Too Many Uncertainties These Days…

November 13, 2019

* Currencies continue to get sold… 

* RBNZ leaves rates unchanged… 

Good Day… And a Wonderful Wednesday to you! Brrr, it’s cold here… too cold for this time of year, that’s for sure! Where’s Al Gore? I would like to point out to him that these temperatures at this time of the year are very rare! I was finally able to eat something other than saltines yesterday, so I would think I’m over my stomach bug… That was no fun! But I’m glad it’s over! Our Blues finally lost a game  last night, this time on home ice… They did get a point for a tie, but lost the second point when they lost the shootout…  (You know I dislike this way of deciding a game vehemently!)  And somehow my beloved Cardinals are able to stay in the news, as they signed longtime pitcher, Adam Wainwright, to another 1 year contract yesterday… Baseball news, keeps me warm! HA! Billy Squier greets me this morning with his song: In The Dark…

I think that’s what the dollar bugs are doing right now… They’re trading In The Dark… While the selling wasn’t as harsh as on Friday last week, the dollar bugs did keep the conn and have the currencies crying “uncle” right now… I read a report on Bloomberg yesterday, and the writer must be a Pfennig Reader, for he went through the exercise of saying how the strong dollar trend was nearing an end, and that investors should look to the euro for a currency that will gain VS the dollar when the strong dollar trend ends… He then went on to explain that the euro is the offset currency to the dollar… Wow! I’ve been saying that for sometime now, and Bloomberg didn’t print my article! I’m hurt! Hey! Those mean people at Bloomberg.com hurt my feelings… Isn’t there some law now that I get to sue them for that? HAHAHAHAHAHAHAHA!

I have a high tolerance of pain, so I doubt anything like that would hurt my feelings, and beside if it did, that would be MY problem for being such a sap! I came up with that all by myself, and didn’t need a “safe room” to come up with it! I’m just saying….

Remember yesterday, when I told you that someone (we won’t know who for a while) showed up and sold 3 million ounces of Gold on Monday? I got to thinking about this more and more yesterday… You know in the past if someone was going to sell 3 million ounces of Gold they would do it in several different trades throughout the day, so that the markets don’t get wind of it, and to keep the price from dropping dramatically while the sell is being made….. The only reason to throw all 3 million ounces of Gold for sale at once is the manipulate the price lower… They wanted the markets to get wind of it, they wanted the price to drop dramatically… And still the CFTC doesn’t do anything about… Congress doesn’t do anything about it… The Fed doesn’t do anything about it…

OK… on to other things here before I get all riled up! What? Wait! I already was riled up! OK, then, before I go bananas! Better…. Don’t want people to get the wrong impression of my moods when writing stuff! I watched a video on YOUTUBE yesterday from Mike Maloney… Mike is a good guy, that normally talks Gold & Silver, but looks at what the Fed is doing too… And in his video yesterday, he talks about The Fed getting recession indicators… And it just so happens that 3 months before the recession in 2001, the Fed began cutting rates…. And it just so happens that 4 months before the recession in 2008 the Fed Began cutting rates… And… Didn’t the Fed begin cutting rates two months ago now? I’m just saying…

Last night, for us, today for New Zealand, The Reserve Bank of New Zealand (RBNZ) met today to discuss rates… The RBNZ left rates unchanged, which was no surprise to me, although, these days you never know what those Central Bankers are going to do, right?  In The Eurozone, today, we will see the color of September Industrial Production, which I can’t imagine won’t be negative, and in the U.K. where BREXIT seems to be tearing the country apart, they’ll see the color of Retail prices, which is a way of seeing inflation.

So, there are things going on outside of the U.S. today folks, and with the U.S. Data Cupboard only having the stupid CPI for us today, then the focus today will be…. No wait, I know better than to say the focus will be on the outside of the U.S. today, not with the Trade War negotiations going on still… Yesterday, the President was scheduled to talk at the economics club of New York, and most observers thought he would use this scenario to announce a Trade Agreement… But that didn’t happen, and now the markets are beginning to get that olde tyme feeling, once again that an agreement is not going to come of these negotiations, and all those that took their safe havens and sold them, thinking the deal was done, will be going back to them soon… Or, at least, that’s how I see it going…

And why wouldn’t they? There’s just too much uncertainty in the markets today folks… And haven’t I always told you that traders don’t like “unknowns”? So, far the dollar has withstood all this uncertainty, but one has to wonder for how much longer it can do that? I mean we have the aforementioned Trade Talks still going on… We have an impeachment process starting today… We have seen an inverted Treasury bond yield curve… We have the repo market in a huge mess, that has caused the Fed to reintroduce QE… We have a Fed Reserve that has cut rates at 3 consecutive meetings, and should I go on?

Well, yes, Chuck, if it pleases you… OK, then… We have exploding debt that no one other than Chuck cares about… We have a Trade War going on with our biggest Trade Partner (China), and outside of the U.S. we have BREXIT tearing the U.K. apart at the seams…

Is that enough uncertainty for you? Then throw in that the stock market is at all-time highs, but the stocks don’t have the earnings that would warrant the high stock price… And a dollar that’s been in a strong trend for 8 years, and you’ve got a recipe for chaos in the markets… And after all that I’ve said, here I ask this one question…. Got Gold?

 Talk about a BIG Unknown…. A few months ago, I wrote about the protests in Hong Kong, and wondered then just how badly they would affect the Hong Kong economy… The protests continue, and have turned quite ugly with violence, tear gas, all kinds of bad things, and all the while the economy continues to suffer… This is going to play hell with the peg that exists between the honker and the U.S. dollar… As capital flees the country, not wanting to be in a country that is at war basically with itself, the pressure on the Hong Kong Gov’t to come up with something to help the economy from sinking further. Just last week it was announced that the Hong Kong economy had slipped into recession. Chuck? You don’t think that China would opt to drop the peg in the honker do you?

No…. But in today’s environment, anything is possible folks… If capital flows continue to leave Hong Kong then anything’s possible, including a drop of the peg! Longtime readers might recall me saying this years ago… I thought then that once China took over Hong Kong from the Brits, that they would eventually drop the peg of the honker with the dollar, and then use their experience in how to manage a dirty float of a currency, to ready themselves for when they go to a non-managed currency, (the renminbi) in a dirty float… Remember me saying that then? Sometimes, not often, but sometimes, I have a mind like a steel trap! And other times its like oatmeal! Anyway… I think that even though these protests are happening around the world, that they are important to keep abreast of…

Gold hemmed and hawed yesterday and ended up gaining 30-cents on the day… That’s it, a lousy 30-cents!  Of course it’s all relative, for when I was a kid if I had 30-cents in my pocket I was able to buy a moonpie and a R.C. cola, and  have a dime left over for my piggy bank… I was on top of the world!  Geez, am I becoming an old man who only reminisces about the “good old days”?  Oh well, so what if I have? It’s far better to be an old man with good memories, than the alternative! 

OK, getting back to Gold, sorry about that tangent I just went on…  Gold is up over $9 in the early trading today to trade $1.465…   And I just noticed that the yield on the 10-year Treasury dropped from 1.95% to 1.87% in one day, which would tell me that what I just talked about above where investors that sold their safe havens are piling back into them is happening as I write! 

The U.S. Data Cupboard is still searching for real economic data to print, and they won’t find it today, as the only thing printing today is the stupid CPI (consumer inflation ).  Real economic data won’t print here until Friday… So, the focus, as I said above remains with the Trade negotiations, will they or won’t they come to an agreement? Only the Shadow Knows…. 

For What It’s Worth… Yesterday, I had a long FWIW article from Grant Williams, and today I have a quote from the same Grant Williams in this article about Gold that can be found here: https://www.sharpspixley.com/articles/lawrie-williams-central-banks-only-hold-gold-for-traditional-reasons-bs_297472.html

Or, here’s your snippet: “I append the following quote, which was accompanied by a chart, in the Charts that make you go hmm.. section from Grant Williams’ excellent latest ‘Things that make you go hmm…’ newsletter as it truly emphasizes a point I’ve been trying to make here several times over the past few months.

Grant’s observation was as follows: “Central Banks only hold gold because of tradition (if you believe their nonsense), so it probably comes as some surprise to many that, between them, they have bought more of this ‘traditional’ asset in the first half of 2019 than they have done in any other 1H on record. It’s enough to make the skeptics of the world think they might be concerned about something but… well that would be directly opposed to their assurances that everything is under control so… it’s probably nothing. Just tradition…” Do I detect a sharp degree of sarcasm here? Well one would be foolish not to!

It is apparent that the Powers That Be, not only speak with forked tongues, but are beginning to build their gold reserves in prospect of improving their positions ahead of any forthcoming global financial reset which seems to be approaching rapidly. For most of these central banks it is a case of ‘too little too late’ though.

It also makes the then U.K. Chancellor, Gordon Brown’s decision to sell off half the U.K.’s gold holdings at the bottom of the market some 20 years ago – a timing now irreverently known as ‘Brown’s bottom – a particularly abject move’. This was, in hindsight, a remarkable misjudgement by a U.K. political leader, and subsequent Prime Minister, who professed economic prudence and was the self-proclaimed ‘saviour of the world’s economy’ over his role in the implementation of quantitative easing post the 2008 great financial crisis. The U.K. now languishes as the world’s 18th largest national holder of gold as reported to the IMF with a holding hugely below many countries with considerably smaller GDPs. If the U.K. had held on to its gold it would currently be in around 9th place in this gold hierarchy, although still hugely behind some of its more prudent European neighbours like Germany, Italy and France, three of the E.U.’s economic powerhouses.”

Chuck Again…  Makes sense to me, right? You have Central Banks (other than China & Russia’s that have been buying Gold for years) stepping into the Gold buying arena, doesn’t that send us an omen of things that yet to come? I’m just saying… 

Currencies today 11/13/19 American Style: $.6830, kiwi .6396, C$ .7541, euro 1.1009, sterling 1.2837, Swiss $1.1009, European Style: rand 14.9394, krone 9.2141, SEK 9.7539, forint 304.05, zloty 3.8911,   koruna 23.2250, RUB 64.01, yen 108.89, sing 1.3626, HKD 7.8316, INR 71.89, China 7.0046, peso 19.38, BRL 4.1592, Dollar Index 98.38, Oil $56.48, 10-year 1.87%, Silver $16.97, Platinum $874.90, Palladium $1,720.18, and Gold… $1,465.51

That’s it for today…  While the cold temps outside try to sneak inside, I continue to think about the warm weather in S. Florida…  UGH!  So, how does a hockey team win 4 games in a row on the road trip, and then come home to lose on home ice?  They say, “it’s why you play the game” and I guess they would be correct!  I’m going to really test my stomach as soon as I hit send this morning, and drink some coffee! I really do enjoy a cup of hot coffee, especially when it’s cold outside! Remind me sometime to tell you about my former colleague of years ago, Art, who used to out due me with how strong the coffee was each day…  I wonder where Art is these days?  I guess I’ll check LinkedIn…  The Walker Brothers take us to the finish line today with their song: The Ain’t Gonna Shine…   the moon isn’t gonna rise in the sky, the tears are always found in your eyes…   great stuff! I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler