  weren’t the only investments to fall to the dollar bugs yesterday…. The currencies, which in the early morning were looking very perky, gave back their gains as the day went along…. This, to me, just looks like a PPT effort to keep the dollar from falling off the cliff…  The PPT for all of you new to class is the Plunge Protection Team, which was created in 1987, to prevent another October stock market crash….  But over the years, the PPT has expanded their protection to the dollar….  And since they have currency they can easily print and use to buy dollars, when moves as strong as the one yesterday occurs, I just have to believe that it’s the PPT once again….

Hey, how about some good news?  Did you see where the Gov. of S. Dakota, made a video telling people to move there to regain their freedoms, liberties, lives, and livelihoods?  School will open in S. Dakota on time, and even with the 4^th of July Mt. Rushmore fireworks gathering, the Covid-19 virus is under control….  So…. There! Good news!

I did want to talk about the currencies rising VS the dollar yesterday, but totally forgot what I was going to say, but not now! I’m loaded for bear!   In the past few weeks, while the dollar got sold, and the currencies got bought, I kept thinking that there was going to be “something” that stopped this trend, at least for the near term, because the countries with rising currencies, don’t need their currency getting too strong, while they attempt to bring back their lost economies….  It was going to be a pull and then be pulled by outside forces, and yesterday, I think it all came to a head….

Before I went on vacation, I threw an idea against the wall to see if it stuck, and it’s still be bandied about, so for all intent and purpose, the traders were rewarding the currencies of the countries that appeared to have the COVID-19 virus under control… Sweden, Australia, New Zealand, Norway, and a few others were joining the offset to the dollar, the euro, in gaining VS the dollar…  But, as fate would have it… the rewarding for controlling the virus went the dollar’s way, once again…. Who’d a thought that would happen?  Not me… that’s for sure!  If, we in the U.S. have this virus under control, I’ll gladly say I was wrong about how I didn’t see us forgetting about the virus until 2025! 

But if we have it under control, why are states closing up businesses again…  I’m just asking a question that traders aren’t going to answer, because they know the answer!

Recall yesterday, I went through the exercise of explaining why I thought PPI (wholesale inflation) was going to rise…. And lo-and behold it did! I thought I saw a putty tat, I did, I did!  PPI was up 0.6% in July, which was a large increase from June’s negative -0.2%….  Today, we’ll see the color of the stupid CPI (consumer inflation)…. It’s too early for the increase in PPI to show up here, so who knows that the powers that be, will allow CPI to show…

This whole scenario has to be a real conundrum for the Fed heads… And just like a two handed economist…  The Fed Heads want inflation, but…. They can’t have it spiraling our of control right out of the starter’s gate, so you can expect that the CPI next month won’t begin to show the increase in Wholesale prices… I’m just saying… 

The U.S. Data Cupboard is still “wanting”…  We will see the stupid CPI for July print today, along with the July Federal Budget deficit…   The moronic negotiations to come up with another deficit spending stimulus bill are still going on…   Moronic meetings are run by….   fill in the blank, but I know what I would put down!  But just to keep it softer, I’ll say “dolts”…  So, if you have a moronic meeting, run by …..    you get moronic results!… Again… I’m just saying… 

To recap…. There was an engineered takedown of both Gold & Silver yesterday, the like that I’ve never seen before!  Chuck goes through the gyrations, and calls for a pox on the CFTC and COMEX…  The dollar bulls were backed by the PPT (in Chuck’s opinion) and the perky levels for the currencies yesterday morning were wiped out… it was an overall very ugly day for non-dollar investors! 

For What It’s Worth….  Well… as the days go by, I always try to remember to check out what Russ and Pam Martens are saying on their website: www.wallstreetonparade.com. And yesterday they had a perfect FWIW article that talks about how the “too big to fail banks” are rigging their stress tests, and it can be found here: https://wallstreetonparade.com/2020/08/bombshell-report-fed-is-aware-that-big-banks-are-rigging-their-stress-tests-and-letting-them-get-away-with-it/ 

Or, here’s your snippet: “On January 31 of this year, researchers for the Federal Reserve released a study that showed that the largest banks operating in the U.S. have been gaming their stress test results by intentionally dropping their exposure to over-the-counter derivatives in the fourth quarter. The fourth quarter data is the information used by the Federal Reserve to determine surcharges on capital for Global Systemically Important Banks, or G-SIBs.

The report, “How Do U.S. Global Systemically Important Banks Lower Their Capital Surcharges?,” was written by Jared Berry, Akber Khan, and Marcelo Rezende.

We decided to evaluate this claim for ourselves, using the quarterly derivative reports provided by the Office of the Comptroller of the Currency (OCC), the regulator of national banks. The data was appalling. The largest Wall Street banks not only dropped their level of derivatives by trillions of dollars in the fourth quarter, but they restored those derivatives by the end of the following first quarter. (See first OCC chart below which shows the largest of the top 25 banks by derivative exposure.)

In the case of JPMorgan Chase, it dropped its total derivatives from $55 trillion notional (face amount) in the third quarter to $46.9 trillion in the fourth quarter of 2019, a decline of $8 trillion in one quarter or 15 percent. But by the end of the first quarter of 2020, JPMorgan had pushed those derivatives back up to $59.6 trillion.

The Federal Reserve seems to be accepting this behavior from JPMorgan Chase as a legitimate means of reducing its capital requirements. Yesterday, the Federal Reserve announced the new capital requirements for the largest, Global Systemically Important Banks, or G-SIBs. We fully expected JPMorgan Chase to be slapped with the highest capital requirement since its Systemic Risk Report last year showed it to be the riskiest bank in the U.S. and, clearly, based on the above research that appears on the Fed’s own website, it’s aware of JPMorgan’s “window dressing,” the term used by its own researchers.

All of this is just further evidence that Congress needs to take away the supervisory powers over banks from the Federal Reserve; strip it of its ability to bail them out; and restrict the Fed to setting monetary policy. Those restrictions can’t arrive soon enough.”

Chuck again…  stress test, mess tests! What a crock! why give them the stress test if they are going to just rig it to make them look strong?  And why hasn’t someone at the Fed regulatory division looked into this and made suggestions as to how to stop it from happening?  Well, that’s a question that’s easy to answer… Because they are lazy!  And have no intention or interest in coming down on the banks they regulate….  Let that sink in… 

Market  Prices 8/12/20: American Style: A$ .7127,  kiwi .6540, C$ .7523, euro 1.1763, sterling 1.3016, Swiss $1.0939, European Style: rand 17.4260, krone 8.9722, SEK 8.7201, forint 293.41,   zloty 3.7457,    koruna 22.2177, RUB 73.10, yen 106.96, sing 1.3738, HKD 7.7507, INR 74.65, China 6.9467, peso 22.36, BRL 5.4416,  Dollar Index 93.59,  Oil $42.19,  10-year .67%, Silver $25.92, Platinum $934.00, Palladium $2,048.00, and Gold… $1,935.40

That’s it for today, and this week… my monthly oncologist appt. is tomorrow morning…  I made dinner last night, and then I couldn’t eat it, as my stomach turned on me…  I was treated to an old favorite sandwich yesterday for lunch… Good friend, Duane, stopped by and brought me a pastrami sandwich from Carl’s Deli… Talk about yummy! I used to go to my oncologist at St. Mary’s Hospital and Carl’s Deli was right across the street, so there were lots of times I would stop and get two Pastrami with pepper cheese sandwiches. One for me, one for Duane…  But now I go to the oncologist right around the corner from me… So, yesterday’s surprise was truly appreciated!  No birthdays this weekend that I know of…  And the second day of being alone during the day went just fine…  Jimmy Buffett takes us to the finish line today with his song: A Pirate Looks At Forty…  I always like the line in the song: “I made enough money to buy Miami, but I pissed it away too fast”  I always tried to make sure that didn’t happen to me!  Not that I made enough money to buy Miami! I hope you have a Wonderful Wednesday, and please Be Good To Yourself! 

Chuck Butler

 

 

August 11, 2020

* Gold gets whacked badly in early trading today… 

* Chuck poses as a CEO…. 

Good Day… And a Tom Terrific Tuesday to you! Well the first day back in the saddle left me with some riding marks…. HA!  It’s just me and Alex for the next few days here at the old ranch… Which used to mean that we would be wearing out the phone connection to Pizza Man Pizza! But Alex eats better these days, as he keeps his young Iron Man figure… By the time I was his age (25) I had lost all desire to maintain my Atlas shape, and had begun the slow march to where I am now… So, good for him!  I made us some Dijon pork chops last night… One of my specialties! I’m not good for the sides though… The Moody Blues greet me this morning with their song: The Other Side Of Life… 

Front and Center this morning, the short sellers of Gold are really taking out their frustrations on the rise of the Gold price in the early trading today… Gold is down $48 in the early trading today, and the only thing I can see that would relate to the drop in price is that the Covid-19 virus infection rate in the U.S. has dropped… Oh, and that Russia says that they have a vaccine ready to administer to people…   So, other than a few profit takers, and some skittish people regarding the virus being brought under control. The main sellers are of the short variety… 

So, let’s take some time to review the facts….  Has monetary stimulus by Central Banks, including our Fed Reserve, been pulled back?  No, in fact, there are plans for more stimulus, which is nothing but currency printing…  And have interest rates suddenly reversed their downward trend? No, in fact,  interest rates are remaining near zero, and will continue to remain there for some time!  And have Treasury yields risen to bring them out of negative territory?  No, in fact the 10-year Treasury’s yield is just .54%, but when you factor in inflation, the rate is negative… 

Take this drop in the price of Gold for what it is….  A buying opportunity… I’m just saying… 

Well, as I suspected yesterday, there is a major battle brewing in the White House VS Congress, after President Trump, signed an executive order to spend money…  I told you that this was an attempt to take the control over the purse strings in Congress away from those bickering elected officials…  I just want to point out something, that Bill Bonner pointed out yesterday in his letter…

“Of course, there is no mention of “executive orders” in either the Bible or the Constitution. As for the Lord… We’ll let Him speak for Himself. But the Constitution is clear…

No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”

Chuck again… So now, we not only are being given fake money, but now its illegal money… But then the representatives that have allowed the printing of currency instead of the use of Gold & Silver as our money, should all be rounded up and taken to jail…. And just because this has been going on for a long time, doesn’t make it right… There comes a time when you have to stomp your foot down, and say “no mas”!  Hey, if a very proud boxer can bring himself to say “no mas”, then we should be able to say it to our representatives!

OK…. Yesterday, the currencies did nothing VS the dollar, but in the overnight markets, the dollar got sold…. The euro is back to 1.18, and the Aussie dollar (A$) is within spittin’ distance of 72-cents this morning! Gold lost $6 on the day, but Silver gained 81-cents!  Gold was bound to have to go back and fill in the gaps after it shot higher by large amounts each day the last 10 days… So…  like I just said, this would be considered a “dip”….  Use it to your advantage…. Because the next leg up for Gold will take it to $2,500… of course that’s my humble opinion, and I could be wrong…

So… were you aware that the Treasury will have over $2 Trillion in new borrowings between July and December?  The July to Sept period is expected to be $947 Billion, and the Oct. to Dec period is expected to be $1.216 Trillion…

Now those numbers are bad enough, folks, but think about the whole year… The April to June borrowings were $2.753 Trillion…  And the January to March borrowings were $515 Billion…. So add them all up, and we get $5.4 Trillion that will need to be financed with Treasury issuance, and that $5.4 Trillion will be added to our current debt… 

And those estimates for the coming months were done before the next stimulus bill gets passed, or the deficit spending the President signed over in a an executive order on Sunday…   I’ve heard that the Democrats won’t be satisfied with any amount below $2 Trillion….   So, you might as well add $2 Trillion into your computations for debt this year!  Aye, aye, aye….  I need serenity now!

The Fed is hell bound and whiskey bent to get inflation rising, as quickly as they can get it going, and money printing will go a long way toward them reaching their goal of higher inflation. But the velocity of the money being printed, is the key… if money gets stashed away, then the velocity of money doesn’t spiral higher, and trigger inflation… And with the position of most people’s pocketbooks / savings balances right now being so battered, I can’t see people rushing out to spend their new found currency… Do you? I would think at this point people have either learned a lesson about having savings the hard way, or they are licking their wounds, but grateful they had savings… And therefore a replenishing of those savings or even a start up of savings will be in order… Where’s the velocity coming now?

OK, enough talk on that, but basically I’m just trying to explain why investors are flocking to Gold & Silver right now…  Governmental tensions, Geopolitical tensions, negative yields, money printing out the yahoo, and a few other things really have Gold & Silver in the driver’s seat….  Yeah, driver’s seat…. Pick up your feet…. Got to move to the trick of the beat. There is no lead. Just take your place in the driver’s seat!  A little Sniff n’ the Tears for you this morning!

A few years ago, I mentioned the song Driver’s Seat in the Pfennig, and later that day I received an email from a guy who said he was the bass player for Sniff n’ the Tears…. How cool was that?  We actually ended up talking on the phone, as we had lots to talk about, with me being an old bass player myself!

Funny how I always have a “story” to tell about something related, eh? Well, when you have the life I’ve had, there are a ton of stories to tell!

As I told you yesterday, the U.S. Data Cupboard was taking a pause for the cause this week, with little to report until Friday’s reports.  But that doesn’t mean there isn’t anything in the Data Cupboard… For instance today we’ll see the color of July’s Producer Price Index (PPI), which is wholesale inflation, and which there shouldn’t be any… unless…  You know, if I was a business owner, and I had widgets to sell to the public, and suddenly those widgets aren’t selling, would I raise the price of the widgets so that if I sell 1/2 of them my net is the same, or would I reduce the price of the widgets to make them more attractive?  What would you do? 

Me…. I think I would raise the prices, in an attempt to recover my profits….   But, the thing I would do is downsize the widget, so that I’m giving the public less of a product at an increased price…  

Bet you didn’t think I would take that track, eh?  Our Chuck, a CEO that everyone despises? No way!  Well, think about it, Companies have already done the downsizing of their widgets, and kept the prices the same. The only thing left for them to do is increase the prices, which would send wholesale inflation higher, and that would feed the stupid CPI (consumer inflation) and the wheels on the bus go ’round and ’round…. 

Today’s Data Cupboard will also have the small business index for July… I can’t imagine in my wildest dreams that this survey of small businesses will be good… 

To Recap…  Well, the currencies & metals didn’t do much yesterday, but in the overnight markets, is where the action was… The dollar got sold VS the currencies overnight, but Gold is getting whacked in the early trading today, and was down $48 at last check…  Chuck gets help from Bill Bonner to explain what the Constitution says about who gets to spend the currency in these United States of America… 

For the FWIW article today, I have a real treat for you!  Instead of an article, I have a recent video interview with the GREAT Mogambo Guru!  Mike Maloney, whom many of you know of, does the interview, and when I watched it, I just kept going back in my mind the time TGMG (The Great Mogambo Guru, and I had lunch together while I was in St. Pete Florida…   So, here’s the link to the interview…  enjoy!  https://goldsilver.com/blog/gold-silver-truth-treason-mike-maloney-with-richard-daughty/

I also have this, which will tell you about the media… What I’ve always complained about them for, and more… Check this out… 

I had a dear reader send me this….  And I thought that it was worth repeating here in the Pfennig…

John Swinton was a NY Press guy….  Check out what he said oh, so long ago…

“One night, probably in 1880, John Swinton, then the preeminent New
York journalist, was the guest of honor at a banquet given him by the
leaders of his craft. Someone who knew neither the press nor Swinton
offered a toast to the independent press. Swinton outraged his
colleagues by replying:

“There is no such thing, at this date of the world’s history, in
America, as an independent press. You know it and I know it.
“There is not one of you who dares to write your honest opinions, and
if you did, you know beforehand that it would never appear in print. I
am paid weekly for keeping my honest opinion out of the paper I am
connected with. Others of you are paid similar salaries for similar
things, and any of you who would be so foolish as to write honest
opinions would be out on the streets looking for another job. If I
allowed my honest opinions to appear in one issue of my paper, before
twenty_four hours my occupation would be gone.
“The business of the journalists is to destroy the truth, to lie
outright, to pervert, to vilify, to fawn at the feet of mammon, and to
sell his country and his race for his daily bread. You know it and I
know it, and what folly is this toasting an independent press?
“We are the tools and vassals of rich men behind the scenes. We are
the jumping jacks, they pull the strings and we dance. Our talents,
our possibilities and our lives are all the property of other men. We
are intellectual prostitutes.”

Chuck again…. Just about tells it all, and oh, so many years ago too!

Market  prices  8/11/20: American Style: A$ .7186, kiwi .6610, C$ .7532, euro 1.1805, sterling 1.3276, Swiss $1.0973, European Style: rand 17.4845, krone 8.9450, SEK 8.7062, forint 292.19,  zloty 3.7297,   koruna 22.1497, RUB 73.52, yen 106.01, sing 1.3765, HKD 7.7499, INR 74.45, China 6.9644, peso 22.32, BRL 5.4358,  Dollar Index 93.22,   Oil $42.65,  10-year .54%, Silver $27.21, Platinum $956.00, Palladium $2,2026.00, and Gold… $1,980.45

That’s it for today… not as wordy as yesterday, which should be a good thing, ? Thanks for all that sent “welcome back” notes to me yesterday, they are truly appreciated!  Last week,  I was away for the 65th birthday for my best friend in the world. I’ve known Mike Karvas since 2nd grade. We’ve been through good times and bad times together.  So, happy belated Birthday, brother!  my poor beloved Cardinals sure have gone in the other direction, health wise, than the other 28 teams!  They can’t seem to shake the virus that has taken over the world…  I would think that even if they could begin to play games again, that it’s too late… The 2020 60-game schedule will have to go on without the National League’s winningest team…. UGH! in fact, double UGH!    Paul Young takes us to the finish line today with his big hit song: Every Time You Go Away…  And on that sad note (it’s a sad song) I hope you have a Tom Terrific Tuesday today, and will continue to Be Good To Yourself!

Chuck Butler

August 10, 2020

* Currencies & metals rally while Chuck was gone… 

* What’s China & Russia up to? 

Good Day… And a Marvelous Monday to you!  Well, I’m came back… I didn’t want to, but all my doctors are here, so I came back…  What a wonderful time it was, my vacation, spending it with my son Andrew’s family. I really got close to granddaughter, little Evie… What a darling little girl… We laughed, we clapped for each other, we danced, and she just kept getting more darling as the week went on…  Grandson Braden loved the ocean, and didn’t really want to get out of it! Braden is 9 now, and getting to me quite the little man… We didn’t want to experience a cat 1 hurricane, so we left our beach location for a day to drove to Lakeland Fla… It was a new “adventure”, I kept telling Braden… but the hurricane stayed out to sea, and we only got some rain and wind. The ocean sure was angry though! The Gin Blossoms greet me this morning with their song, Allison Road…  I’ve told you before about my former neighbor and good friends Rick & Laura’s daughter, Ally, that I dubbed Allison Road, and still call her that, even though she’s 16 now!

Well… The old saying they used to have on the trade desk, that “The Currencies rally while Chuck is away” held true these past couple of weeks, eh?  Remember that I told you before I left that the euro was thought to be on its way to 1.16, and once that figure was held, it would signal a new weak dollar trend?  Well, not only was the 1.16 figure held, it kept going up to the 1.18 figure before things began to get unwound on Friday last week.  The spin doctors, and not the ones that sang, Two Princes, were out in force on Friday, after the Jobs Jamboree printed… They were working very diligently, and swaying the markets to see things their way, which worked, but for how long? More on the Jobs Jamboree and the spin doctors later….

Before we get there, we HAVE to talk about Gold & Silver…  There are reasons that I’ll get into as the week goes on for this run to higher ground for Gold & Silver, but the one that really keeps coming back to haunt the dollar, is the fact that when you factor in inflation, the 10-year Treasury is trading with a negative yield…  And keeping that in mind, you’ll understand why Gold reached a new record high VS the dollar, or the dollar reached a new record low VS Gold, it’s all the same…  The Folks at Goldman Sacks, aka Lola, upped the ante on their forecast for the price of Gold from $2,000 to $2,300, but in my mind that’s still conservative as to where I think Gold is headed….

And with Silver kicking tail and taking names later, there’s renewed talk of the old Gold/ Silver ratio… There are some pundits that believe that the old ratio will come into play once again, and Gold’s price to Silver will be 15/1…  I can’t see that happening… It would be great for my Silver holdings if it did, but we have to remember this… there are short positions in Silver that are equal to 180 days of Silver production….  And that’s down from where they used to be….   Silver Guru Ted Butler, no relation that I know of,  says that wen the September delivery date comes around there won’t be enough Silver to meet all the delivery requirements…. And that’s when Silver not only jumps but leaps to new highs…

While I was on vacation, I received my weekly letter from Grant Williams, Things That Make You Go Hmmm….  It was, as usual, very good, and chock-full-o-information.  Grant spent a good part of his weekly letter going through the reasons that Gold (&Silver) have taken off to higher ground.  The Deficit spending, the money supply soaring, and other things were at the top of his list…  And then he had this to say, that I have to say is ingenious… “As June turned to July, however, the realization began to dawn on more people that the only way forward, not just for the Fed and the U.S. government, but all central banks and lawmakers around the world, was is to deficit fund the recovery. (That’s a polite way of saying print money until their eye sockets bleed). Not only is that path highly likely guaranteed to lead to currency debasement, but also inflation and, when the conversation turns to inflation, things get even more interesting for the precious metals.”

Chuck again…  I really enjoy reading and listening to Grant Williams, he thinks like I do, that this is all going to end up in tears, but he has this unique way of saying it that doesn’t feel like someone punching you in the nose, like I do….

OK…  So, this weekend I read that the President signed an executive order that would provide economic relief to millions of Americans by deferring taxes and, temporary unemployment benefits. More deficit spending, I might add… 

I saw that and immediately thought… Uh-oh! Not only does this fall right into what I told good friend, Dennis Miller is one of my interviews with him for his letter: Miller on The Money, that with each stimulus action the number grow larger….  For instance, remember the $750 Billion stimulus in 2008? We choked on that number then, but now we’re talking Trillions and Trillions….  

The other thing that hit me was  that these measures would take away some of Congress’s most fundamental, constitutionally mandated powers — tax and spending policy. Uh-oh… looks like a big White House/ Congress battle is about to begin….   

While I believe that something needed to be done, I won’t agree with deficit spending….  There have been 20 consecutive weeks of more than 1 Million people filing for unemployment benefits… Think about that for a minute…  The Continuing Claims are 31.8 Million….  That’s 31.8 Million people in this country looking for jobs… Then when you add in the Gig workers, who don’t get unemployment benefits, you could be adding up to 10 Million more…. 

And that leads me to the BLS’s Jobs Jamboree last Friday…  They claimed that 1.76 Million jobs were created in July… Really? I’m from Missouri, I’ll have to be shown that if you don’t mind!  Well, right off the bat I see that 241,000 jobs were added by the BLS…  But that doesn’t make up for 1.76 Million…  Just think about that for a minute folks… None of the BLS’s numbers make any sense to me….

So, if we know we have 31.8 Million continuing claims, which means they are out of work, and another 10 Million in Gig Workers…  that’ s roughly 42 Million…  which would mean that the Unemployment Rate should be 12.7%….  The BLS says the unemployment rate is only 10.2%…  Which would mean that they don’t count the Gig Workers/ Contract workers, etc.  Now why is it that they don’t count these workers?  I guess we’ll never find out, but the point I’m making here is that in July, when businesses began to open up only to find that they had to close back down again, The BLS is still lying through their teeth about the unemployment situation in the U.S.  I’m just saying….

I know, I know I said a few months ago that I just didn’t care what the BLS was printing any longer, but folks… This is serious stuff…  And quite frankly, I’m fed up with this bunk!  So, I’ll move along here now, for these are not the droids we’re looking for!

So, getting back to the dollar and its recent weakness…  It sure seems like everyone and their brother, have come to the conclusion that with all the debt…  and yields that are now negative…  and the vast amounts of money that is being printed, that the dollar’s days are numbered as the reserve currency of the world…  China and Russia are joining forces to eliminate the dollar from the middle of their trade…  I read somewhere (I read so much that sometimes it’s difficult for me to remember where I saw something)  this past weekend, that the percentage of transactions that were denominated in dollars between China and Russia had dropped to levels that have never been seen before…  Uh-Oh…

So, many of you are wondering what’s going on with me, regarding the currencies… For it was just a couple of months ago that I wrote about how with so much debt in the world, that a default on that debt was very likely, in my mind that is, and that would take down the currencies…. Well, I never said that the currencies couldn’t muster another run at the dollar before all that happens, and that’s what we’re seeing right now. The currencies, led by the euro, have mounted a rally VS the dollar, and this one doesn’t appear to be yet another false dawn… This rally looks like the beginning of a long term trend to sell dollars…

And one more thought on Gold & Silver, from what I read, the demand for physical metals has reached a fever pitch, and the problem with that is simply that there’s not enough supply to fill all those orders for physical Gold & Silver…  And for once, we are dealing with fundamentals… low supply, high demand equals strong price…  So, the tailwinds for Gold & Silver are in place…  Are you ready? Yes I’m ready….

It’s times like we are experiencing now that point to the need to be diversified in your investment portfolio, using all asset classes, including currencies and metals…  I used to give presentations on diversification, and would show how even in times when the currencies and metals weren’t in rally mode, that the inclusion of these asset classes reduced the overall risk in the investment portfolio…  An in these days of no yields, and tensions everywhere, risk is something you probably want to avoid…  I’m just saying… 

OK… I was going through some old Pfennigs last week, looking for something, and came across this discussion that I had on January 15, 2010….  That’s right I said 2010….  “I want to talk briefly about something I said yesterday about Gold… When I said that I laughed at a comment on the newswire that called for Gold at $5,000, I did not mean that I was laughing at the thought that Gold could get to $5,000… I was trying to make the point that pundits are calling this, that, and the other thing for Gold… That’s all… Shoot Rudy, I own Gold, I would be one happy camper if Gold reached 1/2 of that call of $5,000! But again, I must point out that 1. the Gold price manipulators would probably be dead if Gold were to reach $5,000, and 2. the state of the economy would be in shambles… “

Interesting, isn’t it that the economy is in shambles, and Gold is moving toward that 1/2 of $5,000 price… 

Well, after a chock-full-o-data week that was last week, the U.S. Data Cupboard will take a pause for the cause this week, with little to no real economic data to print, until we get to Friday, when Retail Sales, Capacity Utilization and Industrial Production will all print…  Circling back to last week’s data, one print that caught my attention was the Consumer Credit (read debt) print…  For the first time in 4 months Consumers were back to racking up debt…  I’m thinking that at this point that this is not a good thing, as I see it, Consumers have used up all their savings, that is if they had any, and now are resorting to buying things they need on credit cards… 

I’ll relate something that I heard my grandma say long ago…  now mind you she lived through the depression, and when later in life credit cards were introduced to the masses, She told me that a person should never buy groceries on credit, for it’s a slippery slope to really bad things…  Times have changed, but for some reason those words have stuck with me like glue…. 

To Recap….  it’s been a whirlwind couple of weeks while Chuck was on vacation. The currencies have mounted a charge VS the dollar, and a lot of folks are now calling for an end to the dollar strength. Gold & Silver kicked the dollar’s tail and took names later, that is until Friday of last week, when the BLS and the spin doctors, spun a tale of a improving employment, which is bunch of bunk… But the “spin” stopped the daily rallies in Gold & Silver… I’m thinking this should only be a temporary move downward…. 

For What It’s Worth…  Ok, I mentioned above about the de-dollarization plans of China and Russia, and this article on ZeroHedge.com spells it out for you, and it can be found here: https://www.zerohedge.com/economics/russia-china-dedollarization-reaches-breakthrough-moment-countries-ditch-greenback

Or, here’s your snippet: “Late last year, data released by the PBOC and the Russian Central Bank shone a light on a disturbing – at least, for the U.S. – trend: As the Trump Administration ratcheted up sanctions pressure on Russia and China, both countries and their central banks have substantially “diversified” their foreign-currency reserves, dumping dollars and buying up gold and each other’s currencies.

Back in September, we wrote about the PBOC and RCB building their reserves of gold bullion to levels not seen in years. The Russian Central Bank became one of the world’s largest buyers of bullion last year (at least among the world’s central banks). At the time, we also introduced this chart. 

We’ve been writing about the impending demise of the greenback for years now, and of course we’re not alone. Some well-regarded economists have theorized that the fall of the greenback could be a good thing for humanity – it could open the door to a multi-currency basket, or better yet, a global current (bitcoin perhaps?) – by allowing us to transition to a global monetary system with with less endemic instability.”

Chuck again…  Well stranger things have happened through the years with reserve currencies, folks… And just about the time that you think that this can’t happen to our dollar… Well, be careful here, and keep your diversifications… 

Market  prices 8/10/20: American Style: A$ .7145, kiwi .6585, C$ .7471, euro 1.1750, sterling 1.3036, Swiss $1.0895, European Style: rand 17.7638, krone 9.0490, SEK 8.7454, forint 293.78,   zloty 3.7454,   koruna 22.3018, RUB 73.64, yen 106.15, sing 1.3743, HKD 7.7500, INR 74.79, China 6.9667, peso 22.43, BRL 5.4363,  Dollar Index 93.66,  Oil $41.78,   10-year .55%, Silver $28.28, Platinum $970.00, Palladium $2,201.00, and Gold… $2,030.01

That’s it for today…. nice to be back home, but….  Ok, last week, my darling granddaughter, Delaney Grace, turned 13!!!!   How did that happen? I remember sitting at the booth in Vancouver, and readers coming up and asking me to see pictures of the “baby girl”…  So, happy belated Birthday, little d… I love you to pieces!   13! aye, aye, aye….  man am I getting older by the minute! And I don’t like it! So, stop all these birthdays! Ok, only three Pfennigs this week, as the folks from my oncologist’s office called me to change the time of my monthly appt on Thursday to bright and early in the morning…  They said they knew I like those times, so they changed me… You know doing me a favor….  Oh well… At least I’m back… I know you missed me! HAHAHAHAHAHA!  The great voice of Dionne Warwick takes us to the finish line today with her song: Walk On By…  I hope you have a Marvelous Monday, and will be Good To Yourself! 

Chuck Butler

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

 

 

 

 

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 26^th… 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 26^th, 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

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? 

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

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 15^th, I do this, but since it’s July 15^th 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

 

 

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.