Chuck Butler’s: A Pfennig For Your Thoughts
August 29,2017
* Currencies have a strong performance day
* Gold pushes past $1,300!
* Chuck remembers the currency roundup today!
Good Day… And a Tom Terrific Tuesday to you! What a day, what a day, yesterday for the currencies and metals! I know this could all end abruptly with interventions, so I’m going to savor a day like yesterday for a long time! No baseball for me last night, had me in front of the computer, reading article after article, so you would think I would be loaded for bear this morning… I guess we’ll have to see? Frank Sinatra greets me this morning with his song: The Way You Look Tonight… That was the song that my darling daughter, Dawn, and I danced to at her wedding reception. So, whenever I hear this song on my iPod, I get nostalgic, and remember just how beautiful she looked that day…
Front and Center this morning… Boy did I have a brain drain or what yesterday? I had written all the prices down for the currency roundup, and then completely forgot to put them in the Pfennig! UGH! This senior moment has been brought to you by the makers of my chemo drug! And for once I wasn’t being sheepish about the reporting the prices, they were all good! Oh well, I’ll make certain they are included today. Sorry about that! But going forward, remember that I’m not the one to ask to remember to bring you your hear pill! HA!
Well, I don’t know where to start… Either with the euro’s rise, or Gold’s rise… Hmmm… OK, I’ll flip my Mogambo Guru, 1 0z. Silver coin that I keep in my pocket… heads it’s the euro, tails it’s Gold… OK, it’s heads, so Gold, which end of the field would you like to defend? HA!
The euro has climbed back to trade well above the 1.20 handle overnight, after moving steadily through the 1.19 handle in yesterday’s trading. In the middle of June, I wrote about how the sentiment was changing toward the dollar, and it was being questioned as to whether or not the dollar deserved the love of traders any longer… The euro was 109… Last night I read an article from a currency trader, who basically said the same thing I did back in June! Here’s what the trader actually had to say… ” If you are a global asset allocator, the status of the U.S. dollar is really being questioned. Is it necessarily the currency that justifies the same status as it has in the past years? I think strategically you can make the case that the dollar could see its status revisited downwards which would benefit the euro, and not only the euro, but also the Chinese renminbi.”
OK, Chuck again, glad to see this guy jumping on my euro train that left the station back in June! OK, I mentioned the “I” word above, and here’s where I have to let a little air out of the currencies’ balloons… When is European Central Bank (ECB) President, Mario Draghi, going to say, “Whoa there partner, we can’t have the euro soaring like this, as it will wipe out the rising inflation we have right now.” And with that, he’ll attempt to jawbone the euro back down, and when that doesn’t work, look for some coordinated effort among the G-7 nations to slow down the dollar’s decline.
That’s just how I see this playing out… the good news about this scenario is that all the potential buyers of euros, that procrastinated and wanted to see more proof of a weak dollar trend, will be able to buy at cheaper levels for the next leg up because, as I just mentioned… This is a weak dollar trend that began in January 2017… and there won’t be any stopping it in its tracks by jawboning or actual intervention for these things can only halt the forward movement for a short-lived period of time.
The rest of the currencies are attached to the euro train, so they all look good this morning, but I wanted to make special mention of the Norwegian krone and Swedish krona… I told you last week that these two have been quite active in the recent months, and now that more traders, investors, hedge fund managers, etc. have jumped on board the euro train, currencies that were dragged down by the euro, are being rewarded as the euro rises again. The Norwegian krone is especially standing out, in that the rise in the price of Oil has petered out, and has actually lost ground the last few trading days.
Well, it’s time to switch to the other side of the coin, which is me talking about Gold.. Gold too, had a strong, steady climb yesterday, gaining $18 on the day and has gained a few more bucks in the early morning trading today to sit at $1,325 as I write… I had been telling you, dear readers, over and over again that this dance is gonna be a drag, no wait! Try this instead, I’ve been telling you over and over again that I believed that Gold was getting ready to go on a strong run… And in my humble, country boy opinion, this is just the beginning… For if the dollar’s status is being questioned like I talked about above, then Gold is the natural replacement for the dollar… Got it? Good!
Back in the 2003, I used to write in this space about Gold and how everyone needed to buy some Gold… I know, I know, I still say that all the time, but back in 2003, this was new to people’s ears… About 6 years later, I was at my local watering hole with my buddies, and someone said, that they didn’t have enough money to retire, and my good friend, Duane, said, “Well, if we had all just listened to Chuck 6 years ago, and bought Gold, we’d all have enough money to retire!” I smiled like the Cheshire Cat… For I had bought Gold, over and over again as it rose in price…
OK, that’s enough of that Chuck! Even a blind squirrel can find an acorn, so don’t go thinking you’re all that and then some! HA! Of course I don’t think that way! I’m just a country bumpkin that uses logic and fundamentals and trend analysis to get him through this every day… Oh, and I still think that Gold can get to $1,400 by year end… I’m just saying…
When the price of Oil began its recovery from $25 last year, every day I would mention the Russian Ruble as leading the pack of Petrol Currencies… The ruble, in recent weeks, has taken a back seat and allowed the Canadian loonie to get in the driver’s seat on some days, and the Norwegian krone on others, and then the Brazilian real on the remainder of days… But there’s an article out there today regarding Russia paying down all of the USSR’s debts, and that should be a good thing for the ruble!
I don’t know if you’ve noticed or not but the Central Bank of Russia (CBR) has slowed down their rate cuts… I thought that by now the CBR would be cutting rates at nearly every meeting, but they’ve slowed those rate cuts down, and that has helped underpin the ruble, while the price of Oil wallows around in the mud. So, that article about Russia paying off all of the Soviet Union’s debts ($70 Billion) is the featured article in the FWIW section today, make sure you check it out…
The U.S. Data Cupboard has a couple of prints for us to view today… First up in the Case/Shiller Home Price Index, which was last seen printing at 5.6% on the good side… Of course the excuse that was given for the awful print last week of New Home Sales was that home prices had gotten too high, so this will be interesting to see… Then the stupid Consumer Confidence report, which will probably show a rise in the index number… This report always floors me, in how ridiculous it is, for it’s really just a pulse of the stock market… And that really digs at me, because when will these people ever learn that “THE STOCK MARKET IS NOT THE ECONOMY”! Oh well… it is what it is, and I’ll just move along now to the Big Finish!
To recap… It was a Marvelous Monday and overnight trading sessions for the euro and Gold… The dollar’s status is being questioned and that has the euro on the rise, while as I said yesterday, Yellen, opened the doors to a rise in the price of Gold when she failed to talk about interest rates or monetary policy last Friday. Might as well get used to this kind of stuff folks, because the weak dollar trend is here to stay!
For What It’s Worth… Well, I mentioned this above, so no reason to get into a long discussion about it… You can read all about Russia paying off the USSR’s debts here: http://russiafeed.com/russia-pays-last-soviet-debt/
Or, here’s your snippet: “An aspect of the events surrounding the dissolution of the USSR in 1991 which rarely gets discussed is that Russia took on itself the entire burden of paying the whole of the foreign debt owed by the USSR at the time of its collapse.
By contrast the other fourteen Soviet republics – now all of them independent states – were not required to pay any of this debt when the USSR collapsed.
The result was that from the moment it came into existence Russia found itself liable for the entire burden of the USSR’s debt – estimated to be around $70 billion – with just a few billion dollars held in the Russian Central Bank’s gold and foreign currency reserves to cover it.
By contrast the other republics of the USSR when they became independent found themselves entirely debt free.
In the event Russia has successfully discharged the whole of this huge Soviet debt burden it took on itself, steadily paying off all the USSR’s debt ever since Vladimir Putin became Russia’s President in 2000.
The final payment of $152 million to Bosnia has just been made, clearing the debt completely.”
Chuck again… That’s pretty impressive if you ask me! Especially since the country has had economic sanctions placed on it by not only the U.S. but also the European Union for the last 3 years… And like I said above, this should be good for the ruble!
Currencies today 8/29/17… American Style: A$ .7955, kiwi .7276, C$ .8022, euro 1.2043, sterling 1.2965, Swiss $.9444, … European Style: rand 13.0763, krone 7.7127, SEK 7.9215, HUF 253.50, zloty 3.5404, koruna 21.6911, RUB 58.49, yen 108.52, sing 1.3518, HKD 7.8240, INR 63.97, China 6.6273, peso 17.89, BRL 3.1575, Dollar Index 91.78, Oil $46.62, 10yr 2.12%, Silver $17.57, Platinum $996.05, Palladium $943.88, and Gold… $1,325.60
That’s it for today… Looky there! I remembered the currency roundup today! YAHOO! Who says you can’t teach an old dog a new trick? HA! Boy those are some pictures of the devastation of Hurricane Harvey aren’t they? I traded texts with my sister Joanie who lives in Tomball Texas, and she had to move out of her house to another location.. Living here by a river I know all about floods, but not of that magnitude! I hope it’s just material things that get destroyed there, and not any human lives… The Rev. Al Green takes us to the finish line today with his song: Love and Happiness… I love the beginning of this song, it just sets the stage for the rest of the song… And with that thought, it’s time to go… So, please go out and have a Tom Terrific Tuesday, and Be Good To Yourself!