Rocktober 22, 2020
* Currencies & metals rally on Wednesday
* But get sold on Thursday… UGH!
Good day… And a Tub Thumpin’ Thursday to you! Yesterday was another gray and gloomy day here, and Tuesday night it rained like dickens! At one point in the middle of the night I thought a Tornado was moving through the area, the wind and rain was so loud. So, the weather people said that we were in a drought, well I would say after the last few days,, we’re not in a drought any longer! The creek behind my property is rollin’ like thunder! We used to have beavers that would dam up the creek, normally right behind my house… And weather like this would devastate their dam, but they would get right back to work building it up again… I had to wrap chicken wire around the trunks of my trees that line the creek, for fear that the beavers would get them… The trees are still all there, so I guess I saved them! But no, I’m not a tree hugger… In case you were thinking that! Chicago greets me this morning with one of their early songs: Movin In… from their 2nd album, which the first time I ever heard it, I was blown away by the wall of sound that the band featured….
Well, yesterday, I said, “The stimulus deadline came and went”… And then later in the day I heard that the powers that be had given the deadline a 48 hour extension… So, here we are at on the day that the 48 hours ends, and once again I would think that the stimulus bill has a snowball’s chance in hell of getting done… So, all the hope that the Robinhood investors, and Wall Streeters have built up is going to be disappointing… That’s all I have to say about that!
OK… well… all this talk of being near the goal line for a new stimulus bill, sure has the dollar bugs on the run… The euro continued to move higher in the 1.18 handle yesterday, and the Aussie dollar (A$) which has been spending time in the wood shed, afraid to come out and show their bruises, finally got on the rally tracks again yesterday, and climbed back above 71-cents… It was a good day all around for the currencies… Now… let’s see what happened in metals, eh?
For the first time in some trading days, Gold & Silver were able to add on to their early gains throughout the day Wednesday… Gold ended up $18 to close at $1,925.30, and Silver ended up 45-cents to close at $25.13… You know, the price manipulators used the threat of no stimulus as their reason to sell Gold a couple of weeks ago… I wonder what will happen this time? Because Gold seems to be moving ahead and leaving all that baggage in its rear view mirror… But the price manipulators/ the wolves, are always at the door…
I told you yesterday that Silver guru, Ted Butler (no relation, blah, blah, blah) was interviewed this week by Tom Bodrovics at Palisade Radio, explains why he thinks that price suppression in Silver is beginning to fail as the longstanding concentrated short position maintained by bullion banks breaks apart and starts to lose money.
And if you want to listen to him explain his thoughts, here is a youtube video that you can watch curtesy of the folks at GATA…
https://www.youtube.com/watch?v=tSy4gq2OpRk&feature=youtu.be
OK… all that good stuff that went on yesterday, is being unwound in the overnight and early trading markets on this Tub Thumpin’ Thursday… UGH! Gold has given back $20 this morning and Silver has given back 46-cents, while the euro falls back within the 1.18 handle… Yesterday, it looked like things were finally going in the right direction, and today…
For what I can see about Gold’s loss this morning is that $3 of the loss is from dollar strength, and $17 is from sellers… So, once again we’re seeing the price manipulators at the COMEX window… UGH! From what I’m seeing, there’s news that the stimulus negotiators will meet again today, and that’s why the dollar has rebounded… Really? Give me a break! I was born… Just not yesterday!
For all the Ivy league schools, and others of note, Stanford, to mention one, why can’t we as a nation produce another Thomas Jefferson? Man this man could think and put his thoughts down in writing so that everyone could read them… I had a guy send me a nasty note a couple of weeks ago, when I cited something that Thomas Jefferson said about Bankers… he apparently is one of “those kids” brought up the thought that you should hate American, it’s founders, it’s capitalism, it’s history, and so on… But to brighten my day… I had a long time reader send me a picture of a postcard she obtained while visiting Monticello when she was young girl, and the picture is of Thomas Jefferson… So, at least someone shared my admiration of the man!
Ok, back to regularly scheduled programming….
I noticed yesterday that the Canadian dollar / loonie had taken a step outside its normal comfort zone of 75-cents, and was trading above 76-cents… I even did a double take on that number when I was typing the Market Prices roundup… So, later in the day, I had to find out what was going on up north… Well, it seems that not only was the uptick in the price of Oil helping, but so was some economic data…. Retail Sales for Sept. came in bang on the Aug. number of .4% gain, which sure beats the negative numbers that were printing a few months ago… And their version of CPI (consumer inflation ) showed at .5% gain YOY… which was up from the Aug YOY number of just .1%… So, to me, this tell me that inflation is going up and interest rates will have to follow eventually… And like all markets, the traders were looking ahead…
I was having a long conversation, on the phone, with good friend, Dennis Miller yesterday, and during the conversation we agreed that the middle class in the U.S. is a dying breed… And in 20 years, there probably won’t be a middle class, as we knew it to be, silent bur strong!
What brought that conversation on? Well, we were talking about how difficult it is for normal people to build any wealth toward their golden years…. With interest rates near zero, and will be for a long time going forward, how can Joe six-pack save? I talked about how stupid the Cartel, I mean the Fed is in their desire to ramp up inflation, because when you ramp up inflation, it can get out of hand, and pretty soon you would have to raise rates to combat the inflation… And I don’t mean by 25 Basis Points! Remember when inflation got out of hand in the 70’s and how high Paul Volcker had to raise rates to get inflation under control? Remember his Saturday Night Special?
The Fed can’t raise rates past 3% in my view… Because with rates any higher, the debt servicing costs would probably outdistance the tax receipts in this country… And then there would no funds left over for all the other deficit spending programs… And one of the first one to get cut, I’m afraid would be Social Security… OOOOhhhh, I can hardly wait for that to happen! NOT! What is debt servicing costs I hear some of you asking?
That’s market parlance for bond interest costs…. The U.S. issues Treasuries to finance their debt, and those Treasuries have an interest rate that’s payable to the holder. For the past 13 years, The Gov’t has gotten off Scot-free of worrying about debt servicing costs, because interest rates have been near zero all that time, save a couple of rate hikes by Janet Yellen, who had a dastardly agenda she was playing…. Those rate hikes were quickly turned around last spring…
I find the news that physical demand for Gold continues even in the face of Russia halting their Gold purchases while the economy works its way through their version of the pandemic. Apparently China has slowed down on their Gold purchases too. But of course that doesn’t mean they stopped mining Gold… You know when I first started following Gold, Australia was the number one country for Gold mining… So… just like reserve currencies of the world, eventually the leader gets knocked down by the new kid on the block… I’m just saying…
But my metals guru, Tim Smith of TIAA Bank World Markets 1-800-926-4922, tells me that physical demand is still strong… So I asked him about the premiums if they had come down, and he replied, “ Retail Demand is still strong, although off the peak demand of this spring, and premiums have come down a bit, but certainly not wat they were pre-COVID”
Well that’s about what I expected to hear, even with the news last week that some Central Banks were selling their Gold… Probably from countries that can’t pay their bills due to their respective economic lockdowns… I wouldn’t worry too much about this news… Because it didn’t mention the Big three of Gold buyers.. Russia, China and India…
The U.S. Data Cupboard has the Weekly Initial Jobless Claims for last week… And looky there! The Weekly Jobless Claims fell last week to 787,000, thus breaking the streak of plus 800,000 each week that has gone on since March… I’m going to have to look into this number because after rising the last three weeks, it suddenly falls? That seems suspicious to me, doesn’t it you?
A longtime friend, David Gonigam, of the 5 Minute Forecast, at: https://5minforecast.com/ had some thoughts about the unemployment picture in out country, so I’ll hand over the reins for the Pfennig to him… Here’s David… “For the record: Seven months into the lockdowns, the numbers show people are just plain giving up looking for work.
The Labor Department released state-by-state job figures yesterday. Of the 30 states where unemployment fell last month… the size of the labor force shrank in more than half of them.
A shrinking labor force means fewer people working or looking for work. That’s one reason the official unemployment rate has fallen from a peak of 14.7% in April to 7.9% in September.
Economists don’t see any obvious reason. School closings keeping moms at home? California has many schools shut down and Florida does not, but labor force participation is flat in both states. Nor does there seem to be any evidence of more people looking for work in states where job searches are a condition for collecting extended unemployment benefits.
Yet another 2020 head-scratcher…”
Chuck again… I’ve gone on too long again today, so I’ll head to the Big Finish…
To recap… The currencies had a good day yesterday, as the thoughts that a new stimulus may still be in the offering and sent the dollar bugs well into the wall boards they came from… Gold & Silver were able to add on to their early gains for once in a blue moon, and ended the day on as the Godfather of Soul, James Brown, says… On the Good Foot! But have given back all those gains yesterday in the early trading today… UGH!
For What It’s Worth… I was just thinking that I should have saved the David Gonigam thoughts for the FWIW, but instead I have an article for you from Forbes, that the GATA folks first sent me, and then I saw it highlighted on Ed Steer’s letter this morning, so I knew it was FWIW worthy! It’s an article about Citicorp shouting out about how investors need to buy Silver… and it can be found here:https://www.forbes.com/sites/timtreadgold/2020/10/20/silver-shines-says-citi-tipping-a-60-price-rise—for-starters/#4b9011107646
Or, here’s your snippet: ” Silver has been a graveyard for investors since the Hunt brothers tried to corner the market for “poor man’s gold” 40 years ago, so when a big-name investment bank earlier this week forecast a 60% rise in the silver price most investors yawned.
Citi, which has a well-connected resources research team, has put its neck on the silver block in an advisory note with a tip that the price of the metal will rise to $40 an ounce over the next 12-months.
Silver is currently trading around $24.80 an ounce on the London bullion market, having already risen by 38% from $18/oz since the start of the year.
Citi’s case for silver is based on growing demand from investors who see silver as a cheap entry point into the world of precious metals dominated by gold, with a bonus of strong industrial demand.
But the bank doesn’t stop at a 605% silver rally. It also argues that there is a technical case for silver doubling $50/oz, and potentially rising four-fold to $100/oz. The bank said its foreign exchange (FX) technical team is very bullish on silver with “$50/oz a very realistic target — and $100/oz possible.”
Chuck again… $100 Silver? WOW! If Silver would ever trade at $100 an oz. I might even get a hug and kiss from my wife! HA!
Market Prices 10/22/20: American Style: A$ .7100, kiwi .6663, C$ .7597, euro 1.1822, sterling 1.3093, Swiss $1.1021, European Style: rand 16.3110, krone 9.2495, SEK 8.7765, forint 308.25, zloty 3.8743, koruna 22.0288, RUB 76.96, yen 104.67, sing 1.3570, HKD 7.7498, INR 73.61, China 6.6525, peso 21.17, BRL 5.6019, Dollar Index 92.89, Oil $40.32, 10-year .81%, Silver $24.67, Platinum $871.00, Palladium $2,394.00, and Gold.. $1,905.50
That’s it for today… Well maybe the Rays heard my cheers for them, as they won Game 2 to even the Series with the Dodgers… Man these games go late into the night! Well, it’s supposed to get warm again today, and then back to chilly tomorrow… So, I’ve got to get outside today while I can! I have a new book to read… I thought I would try something different than my usual detective books, like Harry Bosch, Mike Bennet, Alex Cross, and Cormoran Strike, and I’m reading: The Madness of Crowds… So, far so good… Just thought I needed to expand my reading material! HA! Oasis takes to the finish line today with their song: Wonder Wall… I laugh whenever I hear Oasis on my iPod… Because, remember they were supposed to be better than the Beatles? Where are you now Oasis? I’m just saying… I hope you have a Tub Thumpin’ Thursday, and a Fantastico Friday tomorrow, and will sure to Be Good To Yourself!
Chuck Butler