June 24, 2019
* Currencies & Metals continue to move higher Vs the dollar
* Chuck gives us a history lesson about the beginning of the last weak dollar trend…
Good Day… And a Marvelous Monday to you! What a week, it was last week for Gold, eh? That move above $1,400 sent me into the weekend smiling like The Cheshire Cat! A weekend that had the great Albert Pujols return to St. Louis for the first time since he left us for the Anaheim Angels after helping the Cardinals win the 2011 World Series. The St. Louis crowd gave Albert standing ovations for tying his shoes… And when he hit a homer in Saturday’s game the crowed called for a curtain call… The first time ever for a player on the opposing team! Albert gave us 11 of his best years in Baseball, and for that we remain grateful that we got to witness it. AC/DC greets me this morning with their song: Back In Black…
Well, someone finally said no mas, with regards to short sales of Gold dominating the markets… let’s recap… Last week we started the week knowing that the European Central Bank (ECB) had signaled for more stimulus, and deeper negative rates….. That got Gold moving in the right direction…. Then we had on the same day, news that a military drone was shot down by Iran, and that the Fed was signaling that a rate cut could come soon… Gold skyrocketed on the combo of those three items, and is still looking solid…
And the dollar bugs? They’ve not been seen nor heard from since last Wednesday morning… The euro was 1.1370 last night when I looked… and all the of the other currencies have followed in the euro’s lead… In the overnight markets the dollar selling has continued and now the euro is within spittin’ distance of 1.14, as we start the day today…
Oh, and to add insult to injury for the dollar, the price of Oil is spiking because of a fire at a Pennsylvanian Refinery… the price of Oil is trading this morning with a $57 handle. So… all the summer drivers? You may have to buck up a few more Benjamins to cover the cost of your summer driving vacation…
There are lots of different directions I could take the letter this morning, but I think I’ll keep it going with the thought that the dollar is going to need some real PPT or Central Bank intervention to keep it from falling more at this point… I read a guy that says he’s not ready to believe that the dollar is ready for a multi-year weak trend, but…. He’s also not ready to add to his dollar holdings… And I would think that this is the idea that’s in a lot of traders’ minds, etc. because we’ve been here before…
A couple of years ago, I wrote about how Traders sentiments had changed and they were all on board for a euro rally, as it appeared that the ECB was getting ready to remove stimulus… And a couple of months later, the sentiment had all changed again, and the dollar was ready to rebound… Proving that the weak dollar trend was not ready for prime time…
Then last year, we had economic data report after report print and be disappointing, and people thought, “well this is not good” but then out of nowhere, the 4th QTR GDP had a rogue 4% print, and left investors, traders, economists, etc. scratching their collective heads over that print, but it was the end of the dollar selling….
And it was at that time I explained to readers that this is a pattern I had seen before, when the dollar went into a multi-year weak trend. I had seen the dollar bugs refuse to allow the dollar to get weaker, and when things got strange for them, they found a way, to renew the dollar buying, but each time the dollar didn’t regain everything it had lost, and eventually it gave way to the multi year weak trend… So… is this it? Is this the take off?
Good question… And one that I’m not ready to answer, but like the guy I talked about above, I may not be ready to call the multi year weak dollar trend, but I’m not buying any dollars either… (of course I hadn’t been doing that for years!) But… why wouldn’t investors begin to add to their currencies and metals before this does potentially take off? Come on, make a call, you’ll feel better that you did in the long run… I do believe…
I read this weekend that Fed Head Neal Kashkari had called for a 50 Basis Point (1/2%) rate cut at the last meeting… He’s always been a dove, but he was really showing his dovishness, eh? He was the only one I heard that called for that size of a rate cut, and now I have to wonder how many other Fed Heads will join him in his call? I’m still of the opinion that the July FOMC meeting will yield a 25 Basis Points (1/4%) rate cut… If the Fed heads go 50 Basis Points, it will signal that they are panicking and that the recession is not only evident but also imminent!
The thing that the talk of rate cuts does is fuel the stock market, as if it needed any further fueling! A year or so ago, I wrote in the now defunct, Dow Theory Letters, that historically speaking, stocks do not perform well at all during a recession… So, is this going to be different? I doubt it… The stock jockeys might be dancing in the street over the rate cuts now, but if I’m right and the recession train is pulling into the station, they won’t be dancing long… Because I don’t believe in the “the time will be different” BS… Never have, never will…
So… I had a conversation with former colleague Aaron on Friday last week, and he was telling me that he got the feeling that the currency and metals holders had grown tired of watching the dollar be strong for so long… And I said, Shoot Rudy, didn’t I teach them that when the dollar is strong that’s when they buy more because the currencies are cheaper? Now, IF this is the start of a multi-year weak dollar trend, they will be buying back their currencies and it will be more costly for them to do so… When will we ever learn? When, will, we… ever… learn?
That’s not to say that now is too late…. Au Contraire Monfrere! This has all just started… And, it’s not too late baby, now, it’s not too late… So, swallow your ego, and make the call to buy back your currencies and metals…
And before you think there’s something fishy going on here…. Look, I’m a loner… I don’t work for anyone, and I don’t get paid for saying things… So, if I say something, you can darn well be assured that its coming from me… myself… and I…. and I’m not paid for saying anything! I only want to see you diversified, so that changes in markets don’t negatively damage your investment portfolio…
OK, now that we have that settled….Do you know what FOMO is? FOMO stands for “fear of missing out”… So, do you fear FOMO? I read an article last night that said that fear of FOMO was fueling the run up in the price of Gold… Well, I don’t know if that’s true or not, but I have FOMAS…. Fear of missing a story! HA!
I think that the run up in the price of Gold is more tied to the 3 items I mentioned above, and the fact that Central Banks around the world have already begun to cut rates… So the interest advantage that the deposits had on Gold & Silver, is going away…
I read this morning that India’s Reserve Bank Gov. Acharya had resigned, 6 months ahead of his term ending… He cited the reason for leaving early was personal reasons… Of course those “personal reasons” came after a class with PM Modi about Central Bank independence… Apparently, PM Modi was applying pressure on the Central Bank of act… Hmmm, sounds familiar doesn’t it?
Oh, that’s right, it’s happening right here in the Gold Ole U.S.A! So, do you think that Fed Chair, Powell, will take Acharya’s lead on this and resign? Nah… I think he’s sitting deep in the Fed Chairman’s chair, and his back is straight, and shoulders back, and ready to take on the President… Memo to Jerome Powell…. If I were you, I’d get out of Dodge before the dam breaks, for when the dam breaks, you’re going to get all the blame for it, because you built the dam too fast, and now it can’t hold back the flood waters… Get out now! That is if you know what’s good for your career!
The U.S. Data Cupboard gets restocked this week, but we’ll have to wait until Wednesday to see any real economic data… There is the Case/Shiller home Price Index (HPI) that will print tomorrow, but as always this report is old news, as it will print for April… But as the week goes on we’ll see Durable and Capital Goods Orders, and Personal Income and Spending, but like I said that’s all later in the week… So no economic data news is good news for the dollar, usually that is… So, we’ll see if that plays out today…
To Recap… We’ve not seen nor heard from the dollar bugs since last Wednesday, when the FOMC Meeting and the news of a drone getting shot down hit the markets and the barn door swung wide open and the currencies and metals came running out! Chuck tells us his experience with the beginning of the last weak dollar trend… And the RBI Gov. resigned over a clash with the PM for independence… sound familiar?
For What It’s Worth… Last month, my good friend, Dennis Miller, of www.milleronthemoney.com wrote a very good piece and used Monopoly (the game) to illustrate his point about Socialism… Well, I came across this article on MarketWatch.com and it’s about how they don’t use cash in Monopoly any longer… and it can be found here: https://www.marketwatch.com/story/the-grim-financial-lesson-children-will-learn-from-cashless-monopoly-2019-06-21?mod=MW_section_top_stories
Or, here’s your snippet: “Hasbro announced Wednesday it will release a version of the classic board game Monopoly designed for the digital age. But financial experts argue the game’s new design could deprive children of important financial lessons.
In Hasbro’s HAS, -0.58% latest edition of Monopoly, gone are the paper money and Community Chest cards. Instead, the board game now comes with a voice-controlled, artificial intelligence device shaped like a top hat.
Designed to prevent cheating, players will now press a button on the top hat and dictate commands, such as paying rent or trading properties.
This is not the first time Monopoly has reflected today’s cashless world. A 2006 edition of the game in the United Kingdom featured Visa-branded V, -0.17% credit cards instead of paper play money. Similar versions of the game are also available in the U.S. Last year, Hasbro even released a version called Monopoly for Millennials in which players compete to buy experiences rather than real estate.”
Chuck Again… Ok, buying “experiences rather than real estate”? Really? That’s what the world is coming to? Where are the lessons to kids about how to manage money? And building wealth? I’m shaking in my seat, shuddering, and thinking about the future of this country…
Currencies today 6/24/19 American Style: A$.6955, kiwi .6610, C$ .7585, euro 1.1395, sterling 1.2756, Swiss $.9746, European Style: rand 14.3327, krone 8.4732, SEK 9.3055, forint 284.30, zloty 3.7320, koruna 22.4620, RUB 63.01, yen 107.30, sing 1.3540, HKD 7.81112, INR 69.37, China 6.8689, peso 19.12, BRL 3.8200, Dollar Index 96.00, Oil $57.77, 10-year 2.03%, Silver $15.38, Platinum $816.38, Palladium $1,516.02, and Gold… $1,409.73
That’s it for today… Rain, rain go away! I’m so tired of rainy, chilly days for June! I heard last night that this will be a weak of drying up, and I’m all for that! Last Friday, I had lunch with son Andrew and grandson Braden, of whom seems to be growing up suddenly… He’s only 8, but there was something there that caught my eye… Well, I’m still surviving here alone! HA! Hmmm… That’s all I’ll say about that! OK… Cardinals take 2 of 3 from the Angels and the Albert Pujols Love Affair… I was more excited to see the best player in baseball, Mike Trout, play, for I don’t get the chance to see him in action very often… He didn’t disappoint. OK… Steely Dan takes us to the finish line today with their song: Rikki Don’t Lose That Number… I hope you have a Marvelous Monday and Please Be Good To Yourself!
Chuck Butler