September 4, 2019
* Currencies get up off the mat!
* Eurozone Retail Sales in July go negative!
Good day… And a Wonderful Wednesday to you! Another near no-hitter was pitched by the Cardinals Jack Flaherty last night… he was sailing along, and one mistake pitch… It’s about the 3rd time in the past month that he’s come close to a no-hitter! He’ll get one yet… he’s only 22 years old! Cardinals win, but so do the Cubs, so our lead on the 2nd place Cubs remains at 3 games, with one less game on the schedule… Can’t everyone just get along with each other these days? Another shooting here in St. Louis… I have a novel idea… Stop reporting them in the paper, TV, radio, internet, and let’s see if that slows the shooters down… I’m just thinking out loud here… Shooting Star greets me this morning with their song: Last Chance… “to be good to yourself”… my kind of lyrics!
Well, the currencies had a small, minor-like bounce upward yesterday VS the dollar, and Gold finished the day up officially by $2, but from my number yesterday it was up $15 at $1,545… So, not a good day all round for the dollar bugs. Don’t you feel sorry for them? NOT! They’ve had the upper hand on the currencies (not Gold & Silver) for most of the summer, and all the kings men and all the kings horses will put the dollar back together again, because… Well, it’s still in a strong dollar trend… Remember, a trend my be your friend, but it’s not a ONE-WAY-STREET!
And if you thought Gold had a good day yesterday, on a percentage return basis, Silver out gained Gold and trades today with a $19 handle… I’ve been telling people for a couple of years now that there would come a time when Silver was in high demand, and the supply would be short… Well, it appears that we’re approaching that time… Yesterday, the GATA folks sent me a blurb that said, Swiss gold fund manager Egon von Greyerz says Silver to Gold ratio will narrow, and become more normal, and that there won’t be any metal available… WOW! OK, so it’s just one guy, but Shoot Rudy, I’ve been saying that for two years now! And it’s finally here! I don’t know if you’ve noticed or not, but Silver has been quite stealth in its upward move lately… I really do believe that Silver’s next stop is $20… I’m just saying…
I don’t see the dollar losing too much ground, because, yesterday, Fed Head, Eric Rosengren, talked about there being no need to cut rates… Now, Rosengren is not the last and final word on a rate movement folks, but… if he’s the only one speaking, like yesterday, he’s the only one being heard!
Well, over in the U.K. PM Johnson has made a mess of things… threatening to suspend parliament, and then losing a confidence vote… What did he think they would do, applaud him for wanting them to go home? It’s not they’re 6th graders folks… And now a snap election is probably going to be needed to clean up everything… That should put tremendous weight on the currency pound sterling… Because, I know you all know, why I’m saying that… Because…. Everyone sing along, or follow the bouncing ball… Traders don’t like unknowns! How many times through the years, have I told you that one? Plenty for sure! That’s why I thought for sure you would already know what I was going to say!
Well looky there! This proves that for once and for all, that even a blind squirrel can find an acorn… Yesterday, I told you that I believed that the ISM Manufacturing Index would fall below 50 when reported later yesterday… And looky there! That’s exactly what happened as the ISM fell from 50.5 to 49.1 a pretty big drop as far as I’m concerned… A little piece of history here folks, are you ready? Back in the early days of my old place of business, I wrote something that caused a real stir amoung the management… I pointed out that the PMI (that’s what it used to be called) had printed to consecutive months at 45, and that I was taught by Hy Minsky that when that happens the economy is in a recession. No matter what the officials that are in charge of calling recessions say, we’re in a recession…
You see, there had been no mention of a recession in the media, economists were convinced that the U.S. economy would skate through recession gauntlet, but there was little old me, claiming that we were in a recession! And then months later, when the NBRD, the folks responsible for calling recessions, actually said that the recession had started months earlier, thus proving me correct!
Come to think of it, I really stirred the drink a bit at times at my former place of business… They were a mortgage company that had a bank, and in 2003, when I wrote a write paper about The Year of The Euro, I had a section in the paper that talked about how there was a housing bubble brewing in the U.S. and it would end up very ugly… The mortgage guys had a hissy fit, with me saying that… But a couple years later that too had to apologize for the things they said to me…
And then there was the time… no wait! Chuck, we don’t have all day to spend talking about your calls that got you into trouble, that then worked out! OK, but that was fun while it lasted, right?
OK back to regular programming… The euro tried to get up off the mat yesterday, but was held back this morning by a rotten Retail Sales print for July from the Eurozone… Eurozone July Retail Sales were negative -0.6%, and the Year on year number fell to 2.2% VS 2.8% last year… I’d say that a recession is in place in the Eurozone, folks… One that even the strong economy of Germany will pull the rest of the Union out of the red…
Well, the protests that we talked about last month in Hong Kong continue to be a real problem for the country… Could this be the center point of a confrontation between the U.S. and China? I doubt it, but stranger things have caused wars… Remember what started World War I? it was the assassination of the Archduke Franz Ferdinand of Austria and his pregnant wife Sophie. So… strange things can happen folks…
Protests are also happing in S. Africa… That place is a real mess folks, and has been for years… I used to say that I wouldn’t touch the S. African rand with YOUR ten foot pole, and I think it’s even more appropriate now!
Do you recall me talking about and old friend, Rob Vrhijof, and him saying that he thought the Swiss franc would do well in the coming months, and I questioned that based on the fact that Switzerland has negative deposit rates, but said if anyone knew, he did… Well, I noticed that when the euro was dropping like a rock last week, the franc was bumping higher… Strange I thought at first, and then it hit me! A real V8 face slap! Of course… The euro was once one of those so-called safe haven currencies, along with francs, and yen, and Gold… But with the shenanigans of the European Central Bank (ECB) the euro’s status as a safe haven currency was in trouble, which made the franc even more appealing… Good call Rob!
The U.S. Data Cupboard yesterday, had the aforementioned ISM Index and Construction Spending, which in July was negative, and in August only rose 0.1%, so this sector is not doing too well, right now folks… There’s not much on the docket today, except the Beige Book fed writings…
To recap… The currencies got up off the mat yesterday, and rallied along with Gold for once in a blue moon… The euro’s move was held back by a negative print for July in Retail Sales. Chuck believes the Eurozone is in a recession already… Chuck points out the steal-like move in Silver in the last week, with the next stop for Silver being $20. And then we go back in time to talk about things that Chuck called out, and got in trouble for, only to be proved correct later…
For What It’s Worth…. Well, this has been a long time coming… U.S. Investors finally getting off their duffs and buying Gold… Well, they’re buying the Gold Index, which isn’t really Gold, but it does follow Gold’s price, and in essence, the fund has to buy the real Gold to match the index purchases by customers so in the end, it works out for Gold… This article from Bloomberg tells us that the Gold Index fund is quite popular these days and it can be found here: https://www.bloomberg.com/news/articles/2019-09-02/gold-etfs-surge-more-than-100-tons-in-august-as-havens-in-vogue
Or, here’s your snippet: “Investors are going for gold in a big way. Inflows into bullion-backed exchange-traded funds topped 100 tons in August to hit the highest since February 2013 as the trade war worsened, risk assets took a knock, and central banks signaled looser monetary policy.
Holdings rose 101.9 tons, bringing total known assets to 2,453.4 tons as of Friday, according to data compiled by Bloomberg. It was the third straight monthly increase after the addition of a combined 154.1 tons in June and July.”
Chuck again… Yes, a real short-n-sweet article today, but the important part is that individual investors are finally seeing Gold as that safe haven investment… Too bad their broker told them the only way to own it was in an index… I’m just saying…
Currencies today 9/4/19 American Style: A$.6790, kiwi .6352, C$ .7507, euro 1.1020, sterling 1.2195, Swiss $.9844, European Style: rand 14.8575, krone 9.0582, SEK 9.7565, forint 298.40, zloty 3.9373, koruna 23.4428, RUB 66.83, yen 106.24, sing 1.3858, HKD 7.8405, INR 72.01, China 7.1717, peso 19.82, BRL 4.1767, Dollar Index 98.59, Oil $54.84, 10-year 1.49%, Silver $19.41, Platinum $974.13, Palladium $1,5343.83, and Gold… $1,538.56
That’s it for today… A little later than usual… sorry… One of our friends that attended the BBQ last Saturday, that we hadn’t seen in a few years, stopped by my writing desk and looked over the pictures I have put up… She really liked one where Alex was about 3 or 4, and Andrew was in High School, and they are sitting next to each other eating popsicles, on a hot summer day… And Alex is looking up at Andrew with such admiration… I told her it was my favorite, and that’s why it’s smack dab in front of me! The Beatles take us to the finish line today with their song: Drive My Car… I hope you have a Wonderful Wednesday, and please Be Good To Yourself!
Chuck Butler