February 17, 2021
* A U-Turn in the Currencies & metals on Tuesday
* Chuck has a great 4-minute video for you to watch today…
Good day… And a Wonderful Wednesday to you!… What has happened to my beloved Missouri Tigers Basketball team?… 10 days ago, they had moved up in the national standings to #10… And since that time they have lost three straight games, including their loss last night to Georgia… A team that they had beaten pretty handily earlier this season… My St. Louis U. Billikens played last night too, and they had little difficulty winning VS LaSalle.. We had a nice dinner last night with friends here, as two of them are headed back home today… Why? Why would anyone go back to those cold, frigid, frozen tundras, covered with snow? Me? I would rather build sandcastles on the beach, than snowmen in my front yard… I’m just saying… Earth, Wind & Fire greets me this morning with their song: After The Love Is Gone… “Oh, after the love has gone. What used to be right is wrong, Can love that’s lost be found?”
What used to be right is wrong… Man, could those lyrics be any more truer today? Oh well, I don’t want to start the day ticking everyone off with my thoughts on that, so I’ll stick to what I know best…
Baseball… HA! Just kidding I wouldn’t do that to you, right out of the starter’s blocks this morning! So, let’s turn to the currencies, which yesterday morning, were pushing the dollar down, but that didn’t last long in the U.S. trading hours, and soon the euro was trading below the 1.21 handle, after climbing to 1.2166 in the overnight markets Sunday night… What caused this major U-Turn? Well, it wasn’t data that caused it, and it wasn’t any Cartel heads speaking that caused it… So before we come to the conclusion as to what caused this dollar buying, let’s look at what Gold & Silver did yesterday…
Gold lost $24.90, on the day and closed below $1,800 at $1,794.50… Silver lost 34-cents to close at $27.32… And don’t think for one minute that the rise in Treasury yields has caused this sell off of Gold & Silver… Because, as we have seen , with the recent increases in Treasury Yields, that they can be short lived… All it takes is some Cartel buying to drive up the price and reduce the yield… I haven’t looked at Ed Steer’s letter yet this morning, but I will go out on a limb and say that I think this attack on Gold & Silver, carried over to an attack on the currencies, and all of it benefitted the dollar. … So, adding 1+1 you get 2 (I don’t care what math teachers say about that these days!) And the 2 here would indicate to me that it is represented by the price manipulators, and the PPT… A deadly duo for non dollar assets…
The good folks at GATA sent me a quote from Craig Hemke of Sprott Metals, and he had this to say: “The fight against the criminal forces that control the precious metal pricing scheme continues, and it is still far from over. However, if we can continue to apply pressure to the banks through physical metal acquisition, a forced deleverage is coming. When that finally happens, you can be certain that the price discovered through a system that is more based in physical reality will not be $27 per ounce.”
Sounds a lot like me through the years, doesn’t it? I’ve always contended that to break the short sellers is to have loads and loads of physical metals bought and stood for delivery… And that’s why I continue to harp on anyone that reads this letter that they need to buy physical metals…
And just to finish this off.. I have, for you, a link to a 4 minute video that the Reddit folks put together that’s a play on the movie: Downfall… that the folks at GATA sent me… And it’s titled: The Downfall of the Silver Cabal… so check this out, it would be funny if…. Well, here’s the link: Downfall of the silver cabal : Wallstreetsilver (reddit.com)
Oh, and one more thing on Silver before we move along… Dave Kranzler, of Investment Research Dynamics, and a constant contributor to the GATA folks, had this to say yesterday, “The iShares silver ‘trust’ SLV is likely a fraud.”
In The over night markets… There was more dollar buying throughout the night, and this morning the Dollar Index is trading at 90.84, which is 70 points higher than yesterday morning’s 90.14… Gold & Silver didn’t fare any better than the currencies, and Chuck believes that the metals manipulators and the PPT combined forces to bring the non-dollar Assets down… Chuck also includes a good link to a 4 minute video that you should watch for the fun of it…
There’s a report out in the Eurozone that says that China has passed the U.S. as Europe’s main trading partner… Wait! What? Yes, here’s a sample of the report… “Recent data from the European Union’s statistics office, Eurostat (pdf), show that China dethroned the US as Europe’s top trade partner in 2020. EU exports to China grew by 2.2% to €202.5 billion ($245 billion) and imports from China increased 5.6% to €383.5 billion in 2020, while EU exports to the US fell by 8.2% and EU imports from the US dropped 13.2%.”
Yes, that makes sense given that China’s economy grew last year, while the other major trading countries saw their economies contract. But when I read the article, I kept saying to myself: Say it Ain’t So Joe!
The price of Oil has climbed to a $60 handle in the past 24 hours.. Seems the frigid temps have shut down refineries in Texas, as the cold front has dipped into the southern part of the U.S. So is this a lasting rally in Oil, or is it a short timer? I just think that it’s pretty interesting to see Oil trading with a $60 handle, for what’s it been 2 years since we last saw this?
As I mentioned above, Treasury yields continue to climb higher, and the 10-year Treasury’s yield is at 1.29% this morning… This rise has been quick and to the point which has me worried… but like I said above, all it would take is for a boat load of buying from the Cartel to bring yields back down, but after they have risen so much, how much could they really be brought down? I guess we’ll have to wait-n-see, eh?
Ok, here’s something that I want to get off my chest… it risks being political in a sense, but that’s not my goal here… My goal is to point out that food supplies are dwindling, and that will cause huge spikes in the price of food… You, me, and the guy down the street that washes his car with his shirt off, will all feel the pain of higher food prices… Didn’t I tell you last week that my wife has already reported to me that groceries are much more expensive these days?
What’ causing these dwindling food supplies? Well, the burningplatform.com had an article this past weekend that I’m going to give you three paragraphs from… Ready? Yes, I’m ready…
“One of those presidential actions envisions the conservation of 30 percent of the nation’s lands and waters over the next decade. Where will all of that protected land come from? Perhaps from Bill Gates, who now owns the deed to most of the farmland in the nation? Doubtful.
The answer is from small, independent farmers, whose agricultural activities, the Democrats say, are responsible for 10 percent of the manmade greenhouse emissions purportedly frying up the planet.
Indeed, what seems to be happening in the United States is that the local farmers are being squeezed out of business, or paid not to grow food, while Big Agriculture is more concerned with exporting its supplies than keeping domestic food stocks safe and affordable. That seems to be a reckless policy at the best of times; at the peak of a pandemic, however, it is simply a recipe for disaster.”
OMG! What are we doing? Well… I guess the answer is in the desire of the Gov’t, and their Cartel, and Treasury that we as a country generate inflation… All I’m going to say here is that we, as a country, need to be careful what we wish for… Because, you see, I don’t see a gentle rise in inflation… I see it getting away from us so fast that it would make your head spin… And then the only way to get it under control is to raise rates.. And with all the debt that we have to service, higher rates is NOT advised… Candidate Trump back in 2015, said that if Interest rates got to 5% “We were screwed”… Sorry about the language, just wanted to make the quote correct…
Ok, well the U.S. Data Cupboard today finally gets off its rear end and off the couch, where it was relaxing and eating chocolate bon-bons last week, and will give us some real economic prints today… First on the docket is Jan. Retail Sales… Refresher.. Retail Sales in December were negative -0.7%… I don’t believe the BHI (Butler Household Index) indicated that Retail Sales will be strong in January… They may not be negative, but they won’t be strong…
In addition, we’ll also see Industrial Production and Capacity Utilization for January… Don’t look for any miracles here folks… The rot on the economy’s vine is being exposed daily… The economic prints should be like the Paul Simon song: Oh, Cecelia you’re shaking my confidence daily…
To recap… It was an ugly day yesterday, after seeing things change in the overnight markets, the price manipulators and the PPT went to work to support the dollar… Gold lost $24, and the euro lost about 1-cent on the day… Ugly, ugly, ugly… That’s for sure… Chuck talks about inflation again, and also talks about food shortages causing rising prices… The games people play now.. every night and every day now, never saying what they mean, now, never meaning what they say… (Joe South) And to that, Chuck talks about Silver a lot today…
For What It’s Worth… Ok, well, since I talked a bit above about the rise in the Treasury yields, I thought it would best to follow it up with an article about it in the FWIW section today… And so… That’s what we have. A zerohedge.com article about the rise in Treasury yields, and it can be found here: 1.25% 10Y Yields: Now What? | ZeroHedge
Or, here’s your snippet: “10-year yields broke through 1.25% during the overnight session on what can best be described as pressing a crowded trade. We’re certainly onboard with a challenge of 1.25% and 1.273% (March 19th peak) beyond there, if for no other reason than late-Friday’s selloff has created more questions than answers – suggesting the underlying momentum evident during the overnight session must run its course before any retracement is in the offing.
Moreover, the lack of an immediate bearish trigger also implies the recent bout of weakness has taken on a different character than had the march toward higher yields been accompanied by a fundamental data event or an influx of Treasury supply. In fact, the relatively smooth takedown of the February refunding left investors with the impression the supply concession in place prior to the auctions themselves would be sufficient. It’s the reemergence of the bearish trend in the absence of an identifiable catalyst that makes the selloff particularly notable.
Given the fact rates are edging higher on a combination of bearish underpinnings as opposed to a distinct driver, the technical landscape is useful in gauging the extent to which any repricing may extend. Beyond 1.273%, there is little support for 10s until an opening gap from 1.431%-1.471% that was established in late-February. 1.50% also holds obvious significance, however a 25 bp selloff driven by a series of already known bearish factors is difficult to envision, leaving us to anticipate dip-buying will emerge long before the overhead opening gap with an eye on anything >1.30% as sufficient incentive for any demand not sated by last week’s auction of $41 bn 10s at 1.155%.
To be fair, there are plenty of factors supporting a durable repricing toward higher Treasury yields;
- inflation expectations as evidenced by 10-year breakevens at 224 bp overnight,
- elevated energy prices as the front-month WTI nears $61/barrel,
- progress toward Biden’s stimulus deal expected by month’s end now that the impeachment trial has been concluded,
- massive Treasury issuance needs and, of course,
- record high equity prices yet again.
We’d be remiss to argue against the intrinsic bearishness of these factors, rather the challenge is gauging the extent to which any repricing can sustainably press before running up against the bullish concerns.
Chief among the influences expected to keep yields from returning to an environment in which 2-handle 10s are back on the table is the overhang of slack in the labor-market resulting from the initial hit to the front-line service sector.
Chuck Again… See what I mean? There are arguments on both sides of the table regarding whether these higher yields can be added to or subtracted from…
Market Prices 2/17/21… American Style: A$ .7738, kiwi .7181, C$ .7870, euro 1.2060, sterling 1.3858, Swiss $1.1164, European Style: rand 14.7652, krone 8.4782, SEK 8.3318, forint 297.68, zloty 3.7334, koruna 21.4340, RUB 73.46, yen 106.04, sing 1.3293, HKD 7.7523, INR 72.82, China 6.4560, peso 20.31, BRL 5.3686, Dollar Index 90.84, Oil $60.74, 10-year 1.29%, Silver $27.22, Platinum $1,239.00, Palladium $2,400.00, Copper $3.82, and Gold $1,791.80
That’s it for today… Well, yesterday was Fat Tuesday, although, there were no Mardi Gras celebrations on the streets in New Orleans, or St. Louis… It would have been too cold in St. Louis, but the pandemic put the kyboshes on that! My Billikens have won 4 games in a row, and are looking like they did before they had the Covid breakout on the team and had to shut down for three weeks, and miss 10 games! Yesterday was a day of rain here… With all the sun you’ve got to have a little rain sometime… right? It was still warmer than 48 other states! I hit the wall yesterday, and without any sun to sit out in, I began reading my new book, and fell asleep in my recliner… Waking up in time to go to dinner! The sun has returned this morning, so hopefully I can stay awake to enjoy it! HA! Heartsfield takes us to the finish line today with their rock classic song: Shine On… I sure hope you have a Wonderful Wednesday, and continue to Be Good To Yourself!
Chuck Butler