April 12, 2021
* Dollar Index continues to head downward…
* Chuck talks about inflation today…
Good Day… And a Marvelous Monday to you! The weather over the weekend turned chilly once again, as I’ve said before April’s weather is a crapshoot… But Friday was marvelous, weather wise, and I held a driveway happy hour, for neighbors and friends, and… My old World Markets Desk… All the folks, except one, made it out to my little river town, and we sat out, and got to see each other face to face and have some great conversations! Then we finished the night with our good friends, Gus & Dianne at dinner… It was fun seeing all my former colleagues’ faces… and catching up on what’s new? And then that night, a cold front moved through, with rain, and Saturday was a dud… Sunday was a little better, but still pretty chilly… UGH! The band Lighthouse, greets me this morning with their rock classic song: One Fine Morning… “one fine morning girl I’ll wake up, wipe the sleep from my eyes… “
Well… Friday’s price action in the currencies was almost a non-event, But the currencies did rally just a tiny bit on the day, with the euro holding onto the 1.19 handle, and the Dollar Index falling from 92.22 to 92.16… And Gold lost $11.60 on the day to close at $1,742.20, and Silver lost 19-cents to close at $25.30… I just don’t get it about the price action of Gold these days… I’m a person that looks at facts, in fundamentals, and then compares them with what has happened in the past when these fundamentals existed, and then combine them and voila! I get a current picture of where something should be going in price… And Gold has all these ducks in a row for it to be climbing steadily each day, higher and higher…
I will say this though, the way the Treasury yields steadily climbed higher in the last 9 months was something to be concerned with, but now with the Cartel’s Yield Curve Control (YCC) that should be the end of all that fear that Treasury yields would return to normal levels, and then attract so much investment that it would leave Gold out in the Cold… But with the YCC in the Cartel’s back pocket now, Gold should be able to climb steadily… And it’s not…
And one more thought on what is holding Gold & Silver back… It’s the short sellers… Did you know that in Silver the short positions equal 118 days of production? And Gold is about 75 days of production? On what planet on earth, does a regulator allow these kinds of short sales that are more than the asset’s total above ground? Oh, that’s right…. The COMEX, and the CFTC… THAT, my friends is a black mark on our country’s ability to regulate markets fairly and efficiently… No wonder the Chinese said to hell with the COMEX 10 years ago and started the Shanghai Gold Exchange! Where short sales are not allowed! Believe me, I could go on and on about how this shouldn’t be allowed in any universe, but it is in ours… UGH!
In the overnight markets… there was a little more slippage in the dollar, and that has given the currencies some good levels to start the week. The Dollar Index has fallen from 92.16 on Friday to 92.02 this morning. Gold is down a buck in the early trading and Silver is down 8-cents… These sure are crazy times in the markets folks… probably crazier than I’ve ever seen before, and I’ve been associated with the markets since 1973!
Well I had quite a few inquiries in the Pfennig Replies mail box asking me about inflation, and what was going to cause it to climb higher, since it hadn’t really done so yet… It’s coming folks, and in some things like groceries, gas, heat, tuitions, insurance health and otherwise, etc. it’s already putting some folks in the red each month… This form of inflation is called “Structural Inflation, and it’s derived by all the fake money being printed… Here’s Bill Bonner from his rogueeconomics.com letter on structural inflation… “Instead of increasing interest rates and thereby reducing demand for credit, the fake money increases debt loads, dependency, and the need for more cheap credit – more money-printing – to keep up with it.
“Structural inflation,” in other words, is not a natural feature of the business cycle. It is government policy. Intentional. Deliberate. And disastrous.” – Bill Bonner
Disastrous it is… because once it gets started… It will be difficult for the Cartel members to slow it down, and I have to think that they know that in their heart of hearts, and do not plan to attempt to stop inflation from rising because….. Remember when I told you many years, ago that the Gov’t needed inflation to inflate away the debt? Well, the debt has grown by leaps and bounds since I first laid that idea on you many years ago… And I can’t imagine how much inflation we would need to inflate away our debt… Maybe Zimbabwe Inflation, maybe German inflation of the past, but it will certainly be more than the 14% that Fed Gov. Volcker slayed in the early 80’s…
And inflation is a kryptonite for the dollar.. You know, I saw a graph on inflation and the dollar’s loss of buying power over the weekend, and I hope to be able to reproduce it here for you tomorrow… And once you see this loss of buying power in the dollar, you’ll begin to realize that all the things I’ve talked about for years, have been going on, but you were led to believe, by the Gov’t, that there was no inflation… This week we’ll see the stupid CPI (consumer inflation) for March, and it should be heading to 3% even with all their hedonic adjustments, but it won’t… It’ll be lucky to breach 2%! But as I told you last week, John Williams at www.shadowstats.com has inflation rising near 5%…
One thing to keep in mind as we go through 2021, and the year-on-year prints of CPI come to light… Their base is a year ago, and what was going on a year ago? Nothing! Absolutely nothing, say it again! No wait… Of course we were just starting our two -week shut down, no wait, that didn’t happen, but we were just starting a shutdown that would last throughout the summer for most states… And that is going to cause the CPI numbers to be skewed when compared to a year ago… As if the stupid CPI didn’t have enough hedonic adjustments to skew it each month already! UGH!
OK, let’s talk about something else… Oh, this is important! My darn fat fingers got in the way on Thursday last week when I said that I would be on the virtual Money Show panel to speak about Gold & Silver on April 21st (Frank Trotter’s birthday), but that was the wrong date, it’s actually April 22nd. The links I provided were still good, and I’ll provide them again as we grow nearer to the date… I was so embarrassed when the first dear reader sent me a note and said I had the date wrong… I was like: These darn fat fingers, had the wrong date, even though I had the promotion staring me in the face as I typed! UGH!
Tsk, tsk, tsk… I’ve now lost 75 lbs and I still have fat fingers! What the heck is going on here? I think I could get down to my H.S. weight, and still have fat fingers! Oh well, these fat fingers fly across this keyboard when I get them going, so they may be fat, but they are agile! HAHAHAHAHAHA!
A quick look at the U.S. Data Cupboard for this week tells me that except for the stupid CPI that will print tomorrow, we’ll have to wait until our Tub Thumpin’ Thursday, when a plethora of economic data will print, including Retail Sales, Industrial Production, Capacity Utilization, and the usual Tub Thumpin’ Thursday fare of Weekly Initial Jobless Claims… The only one I have a bead on right now is Retail Sales for March. You may recall that Feb’s Retail Sales were down -2.7%… The Butler Household Index (BHI) indicates to me that March’s Retail Sales will be very disappointing… Even with the Easter holiday the first week of April, having some sales in March…
So, today’s Data Cupboard has the Federal Budget, but who cares any more how much currency we spend that we don’t have? Americans have all become Comfortably Numb to the numbers… And that’s a shame…
To recap… The currencies rallied by small amounts on Friday VS the dollar… Some of the moves were so small you couldn’t detect them without a price comparison from Thursday. Gold lost $11.60, and Silver lost 19-cents on Friday… Chuck talks about Inflation, and how it’s going to eat away at your buying power, as the dollar’s value gets whacked by inflation… In the overnight markets… There’s been more slippage in the dollar’s value, as the Dollar Index has fallen to 92.02 this morning, and Gold and Silver are down a smidgen this morning…
For What It’s Worth… Since I spent a lot of time on inflation this morning, I thought you might like to hear what Cartel Chairman Powell, had to say about inflation… (if you’re like me, then you would like to skip anything Powell has to say!) Apparently he and I went to different economics classes because I’m not buying what he has to say, and you shouldn’t either… Today’s FWIS is actually a 4:40 in time, video on YOUTUBE… And the video can be found here: https://www.youtube.com/watch?v=Y2GwFiLhZZw
Or, here’s your snippet” At the Debate on the Global Economy hosted by the IMF this week, Fed Chair Jerome Powell once again re-iterated that he sees a temporary spike in prices, but that inflation would not be a long-term, persistent force.
“There’s a difference between essentially a one-time increase in prices and persistent inflation. When we say inflation that’s what we mean. We mean persistent inflation that goes up by 2% or 4% or whatever it is, year after year, and that level of inflation tends to be dictated by underlying inflation dynamics in the economy, as opposed to things like bottlenecks,” Powell said.
Powell added that bottlenecks in the supply chain will be resolved, therefore, any price increase from a “temporarily tight” supply side would likely not repeat the following year.
Higher levels of inflation are not a phenomenon that advanced economies have seen over the past two decades, he added. “
Chuck again… you may as well, get used to Gov’t and Central Bank leaders selling you snake Oil… For that’s all they have left to sell you… They’ll probably be telling us that they still have things under control when inflation is passing 10%… I’m just saying…
Market price 4/12/2021: American Style: A$ .7630, kiwi .7047, C$ .7976, euro 1.1911, sterling 1.3766, Swiss $1.0826, European Style: rand 14.6036, krone 8.4791, SEK 8.5610, forint 299.21, zloty 3.8002, koruna 21.8797, RUB 77.38, yen 109.32, sing 1.3404, HKD 7.7754, INR 74.96, China 6.5520, peso 20.15, BRL 5.6798, Dollar Index 92.02, Oil $60.03, 10-year 1.66%, Silver $25.27, Platinum $1,188.00, Palladium $2,527.00, Copper $4.06, and Gold… $1,733.20
That’s it for today… A very fun home opener for my beloved Cardinals was about the only bright spot of the weekend, as they lost 2 of 3 games… They began the season with a 5-4 record for the first 9 games, and I expect that unless something changes in their roster, that they will hover around .500 all year… Our Blues had a good weekend wining both Friday and Saturday… Let’s Go Blues! Little Evie came to spend the night with us on Saturday night… She’s my buddy again now, and we played with a ball, I read her 6 books, as she sat still on my lap, which is very unusual for this little girl! We had a mini-dance party, and she blew me a kiss when she left… ☹ I was just glad she warmed up to me again… I had some strange days Saturday and Sunday… My legs felt like they weighed 200 lbs a piece, and hurt when I walked… And going up and down stairs was not fun! I slept most of Saturday, as I couldn’t wake up, and Sunday I just sat in a chair outside most of the day… UGH! I’m hoping I bounce back today… The great Barbara Lewis takes us to the finish line today with her song: Baby, I’m Yours… “And I’ll be yours until the rivers all run dry”… I hope you have a Marvelous Monday, and please Be Good To Yourself!
Chuck Butler