January 15, 2020
* Another day of no movement, but overnight changed that!
*Jim Rogers joins us for our daily discussion this morning!
Good day… And a Wonderful Wednesday to you! Another day, another day of nothing happening in the currencies… We’re at a standstill here, just like we were a couple of weeks ago, when I told you that traders are thinking that they shouldn’t be holding dollars, but they can’t think of a currency they would want to own instead, right now… It was at that time that I suggested the Russian ruble, but apparently, they are still stuck in the cold war era when it comes to Russia… So, with that out of the way for today… The band Nazareth greets me this morning with their song: Holiday… Momma, momma please no more facelifts, I don’t know which one is you…
OK… So, the currencies didn’t move very much yesterday. That’s it, thank you for coming, Johnny, tell them what they will go home with! Nah… just kidding… Gold continued to get sold, this time the downward move was less than previous downward moves, but still it was downward, and that’s not a good thing, except for those of you, and there are very many of you by the way, and you know who you are, that still need to buy some physical Gold. Before the mines run out! OK, I made that last part up, just for general effect! But shoot Rudy, if you think that (mines running out of Gold) can’t happen, I’m sure someone said that about Palladium in mines too…
Palladium continues to push upward and onward, and its upward move is a result of a shortage in Palladium… Of course I’ve said this before, so it won’t be new but, they use Palladium in the catalytic converters in cars… So, what happens to car sales when the economy goes bust? And from what I’m reading and seeing in pictures these days, the car sales business may be in big trouble, given all the supply they have sitting on car lots that can’t be moved… I’m just saying…
In the overnight markets we’ve seen some minor moves upward for the currencies, led by the Big Dog, euro… But the upward move is so small at this time, it’s difficult to detect, that is unless you’re a bonafide, super sleuth like me! HA!
And getting back to Gold for a minute, I had this thought yesterday after signing off and seeing the title of the letter yesterday one more time… The U.S. had dropped the “currency manipulator” tag from China in the trade negotiations… Quid pro Quo, right? But for how long, before the U.S. government gets back to blaming China for our woes, and calls them a currency manipulator again?
Besides, China is a currency manipulator… Just calling a duck a duck… But, what if China pulled the old “switcheroo” and turned the tables and called the U.S. a Gold & Silver Price manipulator? I’m sure it wouldn’t be the same as having the currency manipulator tag and having to explain that to World Trade Organization. But, I would find it so entertaining! And would write about it every single day! HA!
But it’s not really funny… The U.S. is a metals price manipulator. There’s no amount of telling me that this isn’t true, can’t be true, never will be true, or whatever… This is what I believe… Just like I believe that you don’t live forever (I think that one has been proven for a few thousand years now!) … Just like I believe that if you put your head down at work, do your job, and don’t get caught up in company gossip, you’ll do fine… Like I believe that any amount of long term debt, should always be paid on and reduced as quickly as it can… Like I believe, oh, you get the message…
And getting back to the U.S. dropping the “Currency manipulator” tag, what do you think China agreed to do? I doubt that they would agree to stop with their plans to issue a gold backed-digital currency…. But I would bet a dollar to a Krispy Kreme that it was discussed… Because in my humble opinion, if China does eventually issue a Gold-backed digital currency, that it would be the end of the dollar’s reserve status… And that’s not anything to sneeze at folks…
In my presentations I used to tell people that when I was a young boy, I watched the Ed Sullivan Show the night the Beatles first performed… And I recall the TV showing pictures of Liverpool, where the band came from, and how depressing those pictures were… And that was because the U.K. economy was in a very long downtrend, that began when they lost the reserve currency status that the pound sterling once held… Gov’t loans are more expensive, taking up needed funds from other economic projects… Commodities are much more expensive… think about that one for a minute, have you have seen the gas prices in the U.K. VS what they are here?
OK, let’s talk about something else… but before I go on, I have one question for you… Got Gold?
Hey Switzerland, you had better toe the line! The U.S. is watching you! It was announced yesterday that Switzerland had been added to the “list” of countries the U.S. thinks is manipulating their currency.
In the meantime, the Swiss franc just hit a 3 year high VS the euro… So… on what basis does the U.S. Gov’t think Switzerland is a currency manipulator? I mean why now and not back 5 years or so ago, when the Swiss National Bank (SNB) tied the franc to the euro cross at 1.20? The SNB would then have to sell francs whenever the cross neared that level… Now, THAT’s currency manipulation!
Well, the Fed’s repo madness continues… The Fed’s balance sheet is near the top it help a few years ago, and our elected representatives are avoiding forcing the Fed to come clean on who’s getting the funds and for what purpose… The Fed is monetizing the debt folks…. Plain and simple, I don’t care what they want to call it, it’s monetizing the debt, plain and simple.
For those of you that skipped economics classes… If government bonds that have come due are held by the central bank, the central bank will return any funds paid to it back to the treasury. Thus, the treasury may “borrow” money without needing to repay it. This process of financing government spending is called “monetizing the debt”.
The difference between Debt Monetization and Quantitative Easing, according to Wikipedia is: Monetization enriches the Gov’t, and QE enriches the Gov’t and the banks…
Because what if… after all this, we find out no bank was in need of the money, and that it was simply a need of the Gov’t to receive free funding? All at the expense of the seniors and savers… I’ll say no more at this time, because I’m getting all riled up! Some very astute economists believe, and I agree with them, that the Fed is simply keeping the economy from collapsing, and collapsing with a bang!
But should the Fed be getting involved with economy woes, such as the end of an economic expansion, albeit a slow expansion? Well, theoretically, the answer is no… But this “we saved the economy” flag has been waved by the Fed since Big Al Greenspan… It has become the norm, what’s expected… “What’ s the Fed going to do to save the economy?” Remember all the hype of a “Greenspan put?” I could go on and on how this is all wrong, that economies should be allowed to boom and bust, but you’re heard me go through all that previously, no need to pull it out of the closet, dust it off and repeat myself…
The U.S. Data Cupboard had the stupid CPI (consumer inflation) yesterday, and it produced, yet another stupid print of a 0.2% gain in December, down from November’s 0.3% gain… Core inflation was up just 0.1%… These numbers are preposterous! Inflation in the major cities around the U.S. has been running around 10% for the last decade… Remember? I showed you the website from the folks that really count inflation the way it should be counted? I just hope to heaven and the stars that the Fed Heads don’t pay attention to this stupid data print… Because I wouldn’t if I didn’t write a letter!
To recap… Another day of no movement in the currencies, and this time, Gold didn’t get whacked, it closed down a bit, but nothing like in previous sessions, and this morning, Gold is back on the rally tracks… In the overnight markets the currencies have all filed in behind the euro and moved upward just a bit… The start of something? You never know, when that will be folks, which is why your diversified investment portfolio needs to be in place…. yesterday!
For What It’s Worth…. Longtime readers will recall me telling them about how the world renowned analyst and investor, Jim Rogers, had stopped by the office to talk to me a quite a few years ago now… We had lunch at the trade desk, and discussed the markets… He’s a very astute investor folks, and when he talks, people should listen… And that’s why when I saw this article this morning from dear reader Bob, I said I’ve got to use this in the FWIW section today… So, with no further ado… you can find the article here: https://www.zerohedge.com/markets/insanity-jim-rogers-warns-horrible-time-ahead?utm_campaign=&utm_content=ZeroHedge%3A+The+Durden+Dispatch&utm_medium=email&utm_source=zh_newsletter
Or, here’s your snippet: “The Fed has increased its balance sheet over 500% in the past decade; The Bank of Japan is printing money to buy bonds and stock ETFs; and The European Central Bank is mired in insane negative interests. And, according to legendary investor Jim Rogers, they will continue this “madness” as long as its necessary.
n 2008, Rogers notes that we had problems because of too much debt, however, “since then the debt has skyrocketed everywhere and it’s going higher and higher. We are going to have a horrible time when this all comes to an end… eventually, the market is going to say: ‘We don’t want this, we don’t want to play this game anymore, and we don’t want your garbage paper anymore’.”
And when that happens, Rogers warns that central banks will print even more and buy even more assets.
“And that’s when we will have very serious problems… We all are going to pay a horrible price someday but in the meantime it’s a lot of fun for a lot of people.”
When it comes to an end, Rogers laments, “it will be the worst of my lifetime.” – Jim Rogers
Chuck again… I know, I know I’ve said that many times, but sometimes kids need to hear from another authority figure for the lesson to sink in… If you get my drift… HA!
Currencies today 1/15/20 American Style: A$.6895, kiwi .6614, C$ .7653, euro 1.1150, sterling 1.3013, Swiss $1.0356, European Style: rand 14.3940, krone 8.8720, SEK 9.4619, forint 298.01, zloty 3.7873, koruna 22.5316, RUB 61.32, yen 109.85, sing 1.3464, HKD 7.7713, INR 70.72, China 6.8978, peso 18.79, BRL 4.1405, Dollar Index 97.28, Oil $58.18, 10-year 1.79%, Silver $17.87, Platinum $1,003.58, Palladium $2,217.00, and Gold… $1,552.50
That’s it for today… I’m pretty sure I’ll be able to get the letter out tomorrow before I head 50 minutes north to the wound center, so I’ll should be back tomorrow… But guess what Monday is? It’s a holiday! So, a 4-day weekend for me! YAHOO! Most days I get up before the alarm goes off so it’s not like I’m getting up when I’m tired! I heard from my friends, and publishers, Pam and Mary Anne Aden yesterday. They had been fighting the flu before Christmas, but they’re all good to go now, and that was good news! I don’t know if I’ve said this lately, but I simply love writing under their umbrella… This is the way it should be done! Not with all the roadblocks that were associated to the letter in a previous life… I’m just saying… Thanks Pam and Mary Anne! OK.. time to go… The Allman Brothers take us to the finish line with my fave song by them: Melissa… I hope you have a Wonderful Wednesday and will Be Good To Yourself!