Rocktober 18, 2021
* Gold’s recent gains were nearly wiped out on Friday
* The Fed/ Cabal/ Cartel tells us we’ve got inflation all wrong!
Good Day… And a Marvelous Monday to you… Who turned off the heat? I woke up yesterday to a temperature of 39 degrees! Chilly, for sure, and I’m no fan of cold weather, so this quick change to chilly weather had me piling on clothes to combat it! I even had to break out the long pants! I had lived in shorts for 9 months, so I had to search for long pants that would fit my new slimmer body… Now that’s a good problem to have, I know… But… what a Pain! Every thing I pulled out seemed to look like Clown Pants on me! I guess I’ll have to buck up and buy some new stuff! UGH! My beloved Cardinals fired their manager last week… “Philosophical Differences” the General Mgr. claimed was the reason… And then wouldn’t tell us what those differences were… I say Horse feathers! It’s all a power play… And that’s all I have to say about that! Uriah Heep greets me this morning with their song: Stealin’…
Well… Well.. Well.. What did have we here? Could Gold finally be playing catch up with inflation? When the stupid CPI numbers printed on Wednesday last week it reflected a stronger number than the previous month’s negative print. The consumer price index for all items rose 0.4% for the month, compared with the 0.3% Dow Jones estimate. On a year-over-year basis, prices increased 5.4% versus the estimate for 5.3% and the highest since January 1991. And Gold reacted favorably gaining $32.80 and then followed that gain by gaining another $ 3.30 on Thursday to close at $1,797.10…
Silver also had a grand day on Wednesday last week gaining 52-cents, and finally climbing back over 23-cents, and Silver, too, had another gain on Thursday of 45-cents to close at $23.60…
And then right when you thought the metals were getting ready to take off on a trip to the moon, the rug got pulled out from under them on Friday… The media all talked about how it was the stronger than expected Retail Sales figure that caused Gold to lose $28.70 and Silver to lose 20-cents on Friday, but again I say horse feathers! Think about that reasoning folks… If and I say that strongly, “if” Retail Sales were really .4% in September, then wouldn’t that increase inflation? And if inflation is going to be stronger, then the price of Gold should be stronger… Instead, once Gold reached $1,801.00, it got sold… resistance? Nah… price manipulators? Probably…
And taking a cue from the rising inflation that we haven’t seen in 30 years… The price of Copper soared by 25-cents last Thursday up to $4.52… And then added another 27-cents on Friday to close the week at $4.71… I’m of the opinion that all the metals, and commodities would be much higher right now without price manipulation… But they’re moving in the right direction now, let’s envision them going much higher…
And “IF” Retail Sales were so strong, then why didn’t the dollar rally? The dollar has seen some real selling since I left you on Wednesday morning. At that time the BBDXY was trading at 1,165.14… But when all the dust settled on Friday, and traders headed to the Hamptons, the DDDXY (Dollar Index) was trading 1,159.37… A Big Drop from the Wednesday morning figure, eh? The euro traded up to 1.1600, the Aussie dollar (A$) rose above 74-cents, pound sterling rose above 1.37, and on and on… The Petrol Currencies got an extra boost as the price of Oil rebounded to trade over $82.00.. The Russian ruble is trading with a 70 handle, and so on… The dollar was really getting sold, folks…
Speaking of the Russian ruble… Surging oil and gas revenues have pushed Russia’s wealth fund to record levels, but President Vladimir Putin wants to save the extra cash for a rainy day. After approving $35 billion in infrastructure projects from the fund this year, Putin has told the government to limit further spending. Officials close to the process say there aren’t many more well-prepared ventures left in the pipeline anyway.
Putin called the low incomes of millions of Russians “the main enemy” earlier this week. Still, he has stuck to his longstanding focus on limiting debt and rebuilding reserves quickly after boosting spending last year amid the Covid-19 pandemic. He proposed only modest increases in welfare spending, even as the government is likely to receive about $40 billion in extra oil-and-gas revenue this year.
You can find the whole article here: https://www.bloombergquint.com/global-economics/putin-is-back-to-building-financial-fortress-as-reserves-grow
Chuck again… Hmmm… spending on projects with money that you have saved… What a Novel Idea, eh? This is why I like the Russian ruble, they have a sane Central Bank head, they have reserves by the truck load, which includes tons of Gold, and they have interest rates that are higher than most in the world… And imagine if you will, our president telling Congress to limit spending…
In the overnight markets last night, the dollar got bought once again… So the selling in the dollar had a tourniquet wrapped tightly around it , and the bleeding has stopped… For now that is… The BBDXY which closed on Friday at 1,159, is trading this morning at 1,161.. So, just from that you can see that the bleeding in the dollar has stopped.. Gold is down $4.60 in the early trading, and Silver is down 11-cents. Copper is up another 10-cents this morning… That metal has really gotten with the program of increasing with inflation..
But, according to the Fed/ Cabal/ Cartel, Wall Street and everyone else is getting this inflation all wrong… Wait, What? Yes, the Mr. Know-it-alls, from the Eccles Bldg, are saying that we’ve all got the rising inflation wrong, and that we need to chill…
Could they be any more wrong about this? NO! The couldn’t… They are so wrong about inflation that they’re almost right… There I go with that description… To me, I see the wrong and right meter as a circle, and when something is so wrong, the needle is almost to the right ….
Ever since the Reserve Bank of New Zealand (RBNZ) hiked rates about two weeks ago, the two antipodean currencies (A$’s and kiwi) have been on the rally tracks… The A$ gets to rally because its kissin’ cousin across the Tasman (NZ) hiked rates… Imagine if the Aussies had also hike rates? I find this association to be a little too much, and wonder how much the A$ can squeeze out of this radish… But don’t argue with City Hall, or don’t fight the Fed, or the markets are never wrong… Choose your phrase, because the all play here…
I would think the markets would look at Australia, and what’s going on there, and mark down the currency, but, that’s not happening, so just go with the flow…
I say the same thing about pound sterling… Although I will say that the pound is getting some play here because the Bank of England has hinted that they will be raising rates soon… And that’s old school, folks… Old school trading… buying a currency ahead of a Central Bank rate hike…
Ok… on to other things… traveling through Twitter on Sunday, found me reading a report that highlighted a McDonalds franchise that was offering $21 per hour wages… Wage inflation, that’s what that is folks… and it’s the kind of inflation that the Fed/ Cabal/ Cartel has been looking for… Wages rising but being eaten up by inflation… Ooh… I can see this all unfolding now folks… And it’s an ugly thing, that will eat away your earnings, your savings, your nest eggs… Better get ready… Oh… and one more thing… Got Gold?
The U.S. Data Cupboard last week had the aforementioned Retail Sales, which actually, didn’t meet expectations, but compared to August’s negative number, looked as though it had soared! But there was another piece of data that caught my attention… The U of Michigan’s Consumer Confidence, which any of the consumer confidence reports had historically been nothing more than a pulse of the stock market… But this time… The Confidence poll took a hit, and early October data from U of M sentiment survey was expected to show the rebound continued, but it did NOT. Preliminary October sentiment slipped from 72.8 to 71.4 (well below the 73.1 expected). That is the second-lowest level since 2011,
And… The stock market rallied by nearly 400 points! So, what gives with the historical pulse of the stock market? I’m telling you this now so you hear me now and listen to me later…. Stocks are not being bought by individual investors to the tune of moving a market nearly 400 points… These are huge institutional and hedge fund buyers… And the U of Michigan is a poll of individuals… I don’t know if that makes sense or not, but eventually it will… Of course, to argue with me on that, a guy at Goldman, aka Lola, is saying that mom and pop buying of stocks is strong… So, who you gonna call? Ghostbusters? No, wait… Who are you going to pin your colors to the mast of.. Me or Lola?
The U.S. Data Cupboard this week is another in the line of “not much to look at”… We’ll start the week today with two pieces of real economic data and they are: Industrial Production and Capacity Utilization… And then the rest of the week is dominated with housing data… It’ll be interesting to see if the dollar continues to decline this week, or if it rebounds… I say that because usually when we have a week of slow data, the dollar does well, because traders don’t have negative data to trade off of…
To recap… It was a rollercoaster week for Gold & Silver last week… All the good performances of the week were nearly wiped out by Friday’s sell off, and those that would have you believe so you can follow them down the road to ruins, would have you believe that the strong Retail Sales figure for September brought about the selling in Gold & Silver… Chuck says, “horse feathers!” The dollar had a bad week last week and the BBDXY went from 1,165 on Wednesday to end the week at 1,159… We haven’t seen a 3 day downward movement in the dollar like that in a month of Sundays… But the overnight markets did some dollar buying, to stop the bleeding…
Before we head to the Big Finish today… I had a read send me a note telling me that I shouldn’t be talking about vaccines… Hmmm… Well, maybe I shouldn’t, and maybe I should… But do you know who gets to decide what I write about? ME! And if I think it has an inkling of a chance of having something to do with the markets… Well… you know me… I do admit though I would have to look under a rock to find anything to with the markets when it comes to vaccines… I’m just saying…
For What It’s Worth… Ok longtime readers know of my affection for Grant Williams and his letter: Things That Make You Go Hmmm…. Well I was reading it yesterday, and he had highlighted an article in the Economist… It’s about rising wage inflation, which I touched on earlier this morning, and while I can’t give you a link, because you have to be a paid subscriber, I can share with you a bit… or you could subscribe to Grant’s letter!
Or, here’s your snippet: “The rich world is used to wages and prices growing slowly. In the decade after the global financial crisis, inflation rarely exceeded central banks’ targets, and wages seemed unable to grow much faster. The spending power of average hourly pay in Britain, Italy and Japan was about the same at the start of the pandemic as it had been in the mid-2000s. The fact that American wage growth averaged 2.9% from 2015 to 2019 while average inflation stayed below 2% seemed a rare triumph.
The recovery from the pandemic has brought about a startling change: prices and wages are both surging. American hourly pay rose by 4.6% in the year to September while consumer-price inflation of 5.4% is more than wiping out those gains.
In Germany inflation has reached 4.1% and the main public-sector union is asking for a pay increase of 5%. Wages and prices have even picked up modestly in Japan. The causes of higher prices are clear: rampant demand for goods has met bottlenecks in supply chains, and energy prices have soared. Wage growth is more mysterious. In most places employment is lower than it was before the pandemic. Yet workers seem unwilling or unable to take the abundant jobs that are on offer. The labor shortage may reflect how hard it is to move between professions and places as economies go through an unusual adjustment. Fear of the virus and the lingering effects of state support for household incomes could be keeping workers idle. The pandemic may even have led some people to put family and leisure above their careers.”
Chuck again… I really do recommend reading Grant Williams’ letter: Things That Make You Go Hmmm… and you can find him here: www.grant-williams.com And you can sign up and send your currency for payment, it’s well worth it!
Wage inflation is coming, and is upon us folks… And it’s only going to make matter worse…
Market Prices 10/18/2021: American Style: A$ .7386, kiwi .7053, C$ .8066, euro 1.1593, sterling 1.3728, Swiss $1.0814, European Style: rand 14.7500, krone 8.4241, SEK 8.6607, forint 311.96, zloty 3.9492, koruna 21.9525, RUB 70.95, yen 114.40, sing 1.3502, HKD 7.7787, INR 75.28, China 6.4347, peso 20.46, BRL 5.4585, BBDXY 1,161.87, Dollar Index 94.05, Oil $83.55, 10-year 1.60%, Silver $23.30, Platinum $1,047.00, Palladium $2,063.00, Copper $4.78, and Gold… $1,763.80
That’s it for today… Our Blues got the new season off on a good note (pun intended) on Saturday night with a road win in Denver… It’s fun watching hockey at times… And other times it can be brutal… Good thing the game was on a Saturday night, as it had a late start! Little Evie and brother Braden were here on Friday morning for a bit… She sat on my lap and talked to me for a while.. I couldn’t understand anything she was saying to me as it all gobbledygook! It was so cute any way! At least she’s trying to tell me things… Probably like, “why are you making me sit on your lap?” HA! I heard from the Great Mogambo Guru last week… I’m hoping he’s gearing up for another of his letters! I did hear from a lot of your Dear Readers that thanked me for bringing the Mogambo Guru back into their lives! Well, you know those 10 lbs I was complaining about last week that I had gained? Well, as of yesterday, they were gone again… I don’t like having to lose weight that I had already lost once… But I guess I should think about that more before I stuff my face with pizza and beer! HA! The song to end the day today is a true 70’s song… It’s Hamilton, Joe Frank & Reynolds with their song: Fallin’ In Love… Baby, Baby Fallin’ In Love, I’m Fallin’ In love again… I hope you have a Marvelous Monday, and will please Be Good To Yourself!
Chuck Butler