April 1, 2020
* Currencies drift on Tuesday, but Gold gets whacked!
* Improving investor sentiment? Really? Come on!
Good Day… And a Wonderful Wednesday to you! The trading in Gold yesterday, was right up there with what I spent the better part of yesterday talking about… I shake my head in disgust, and disbelief, that this continues to carry on… It was a cooler day here yesterday, than the previous day, so I was only able to be outside for about 2 hours in the late afternoon… Hey! It’s April Fool’s Day! I would have to think that the April Fool’s pranks will be muted this year, given the dire situation of having to stay home by yourself, or with spouse, partner, whomever! Quite a few years ago, I wrote a note and left it on the kitchen table telling Kathy that I was sorry but I had dented the rear panel on her car, and that she should go out and look at it…. When she got there, I had taped a note on the rear panel that said, “April Fools!” …. That’s probably about the best I can do…. I’m not a prankster, a joker yes, smart Alec yes, but prankster, no… The Beatles greet me again this morning with another good morning song titled: She’s Leaving Home…. For those of you not familiar with this classic, it starts out… Wednesday morning at 5 o’clock as the day begins….
And Welcome to April! March came in like a lamb, and went out like a lion, for sure, but…. Things are only going to get worse, folks… I hope you’re tired of hunkering down, because, this is going to go on for much longer, as the dark clouds gather, to bring the rain for our parade…
OK… Well the currencies drifted yesterday, but Gold got whacked! And I mean Whacked! My old football coach had a wooden paddle with golf ball sized holes drilled through it to allow a good whacking with wind resistance…. I never experienced the feel of this paddle, but I saw many a player receive the paddle… And that sound it would make would be like the sound that hit Gold yesterday…. (The old coach has passed on, so no letters claiming bad things are called for here, just wanted to give the whacking that Gold received yesterday a proper sound.)…
Well, did you hear the new yesterday that China printed their PMI (manufacturing index) and it rebounded from a very low number below 50 to a number above 50? Let me see a show of hands from those of you who believe this to be true? OK, you, in the way back, why on earth would you believe this to be true? What’s that you say, you believe everything any Gov’t tells you? OK, is there anyone else, besides this sheeple in the back of the room? The good news that came with this was that the Global Growth currencies of Australia and New Zealand both took the news and used it to rally on the day…
One of the things that keeps coming back into my brain yesterday, was a quote on the Kitco.com site, where they said that Gold was getting sold yesterday due to “investor sentiment improving”…. Really? They really believed that? Consumer Confidence fell from 132 in April to 120 in March, and they think investor sentiment is improving? I’m not buying it…. This was a engineered price take down by the price manipulators, it’s as obvious as a streaker running down the street! What on earth would investors be feeling good about? Stocks were down again yesterday, and the prospects for more Central Bank “planning” is growing by the hour….
You know another thing that just gets my goat? Central Bank planning…. Hey! Think about this for a few minutes and then tell me I’m wrong about this…. Didn’t the Soviet Union use Central Planning for over 100 years? And didn’t the Communist Party of China do the same? And where did it get their economies? I’m just saying…. Why on earth would Central Banks of the Western Hemisphere think that they have the “handle on the right way to do Central Planning”? Ok, for those of you new to class and what to catch up on what I’m talking about….
Let’s take the Fed Reserve for a minute here…. They’ve really pulled out the big guns for dealing with the economic perils of a pandemic, haven’t they? But think about that for a minute, were they not already pulling out the big guns before the pandemic hit our shores? Why, yes, Chuck they were, now that you mention it… So, that was what all that pointing and yelling was about months ago, when the Fed was bailing out the banks with daily infusions of money in the repo markets? Geez, Chuck I wish you would have spelled that out in plain English for us non-market folks…
Come on, I tried, and tried to tell you that this wasn’t a good thing, and that it wasn’t temporary as the Fed Heads kept telling us! Well, on second thought, yes, you did do that, but…. I just thought you were crying wolf once again….
Don’t you just love when I have these conversations with “someone else”? Come on, stay with me here, we have lots more to discuss….
You know… There’s something going on that I want to get off my chest…. It’s these damn paper trades in Gold and Silver…. I hate you use that strong language, but how else would you, dear reader, know how frustrated I am with this c—? Yesterday morning I had to report that Silver had dropped to $13.95…. But if you called a coin dealer and asked him for a price of 1 ounce silver coin it would probably be $25…. Paper trades should be outlawed, if they aren’t being used in the proper form… To lock in a price, and then deliver or accept delivery…. Otherwise it’s a sham, a speculation, without delivery! I’m just so frustrated with these paper trades driving the prices of the commodities like Gold & Silver down…. Marin Katusa, the commodities guru, wrote on Twitter yesterday that the price ratio of Commodities to stocks was at an all-time low…. Beep, Beep, Beep…. What’s that you say? It’s the warning signal on my truck that’s backing up right now to load up on Commodities, because….. Inflation is coming folks…. And I mean real inflation, not stock market inflation or house price inflation, but real old-fashioned inflation, the kind that kicks you in the teeth, and robs you blind…. I’m just saying….
I hear tell that the lawmakers are talking about another $2 Trillion in aid to be doled out…. That would make our trip to $30 Trillion even easier to obtain, right? You can’t just keep throwing money at something like this, when will they get it? Yesterday, I saw a blurb from the White House saying that the experts there have the total deaths in the U.S. from the Pandemic to be 100,000 to 240,000… OK, I’m not making light of this pandemic folks, but let’s look at it and compare the pandemic to other things that kill people…. Like the one that’s near but not so dear to my heart…. Cancer…. There are 50,000 people a month that die from cancer…. So, 100,000 is just two months of Cancer deaths…. Or how about smoking? Google tells me that there are 480,000 deaths annually from smoking, including those with second hand smoke. So, 6 months of smoking deaths…. Do you see what I’m saying here, I’m not taking the pandemic lightly, I’m seriously washing my hands every hour and staying to myself for the most part each day… But where has all this effort to curb a disease been all these years?
OK, I know that the last paragraph is going to tick off half my readers, but I just had to say it… Which is something that 100% of you have come to expect from me… I call them the way I see them folks… no beating around the bush, and no spin…. So, if you are mad at me for that last paragraph, keep reading because I’m sure you’ll find something you agree with!
Well, well, well….. what have we here? Why it’s none other than “I see no future economic crisis in our future,” Janet Yellen…. This is why I love Twitter folks… People get on there and spew stuff that makes me wonder what they’ve been smoking! Yesterday, it was former Fed Chair, Janet Yellen, who had this to say…. “Highly indebted firms usually cut back a lot on investment & hiring…will make recovery more difficult” – Janet Yellen…
OK, but who left rates at zero until a couple of years ago, Janet? Who set up these Corporations to borrow at low rates? Not you? Balderdash! Yes, first it was Ben Bernanke that sent rates to zero, but then you held them there for most of your term! And now you say that these highly indebted firms are going to make the recovery more difficult…. Wait! What? I thought you told us a few years ago, that there would be no more crisis situations for us to worry about? These Fed Heads are crazier than loons folks…. There I said it, and believe you me, I wouldn’t have been even able to talk about this in my previous location!
So…. Goldman Sachs, aka Lola… says that GDP in the U.S. is going to fall 34%! That’s surely upping the ante on the GDP forecasts isn’t it? First it was 5%, then 20%, then 24% and now 34%…. Just keep moving the goal posts, Lola, because this is going to get really ugly! And we’ll begin to see the rot on the economy’s vine today when the ISM for March gets printed…. And like the old game of Limbo, the question will be “how low can it go?” And then double that decline for the April print, because we only started the shutdown of the economy about mid-March…. It was March 12th, when we were told that we were attending the last Spring Training game, that all futures games were cancelled…. About a week later they closed our beach… And now I hear word that the management has to close the pool too! Yeah, whatever the decline is in March for manufacturing, I think you can double it for April….
I think I erred yesterday when talking about the ISM (manufacturing index) print today, and said that last month’s print was 44, but that wasn’t correct, and I apologize for that error, I errored and took the forecast for last month’s print… So, the forecast for this morning’s print is 44… But what I said about two months of below 45 in this data set indicates we’re in a recession…. So, that much was right!
Face masks are coming…. Basically, I believe the Gov’t is going to tell us soon that we are required to wear face masks…. Don’t have access to them? I’m sure your friendly National Guardsman will be happy to supply you with some…
Well, let’s end this with a happy note today, eh? Hey! Gold is up $17 in the early trading today, so Gold has that going for it, eh? Up for 3 days, down big 1 day… Crazy, but the thing I keep coming back to here is that Gold is showing its true calling of being a safe haven asset…
To recap… The currencies drifted yesterday and in the overnight markets, but Gold got whacked! And the sound was awful! There’s talk of another round of $2 Trillion for more stimulus…. Janet Yellen opens mouth and inserts foot, and of course Chuck is there to chronicle the whole thing! Inflation is coming folks, the dark clouds are gathering, to rain on your parade…. So many printed dollars chasing so little goods….
For What It’s Worth…. Longtime readers know my affection for anything Jim Grant says… I scour the internet to find quotes from him, because, well, he’s Jim Grant…. Need I say more? Well, this was found on zerohedge.com and is Jim Grant at his best…. And it can be found here: https://www.zerohedge.com/markets/jim-grant-warns-feds-all-actions-are-clear-and-present-danger-us-creditors
Or, here’s your snippet: “In a veritable treatise on all that was wrong with The Fed’s actions, Jim Grant – founder and editor of Grant’s Interest Rate Observer – was somehow allowed nine minutes on CNBC’s Squawk Box to put America straight on what we are facing and the consequences of these unelected and unaccountable officials terrifying experiments.
Grant began by slamming Jay Powell’s seemingly blinkered proclamation that “he sees no prospective consequences with regard the purchasing power of the dollar” as “very concerning” adding more pertinently that he thinks “that wilful ignorance is a clear-and-present-danger for creditors of The United States.”
It appears his fears are starting to be warranted as USA Sovereign credit risk is rising…
Grant, whose wife is a physician, reminded the anchors that the current actions (and consequences) have a direct analogy with the opioid crisis, as “in the early 2000s, the medical profession got it into its head that pain was the vital sign, and that no one ought to be in pain… this led to the deadly over-prescription of opioids.”
Simply put, credit and equity markets “have become administered government-set indicators, rather than sensitive- and information-rich prices… and we are paying the price for that through the misallocation of resources.”
Grant ends on a hanging chad of a rhetorical question “what do corrections correct? Is there no salutary role for recessions and bear markets?”
Of course there is, he answers, “they separate the sound from the unsound, they separate the well-financed from the over-leveraged and if we never have these episodes of economic pain, we will be much the worse for it.”
Chuck again…. Yes, you’ll get more from the link as this was a snippet of a 9 minute video there…. Be sure to check it out….
Currencies today 4/1/20 American Style: A$.6073, kiwi .5915, C$ .7025, euro 1.0941, sterling 1.2390, Swiss $1.0355, European Style: rand 17.9720, krone 10.2997, SEK 9.9834, forint 335.03, zloty 4.1784, koruna 24.9545, RUB 78.69, yen 107.55, sing 1.4334, HKD 7.7571, INR 75.80, China 7.0875, peso 24.13, BRL 5.1942, Dollar Index 99.60, Oil $20.63, 10-year .61%, Silver $13.98, Platinum $719.72, Palladium $2,352.77, and Gold… $1,593.91
That’s it for today…. but not this week! For the first time in 3 months I won’t have to get up early on Thursday, and drive 55 minutes north to the wound center in Port St. Lucie! So, I’ll be back full of joy and stories of miracles tomorrow, HA! I was supposed to go for a scan next week, my first one in 4 months, but they called me to postpone it 6 weeks! I have a sneaky feeling that in 5 weeks they’ll be calling me to postpone it further out on the calendar! I’m re-reading James Rickard’s book: The Death of Money… I like to re-read books now and then in case I missed something, and it appears I did either miss it or forget about it, in either case I’m glad I’m re-reading it! Sam & Dave take us to the finish line today with their song: Hold On…. Which is very good advice for what we’re all going to have to do in the near future…. I hope I didn’t tick too many of you off today and I that you have a Wonderful Wednesday! Please Be Good To Yourself!
Chuck Butler