Rocktober 20, 2020
* Currencies and metals have a “meh day”
* It’s not time, yet, for Chuck to gloat…
Good Day… And a Tom Terrific and Manfred the Wonder Dog Day to you! Well, I voted yesterday… I usually vote absentee, since I can’t stand in long lines very long without major pain… And the National Election is one of those times! The thing I missed was the lack of a (I Voted) sticker! HA! My trip to the wound center was OK… once again another doctor said, “keep doing what you’re doing”… It’s a good thing I have insurance, or else I would balk at paying a doctor their fees if that’s all I heard out of them! HA! I have to wear shorts to the wound center, obviously, and when I stepped outside, it was cold and rainy, and I shivered, and said, “ I wanna be where it’s warm”! Well, I’m getting to hear, one of my two fave songs from Chicago this morning… Chicago greets me with their song: Hard Habit To Break…. I have to say that I didn’t always care for the direction that Chicago went after the death of Terry Kath, but this song, just gets to me in a good way…
Well, the hopes I had for a very good day in the currencies and metals yesterday, turned into a Meh, day… Gold did hold on to some of its early gains to close up $3.50 at $1,903.00…. And Silver closed up $17-cents. at $24/35/// But those gains were off their earlier gains… I can’t see Gold holders selling at a profit on the day, as the profit was, while good, not great…. So, it had to be more price manipulators showing up at the COMEX with arms full of short Gold & Silver trades… It’s become a common day occurrence these days, as I think the bullion banks can see the writing on the wall, that no matter what direction we go, Gold is going to rally…
The euro held its gains throughout the day, so the dollar bugs were non existent for one day, that is… The Aussie dollar (A$) didn’t fare as well as the euro, and lost about ½=-cent on the day… Speaking of Australia… I have a long time reader, Bob, who sends me links that I use from time to time in the FWIW section… He lives in Australia, and he sent me a link to a file of simply beautiful flower gardens in Australia… It’s spring there, and the flowers are in bloom! One of the things weighing on the A$ has been the strict lockdown of the economy… It was reported the other day that a woman walking in a park, was arrested for not following distancing rules… Now that’s strict… Now we all know what a lockdown like that can do an economy, and so the A$ is having a difficult time gaining any traction, right now…
In the overnight and early morning trading markets, the euro has popped back over 1.18, which seems to be the line drawn in the sand by the dollar bugs… They’ll allow the euro to reach 1.18, but that’s about it… So, we’ll see how today goes for the single unit… The euro is about the only currency to see gains though, this morning… Gold and Silver are basically flat this morning, so they have that going for them…
Well… have you heard the news, there’s good rockin’ at midnight, no wait! The news I’m talking about is serious stuff, we don’t need silly stuff right now! The news I’m talking about is that Fed Chairman Jerome Powell, gave a speech recently on why the Fed wants to develop a digital currency… here’s what the Fed Chairman thinks about a digital currency… “It’s more important for the United States to get it right than to be first,” adding that “we are committed to carefully and thoughtfully evaluating the potential costs and benefits of a central bank digital currency for the U.S. economy and payments system. We have not made a decision to issue a CBDC.”
I guess this is where I gloat… No wait, it’s not a done deal just yet, but with 80% of the Central Banks around the world “exploring the idea of a digital currency”, I would have to say that IT’S COMING! And that will be the end of the last of our civil liberties, folks… You know, through the years, that we, as a country, were accumulating piles of debt each year, I really though that it was because these guys that elected were just too stupid to figure out what all that debt was going to do to the economy…
But now, I think I see where this was all going in the first place… They knew that if the debt got so large, it would collapse the financial system, and when that happened they could introduce their digital currency, and central planning, and all the other crap that goes with this plan…
It’s really a sad state of affairs, folks… I think I’ll go out today, and spend some cash just for old times sake…. And savor what it feels like to have some cash in your pocket, that you can pull out, and lay it on the counter… There’s so much freedom and feeling of accomplishment involved with the exchange of cash…. And that feeling is going to be gone, eventually, folks… These guys don’t talk about something unless it’s 80% through its testing phase…. And the “new Bretton Woods” meeting that the IMF is calling for? Seems too soon to introduce the new financial system, so what is the IMF up to?
No good…. That’s what! Given what we all know has happened to countries that needed help from the IMF… The countries all wished they hadn’t called the IMF to begin with when it’s all over… I’m just saying..
Got Gold?
The U.S. Data Cupboard today has the Housing Starts and Building Permits, and from the looks of it, they have had a very good September… And why wouldn’t they? Mortgage rates are in the 2’s… That’s crazy! Tomorrow’s Cupboard offering will be the cartel’s, I mean the Fed’s Beige Book… Not that this is a market mover, but does sometimes give us a hint of what the regional Fed Heads are seeing…
To recap… Our “up day” turned into a “meh day” yesterday, Gold & Silver couldn’t hold their early gains, but did finish out the day with small gains, and the euro pushed higher, but the rest of the currencies aren’t following along at this time… It’s time for the little dogs to get off the porch and follow the big dog (euro) down the street to chase the dollar bugs!
For What it’s Worth…. Longtime readers will recall me referring to Koos Jansen a lot in times past whenever I wanted someone else’s opinion on the direction of Gold… Well, Koos changed his name back to his original name of Jan Nieuwenhuijs…. And he no longer writes for Voima Gold, he has hung out his own shingle… Recently he tweeted the following: Gold is the only way out for central banks.
CBs want inflation? They need a higher gold price.
CBs want to repair their balance sheets? They need a higher gold price.
CBs want to reset the system with an immutable, neutral, and evenly distributed reserve asset? That’s gold.
So, when the GATA folks sent me a link to his latest article, I thought, welcome back Koos, I mean Jan, and this is a FWIW article! The article follows up on his thoughts above, and it can be found here: https://thegoldobserver.substack.com/p/gold-is-the-only-way-out-for-central
Or, here’s your snippet: “The tweet was born out of several ideas I had for articles to write. One, on the relationship between the gold price, inflation expectations, and the inflation needed to lower the debt burden. Two, on the accounting structure of central banks’ balance sheets, and the ability of using gains in the price of gold to absorb losses on other assets. Three, on restoring financial stability through a new equitable monetary system that incorporates gold. In aggregate, I think gold will be used to get out of the current financial mess.
Today’s article is a preview of the three aforementioned articles.
Gold, Inflation Expectations, and Inflation
Due to excessive debt levels, central banks are desperate to spur inflation and keep interest rates at or below zero. Deeply negative real interest rates would lower the debt burden. But creating consumer price inflation is not easy in this day and age.
Strictly speaking, there is no economic law that guarantees that a higher gold price will create inflation. Though, historically the gold price has been an expression of inflation expectations. In turn, inflation expectations are what feed into inflation. So, when the gold price goes up, inflation usually rises within a year or two.
In the 1990’s the Federal Reserve even based its monetary policy partially on the price of gold (source). If the gold price went up—and the market signaled it was expecting inflation to rise—the Fed would tighten. If the gold price fell, the Fed would do the opposite. On February 22, 1994, the Chairman of the Fed, Alan Greenspan, explained to Congress:
[Gold] is a store of value measure which has shown a fairly consistent lead on inflation expectations and has been over the years a reasonably good indicator, among others, of what inflation expectations are doing. It does this better than commodity prices or a lot of other things.
A higher gold price can bolster inflation expectations, and this is what central banks want.”
Chuck again… The article is much longer, so if you have the time, and it interests you, be sure to click the link above to go to Jan’s new website!
Market Prices 10/20/20: American Style: A$ .7030, kiwi .6560, C$ .7582, euro 1.1810, sterling 1.2927, Swiss $1.1013, European Style: rand 16.5305, krone 9.2860, SEK 8.7890, forint 309.50, zloty 3.8778, koruna 23.0584, RUB 77.75, yen 105.67, sing 1.3578, HKD 7.7498, INR 73.45, China 6.6840, peso 21.19, BRL 5.6056, Dollar Index 93.26, Oil $40.88, 10-year .77%, Silver $24.61, Platinum $865.00, Palladium $2,382.00, and Gold… $1,903.00
That’s it for today… Man… I was really draggin’ the line this morning until I started talking about digital currencies, that really got my motor running! HA! Another gray, gloomy day with more rain this afternoon for us today… UGH! I really do have to go where it’s warm! We usually head to S. Florida this time of year, and come home around Thanksgiving, but not this year, with my leg wounds having to have their dressing changed every other day, and be seen by a doctor once a week, that put the kyboshes on our annual Fall Trip South… I’m so depressed about that, I can’t express my depression any more than that… So… will there be Trick-or-Treaters in your neck of the woods this year? I would miss the little ones if they decided to not Trick -or-Treat this year… I’m so done with this virus thing, all these changes have gotten to me and I don’t want to deal with them any longer! I had better stop there… The Four Tops takes us to the finish line today with their song: Reach Out, I’ll Be There… Man, did I love me some Four Tops when I was a young man and could dance to their music… I hope you have a Tom Terrific and Manfred the Wonder Dog day, and please Be Good To Yourself!
Chuck Butler