November 9, 2020
* Currencies & metals have a great week, last week
* But in the overnight markets, Gold & Silver have gotten sold… Big Time!
Good Day… And a Marvelous Monday to you! What a strange week it was last week… All the forecasts of the election being chaotic came to fruition, and we ended up with a new president, that is unless the courts decide otherwise… Besides all that, it was a beautiful week here, with temps that were warmer, and lots of sunshine! Not like the previous week with gray, cold, rainy days… But you have to have those to fully appreciate the sunny, warm days! Sad news received on Sunday… Alex Trebek had finally succumbed to pancreatic cancer at age 80… I don’t like to hear about how cancer took another life, and there are more than 600,000 that succumb to this awful disease each year. I lost my mom, dad, oldest sister, and another sister to cancer… So, when I was told over 13 years ago that I had cancer, I was dead serious about beating it… But in reality I didn’t have that much to do with my still being alive today, it had more to do with the advances in cancer medicines, and the Good Lord answering the thousands of prayers said on my behalf… My doggedness had a little to do with it, I guess… The Beatles greet me this morning with their song: Michelle… I used to sing this song to my former latte buddy, Michelle…. I just had a tinge of sorrow in my missing of my former colleagues… I’m just saying…
Well, one prognostication that came to fruition and meant more than the other one, and that is Chuck saying on Monday last week ,that with all that was going on, he expected Gold to have a Good Week… And that it did! Last Monday morning, Gold opened at $1,880.00… And ended the week at $1,950… That’s a $70 gain last week… I would say that was a good week, eh? Silver also had a good week, but I didn’t have to tell you that, did I?
The currencies also had a good week, with the Big Dog euro, leading the little dogs off the porch to chase the dollar bugs down the street… The euro climbed through the 1.17 handle, and didn’t stop until it was trading at 1.1890 on Friday afternoon…. The euro wasn’t the only currency that pushed through some levels they hadn’t seen in a while… The Dollar Index began the week at 94.04, and ended the week at 92.19… The dollar couldn’t find a bid anywhere, and even the beaten down Petrol Currencies got in on the act of rallying VS the dollar last week!
I do believe that the currency traders see more and bigger stimulus coming in January, and they are already taking the dollar bugs to the woodshed for that additional deficit spending and currency printing… Now, having said that, I am fully aware that the PPT is out there lurking in the weeds, waiting for the right opportunity to intervene once again… The wolf (PPT) is always at the door, folks… Well, that is until a multi-year weak dollar trend is carved in stone… Then even the PPT will see that buying dollars is a lost cause… But, we’ve been here before, with the euro knocking on the door of 1.19, and The Aussie dollar (A$) trading with a 72-cents handle, only to see it all be subjected to PPT intervention (buying dollars)…
Maybe, just maybe, cause, you never know… this will be… No! STOP right there! Before you say another word, Chuck, you’re not going to be allowed to jinx or put your kiss of death on a rally… OK… I get it… I won’t say what I was going to say, but I bet longtime readers know where I was going with that start! But when the Dollar Index falls to 90…. Then I ‘ll be allowed to say what I was going to say!
Well… all that goodness in the metals has been wiped out in the early trading today, with Gold down $58.90, and Silver down over $1… This surprised the heck out of me, so I went to investigate… Seems there’s news this morning that Pfizer’s virus vaccine is proving to be effective, so far that is… And that news has taken the starch out of Gold’s shirt, that seemed to be all crisp and boxed up on Friday… But that’s what happens in these markets folks… You throw all reasons you bought something yesterday, because of a news story today… And that may be the way to go about things these days, but I’m staying on the high road, and not selling any Gold or Silver, because I do believe that better days are ahead, and this is just “one of those days!” ….
The Oil traders like the news that we’re closing in on a vaccine, and the price of Oil has jumped higher to a $41 handle… You see… in essence what we have here are the two non-dollar assets of metals and Oil, that has been subjected to the ups and downs of a virus, while the currencies haven’t participated… so far… that is…
OK, we’re well into the month of November, my least favorite month for a number of reasons, that I don’t want to share with you, for I don’t want to get depressed on a Monday morning! So, what are your plans for Thanksgiving? I would think that a lot of people will pare down the guest lists this year, or just have household Thanksgiving… Well, I’m here to tell you it would be over my dead body, if we didn’t have everyone that we usually have for Thanksgiving… Shoot, Rudy, they were just all here for little Evie’s 1st Birthday party! And it’s been a month, and no one got sick! Life is full of risks folks… When you walk out of your house you put yourself at risk, but these are things that we don’t think about, but if you put as much thought into those risks like you do about the pandemic, you would never leave your house…. I’m just saying…
Well… The U.S Data Cupboard last week, showed that the 3rd QTR was doing much better than the 2nd QTR… But we would be in one hell of mess if the 3rd QTR didn’t out due the economic shutdown of the 2nd QTR, right? But I have a bone to pick with the BLS once again… They say that 638,000 worker were added in Rocktober, and that the Unemployment Rate fell to 6.9%…. Really? Ok… first, lets start with the 638,000 jobs reportedly created in Rocktober… 334,000 of those 638,000 were created out of thin air after the surveys were received by the BLS… So, the number wasn’t as great as it was reported to be… And then we have the Unemployment rate at 6.9%…. On Thursday last week we saw that the Initial Jobless claims weren’t as strong as the week prior, and that a total of 21.51 Million folks are still receiving Unemployment Checks… So… a quick calculation on the back of napkin tells me that the Unemployment Rate should be 14.05%…. So, put that in your pipe and smoke it BLS!
Where they get their numbers always baffles me… They report them, and then try to pass them off as better than the average bear numbers, thinking that we won’t see what they’re up to! Hey! I may only have one eye, but I see very clearly, now that the rain is gone, no wait! I see very clearly, and that’s that!
So… the economic data wasn’t strong enough to pull the dollar out of the woodshed, and usually that only happens when… No! Chuck, you were told not to mention the WDT words!
The U.S. Data Cupboard this week is big letdown from last week’s chock-full-o-data Data Cupboard… I’m just going to say this once (as if!) but, if you think the last administration was hooked on deficit spending, wait till you see the results from the next administration…
My fave writer, and podcast person, Grant Williams of Things That Make You Go Hmmm… (TTMYGH) sent me his latest letter last night, and I, as usual, went through it from start to finish, and he pointed something out that not only I wasn’t aware of, but probably most of you too… It had to do with the Banking sector’s 3rd QTR results, which all beat the estimates.. but did you know the secret of their earnings surprise? They reduced their loan loss balances…. What’s so bad about doing that? Well, grasshopper, and Grant so eloquently showed us in his letter… The loan losses for banks after the Leman Brothers collapse and the start of the financial meltdown, didn’t occur until 6 months later… That’s right… after everyone thought the banks were in like Flint, They began to book loan losses, and well… They showed then that they were not patient enough to let the muffins rise… so to speak… And they could very well be on their way to not being patient enough this time too….
OK… I guess, it’s like everything else I talk about… These are things you should be very wary of, folks… I’m just saying..
To Recap… The currencies and metals both had great weeks, now let’s see if they can carry that forward… The overnight markets are telling us yes, so far… But as Chuck is reminded twice in this letter, we’ll have to wait-n-see… The election didn’t bring as much chaos to us as was believed to be the case beforehand, but it did bring us a new President, as long as the courts agree, I guess… Like I said above they have until December when the electoral college will cast their votes, and then of course January for the inauguration… Chuck believes the markets are already seeing more deficit spending and currency printing coming, and that’s whey they have taken the dollar bugs to the woodshed…
For What it’s Worth… I realized this past weekend when I received a number of emails from people that talked about how China and Russia are making the moves, be it right or wrong, to remove the dollar and the U.S. from their well being… The main article can be found on www.asiatimes.com under the writer’s name: Pepe Escobar
Or, here’s your snippet: “ Whatever the geopolitical and geoeconomic consequences of the spectacular US dystopia, the Russia-China strategic partnership, in their own slightly different registers, have already voted on their path forward.
Here {1} is how I framed what is at the heart of the Chinese 2021~2025 five-year plan approved at the plenum in Beijing last week.
Here {2} is a standard Chinese think tank interpretation.
And here {3} is some especially pertinent context examining how rampant Sinophobia is impotent when faced with an extremely efficient made in China model of governance. This study shows how China’s complex history, culture, and civilizational axioms simply cannot fit into the Western, Christian hegemonic worldview.
The not so hidden “secret” of China’s 2021~2025 five-year plan – which the Global Times described {4} as “economic self-reliance” – is to base the civilization-state’s increasing geopolitical clout on technological breakthroughs.
Crucially, China is on a “self-driven” path – depending on little to no foreign input. Even a clear – “pragmatic” {5} – horizon has been set: 2035, halfway between now and 2049. By this time China should be on a par or even surpassing the US in geopolitical, geoeconomic, and techno power.
That is the rationale behind the Chinese leadership actively studying the convergence of quantum physics and information sciences – which is regarded as the backbone of the Made in China push towards the Fourth Industrial Revolution.
The five-year plan makes it quite clear that the two key vectors are AI and robotics – where Chinese research is already quite advanced. Innovations in these fields will yield a matrix of applications in every area from transportation to medicine, not to mention weaponry.
Big Capital – from East and West – is very much in tune with where all of this is going, a process that also implicates the core hubs of the New Silk Roads. In tune with the 21st century “land of opportunity” script, Big Capital will increasingly move towards East Asia, China, and these New Silk hubs.
This new geoeconomic matrix will mostly rely on spin-offs of the Made in China 2025 strategy. A clear choice will be presented for most of the planet: “win-win” or “zero-sum”.
Chuck again… There’s a lot more to this article than I’ve snipped out here… let me state right here, right now, that I do not believe in communism… The reason I’ve talked about this stuff is that it will, in time, put heavy burdens on the dollar… And that’s it!
Market prices 11/9/20: American Style: A$ .7317, kiwi .6835, C$ .7716, euro 1.1872, sterling 1.3175, Swiss $1.1025, European Style: rand 15.2900, krone 9.0246, SEK 8.5895, forint 300.65, zloty 3.7570, koruna 22.3109, RUB 77.37, yen 104.94, sing 1.3426, HKD 7.7528, INR 73.63, China 6.6104, peso 20.15, BRL 5.3635, Dollar Index 92.37, Oil $41.14, 10-year .90%, Silver $24.556, Platinum $878.00, Palladium $2,479.00, and Gold… $1,894.90
That’s it’s for today… Well, it appears from the weather people that today will be the last in our current run of nice days… So, I’ll get back outside and continue reading my book: The Madness of Crowds, by Douglas Murray… So, far it’s a very interesting book, and quite different than my usual reading material! I finished my Jack Reacher book in 3 days! I have another new book lined up to read next, it’s title is: The Taming of the Mega Banks… I’ll get all pumped up while reading it I’m afraid, only to be disappointed going further out in time… My Good friend, Dennis Miller, of www.milleronthemoney.com ran an interview he did with me on the not so funny business of metals manipulation… If you don’t already get Dennis’s excellent letter once a week, what are you waiting for! There are only a handful of guys left in the world, folks, that speak the truth… And two of those guys are in one letter! Oh! Last week I made an error, when I said I was already listening to the smooth jazz Christmas music station on SXM… I meant to say on Pandora! Not trying to make any excuses but I listen to SXM almost all the time, so you can see where my error came from! The late Great Marvin Gaye takes us to the finish line today with his song: Let’s Get it On…. I hope you have a Marvelous Monday, and I ask you to please Be Good To Yourself!
Chuck Butler