Gold Trades Above Its 200-Day Moving Avg.

May 18, 2021

*currencies and metals have strong rallied on Monday

* When will they ever learn? 

Good Day…. And a Tom Terrific Tuesday to you! Well… another day, and another day with the pain in my stomach waning… I must have really done major damage inside me because the discoloration, and swelling doesn’t seem to want to go away, just yet…   Last night, the Butlers met Grace’s dad. A couple of weeks ago, we met her mom, but her dad, had not arrived from Dubai yet… I just love spending time with Grace’s mom, Lori… She, as I described previously, is a real southern belle…  Now for those of you trying to figure out who Grace is… (where have you been?) Grace is Alex’s steady girlfriend for over 3 years now…  Little Evie was there, along with darling Delaney, so I got to get hugs and kisses from my two favorite girls!  Los Bravos greet me this morning with their song: Black is Black…

As I said yesterday, with little to no real economic data this week, traders will be searching far and wide to anything that would give them direction on where to take the currencies and metals. And so while the dollar lost more ground yesterday, the currencies didn’t move much…  Gold & Silver though, did see some major moves upward on the day, so, let’s grab a cup of coffee, sit down, and review the moves yesterday.

The old Dollar Index moved downward from 90.16 to 90.07, and BBDXY moved downward too from 1,121.04, to 1,119.31…  So, both indexes confirmed what I just said, that the dollar moved further downward, but not by much…  Gold did move upward by a lot, or the dollar moved downward by a lot to Gold, either way you look at it, Gold was up $22.50 yesterday to close at $1,867.40, and Silver rose by 71-cents to close at $28.25… 

Ok, I hate to be bearer of potential bad news, but we have to always keep aware of the wolf that’s at the door, with the anti=dollar assets… Previously, when things were looking like the dollar was headed on a ride on the slippery slope, the PPT (Plunge Protection Team) with the ESF (exchange Stabilization Fund) stepped in and made sure that the dollar did not take one more step toward the slippery slope. There has to be a slow, steady downward move in the dollar, and not a steep dive downward, that leads to another steep slide down…

The Fed has stated that they want inflation to rise, and one of the easy ways to insure inflation rises is to allow your country’s currency to weaken by a large amount, this is called allowing inflation to be imported… If we could ever have a few weeks of the dollar getting weaker by the day, it would confirm that the dollar was in a new weak dollar trend, and when that happens, we’ll no longer see the PPT stepping in to protect the dollar, for if they did it would akin to “catching a falling knife”…

In the overnight markets….  there seemed to be nothing stopping traders from selling dollars, and sell them they did… The euro has breached the 1.22 figure, and the rest of the currencies are starting the day here in the U.S. with some lofty figures. The Petrol Currencies all have extra oomph behind them this morning, as the price of Oil has risen to a $66 handle… The Canadian dollar/ loonie, is trading above 83-cents, the Norwegian krone is looking spiffy, along with the Brazilian real and Russian ruble this morning… 

Ed Steer tells me this morning that Gold has moved past its 200 day moving average with that runup yesterday.  Gold is flat this morning, but Silver is up 23-cents as they start their days respectively…  I read a blurb this morning on Kitco.com that talked about how the metals bulls are back and pushing the metals higher, with the next stop $1,900… 

In my opinion, this move higher in Gold these past few trading days, is long overdue, as inflation has been rising, and I don’t care if it’s only transitory, it’s still rising, and that calls for Gold to respond… And to date it has been having the reins pulled on it way too often… Time to let loose and let ‘r rip!  And I’m ready for that! 

When will they ever learn? When will they ever learn… Those famous song lyrics by Pete Seeger, are always on my mind, because it seems investors, Governments, Treasuries, Central Banks never remember the past. What got them in their situations, and so they are resigned to having to deal with what comes their way, simply because they failed to learn from the past… 

And that would be sort of OK, if it only affected them, and not taxpayers like you and me…  We foot the bills for their ignorance, and inability to learn lessons… You know me I’m a Constitution, Bill of Rights, kind of guy, and in those precious documents I can’t find it written anywhere that the U.S. Gov’t would be immorally running up debt, or leaving taxpayers in the red…  You know… one of these days, it’s all going to come crashing down on them, and they’ll look at each other and say it wasn’t their fault, it was Capitalism’s fault… And they would be more wrong!  

Ok, let’s go onto something else as this discussion has me really full of you know what and vinegar, and I could end up saying something stupid… 

Remember a few weeks ago, when I told you about how there was talk that the cryptocurrencies were going to see some regulation in the future, and I wondered if this would be a problem for these cryptocurrencies?  I don’t know, because I don’t really follow these digi-currencies, but it sure seems to me that this is what has caused some investors to take profits… Since then Bitcoin has fallen from $58,000 to just below $45,000…  And that’s all I have to say about these digitals…

Longtime friend, best selling author, and publishing guru, Bill Bonner, has some thoughts in his Daily Economics letter yesterday on cryptos… Here’s Bill: “And so… whether we look at the private sector or the public sector… at cryptos or at federal deficits (already headed for an 8-month record over $2 trillion)… at Elon, or at Janet, Joe, or Jerome…

…well, everyone is nuts.

Or else we’re just too “out of it” to appreciate what is going on.

Maybe this is just one of those times in history when you have to be young… or brain damaged… to understand it. No one over 50 can be trusted to “get it.”

But we’re not sure if that “50” refers to age or I.Q.”

Chuck again…  I sure do love reading his thoughts every day…

Well, all you families out there with young kids, you can expect to begin to receive your monthly checks from the Gov’t for child credits starting in July…  Now that’s all fine and good, but once again, where does this money come from?  Should the Gov’t be sending out money they don’t have?  Well, we all know that anything that makes sense doesn’t get implemented in Washington D.C. I truly believe that our current debt will be $30 Trillion at the end of this year…

But I may as well go yell at the walls, at least I would probably get a better response out of a piece of drywall than a Congressman…  I’m just saying…

In addition, a few times in the past year, I’ve highlighted a state that passes the no sales tax on Gold & Silver sales law… The number of those states bringing those bills to a vote are growing… And once everyone in the States, doesn’t charge sales tax on Gold & Silver we’ll see these two take steps toward new record levels…  Are you ready?

There are no changes to the U.S. Data Cupboard offerings today, as Building Permits for April, will print… nothing more, nothing less… Tomorrow, the big print will be the Fed’s Meeting Minutes, but since nothing happened at the meeting, I doubt the minutes will hold anything new for the markets.

To recap… the currencies continued to push the dollar down yesterday, but the downward move was small on the day… Gold & Silver had great days, and that brought Chuck to remind everyone that the last time we were here, the PPT came in to defend the dollar.  In the overnight markets the dollar has gotten sold down, with the old Dollar Index at 89.84 this morning. Chuck explains how the Fed needs a weaker dollar to help import inflation, and he also questions the gov’t’s checks they plan to send out on a monthly basis in July…

For What It’s Worth… Well, for the past 10 years I’ve chronicled Russia’s amassing of Gold in their reserves… And then added in Russia’s desire to dedollarize… And what you have now is this report on Bloomberg.com that Russia now holds more in gold than in dollars, and it can be found here: Russia’s $583 Billion Reserves Now Hold More Gold Than Dollars – Bloomberg

Or, here’s your snippet: “A multi-year drive to reduce exposure to U.S. assets has pushed the share of gold in Russia’s $583 billion international reserves above dollars for the first time on record.

Gold made up 23% of the central bank’s stockpile as of the end of June 2020, the latest date for which data on the breakdown is available, according to a report published late Monday. The share of dollar assets dropped to 22%, down from more than 40% in 2018.

The shift is part of a broader strategy outlined by President Vladimir Putin to “de-dollarize” the Russian economy and lower its vulnerability to U.S. sanctions amid deteriorating relations with Washington. Gold is now the second-biggest component of the central bank’s reserves after the euro, which makes up about of a third of total assets. About 12% of the stash is in yuan.

The increase in Russia’s gold reserves was aided by a 26% surge in prices between June 2019 and June 2020. The central bank also bought $4.3 billion worth of the precious metal over the period, according to the report.

Russia has been growing its international reserves in recent years

Russia spent more than $40 billion building a war chest of gold over the past five years, making it the world’s biggest buyer. The central bank said it stopped buying gold in the first half of last year to encourage miners and banks to export more and bring in foreign currency into Russia after oil prices crashed.”

Chuck again…  And China is doing this too, folks… And all that was confirmed by the news I gave you previously that the total % of dollars held by Central Banks in reserves has hit an all-time low… And the other thing that I saw in this report was that the data was from a year ago, I would think in the past year, Russia has gotten rid of scores of more dollars… I’m just saying… 

Market Prices 5/18/2021: American Style: A$ .7796,  kiwi .7252,  C$ .8309, euro 1.2209, sterling 1.4185, Swiss $1.1130, European Style: rand 13.9981, krone 8.2292, SEK 8.3043,  forint 287.30,  zloty 3.7065,   koruna 20.8164, RUB 73.91, yen 109.04, sing 1.3299, HKD 7.7655, INR 73.08, China 6.4381, peso 19.74, BRL 5.2709,  Dollar Index 89.84, BBDXY 1,115.74,  Oil $66.56, 10-year 1.64%, Silver $28.48, Platinum $1,227.00, Palladium $2,976.00, Copper $4.70, and Gold… $1.867.20

That’s it for today   Well, our Blues had to start out their playoffs without one of their best players, who was ruled out for Covid Protocol… And after playing 2 good periods and being tied 1-1, they ran out of gas in the 3rd period, and lost 4-1.. That was Game one of their best of 7 series with Colorado… Dinner last night was great, and the company was even greater!  We’ve been in a rainy period that supposed to begin to end tomorrow.. I sure hope so, because I didn’t remember moving to Seattle…. Hamilton, Joe Frank, and Reynolds takes us to the finish line today with their song from the 70’s: Fallin’ In Love…  This song reminds me of when I was traveling the country with the band, and it kept playing on the radio… I hope you have a Tom Terrific Tuesday, and Please Be Good To Yourself!

Chuck Butler

 

 

It’s Tax Day….

May 17, 2021

* Currencies & metals have good rallied on Friday

* Kitco.com allows Frank Holmes to talk price manipulation! 

Good Day… And a Marvelous Monday to you!  It’s Tax Day… and Pfennig Tradition calls for this: Should five percent appear too small Be thankful I don’t take it all ‘Cause I’m the taxman Yeah, I’m the taxman- The Beatles!

What a disastrous weekend for my beloved Cardinals! They got swept by the Padres out in San Diego. I had just been talking about how the Cardinals pitching was doing so well, and then they went West and walked 26 batters in 3 games!  Baseball is a difficult enough game to win without putting so many runners on board! It was a kind of yucky weekend here weather wise, and this whole week is supposed to be about the same! UGH! I’m still waiting for consistently warm May days…  My cold is gone… all that remains is the muscle pain in my stomach…  Steely Dan greets us this morning with their song: Kid Charlemagne….

Well, Friday was a good day for the currencies and metals, folks… It all came about as a reaction to the bad data that printed on Friday… More on the that bad data below…. Well, it took about a week for the euro to get back to the 1.21 plus area, but it finally rose above 1.21 on Friday… About a week ago we had the PPT come in to defend the dollar, and that brought the euro back to the 1.20 range. So, the Big Dog (euro) is eating again, and gobbling up dollar bugs!  The BBDXY was down a few shekels on Friday, opening the day at 1,125.08 and ending the day and week at 1,121.04…   It’s taking me some time, but I’m getting used to using the new Dollar Index that includes the Chinese renminbi/ yuan.

Gold & Silver had a good day on Friday too… Gold rose by $17.40, to end the week and day at $1,844.90, and Silver rose on Friday by 34-cents, to close the day and week at $27.54…The Price of Oil was up on Friday, So, all in all a good day for the anti-dollar assets…  It too took Gold & Silver a week to get back to where they were before the engineered takedown by the PPT…   So, hopefully, everyone that wanted to buy at cheaper levels, got in, last week, while the getting’ was good!

So, we start the week with the overnight markets last night… And in those overnight markets, the dollar has slipped a bit more, and Gold is up $6.90, and Silver is up 22-cents… This is going to be a strange week in that there is little to no real economic data that’s printing, and so the markets will be looking at other things to trade off of…  News like more stimmy checks, or inflation news, etc.  Traders will have to search far and wide for anything to get them going in one direction… 

So, basically, what I’m saying is that I don’t think we should look for any major moves in the currencies & metals this week, which is fine with me, in that as long as the general direction moves upward in a slow, stealth-like manner, as to not ruffle any PPT feathers, is just fine with me! 

OK, circling back to Gold…  the folks over at Kitco.com do a great job of reporting prices, writing articles and research on metals, but one thing they’ve avoided all these years is any acknowledgement of price manipulation of Gold… but that all changed last week, when long time Gold Fund Manager, Frank Holmes, was interviewed and went straight for the jugular with price manipulation, and Kitco.com printed it!  Here’s a snippet of Frank’s talk : “Governments and central banks might have an interest in “stabilizing” gold prices in order to maintain public confidence, which may be an explanation as to why the gold price did not move up on the release of last month’s headline record inflation data said Frank Holmes, CEO of U.S Global Investors.

Headline inflation came in at 4.2%, the highest since 2008.

“The threat of gold exploding would basically say they’ve lost control, and I really think there’s some kind of stabilization, if you want to call it,” – Frank Holmes

I met Frank Holmes many years ago, and had dinner with him and Thom Calandra in Las Vegas… And then we never crossed paths again…  Strange how that all works out, eh? But I’ve read his articles through the years, for he knows what’s going on, and is unafraid to talk about it… Sort of like someone else I know quite well…  ME! 

So, in my mind, if the folks at Kitco.com are willing to print an article that talks about price manipulation in Gold, then the whole price manipulation story is coming more to light… The spotlight isn’t on it yet, but it’s about half-way…  If the Corprations and hedge Funds and Pensions and Insurance companies would all stomp their feet and complain about price manipulation, the media would finally admit that it exists, and write about it…  Unfortunately, the day I see that happening is the day I’ll be turning over in my grave… I sure hope it doesn’t take that long, but since none of these groups have even hinted that they are unhappy with price manipulation, it’s going to take some time… 

Well… I finally filed my taxes on Friday… It’s all different now that I’m retired and my income consists of Social Security, and some investments… I don’t know what took them so long to get them done, but I’m just glad I don’t have to do it any longer!  Game time is on time, right? 

The Cardinals of a long time ago, had the great power hitter, Richie Allen for one year… And it was a year that the Cardinals were out of the pennant race in August… The reporters would ask Richie how his knee felt, and he would reply, “It fells like 8 games out of first place”…  that’s funny now after all those years gone by, but I doubt it was funny then…

OK… onto other things… I saw a blurb on Google on Saturday, that said, “2020 tax filers will receive a supplemental stimmy check”… Wait! What?  Enough is enough! Stop this madness before everyone is holding out their hats waiting for another stimmy check, that’s really nothing but fake money, as it was never earned by anyone, instead the Gov’t just made some computer entries and voila! It’s in your bank account.

I’ve long banged on the drum and shouted from the rooftops that the U.S. Gov’t needed to only spend money they had collected in taxes…  Deficit spending came about because there was no anchor preventing it… Gold had been replaced by the “Debt Ceiling”, which used to be a bunch of show for the people to make them think our elected officials were serious about it… But every time the debt ceiling was reached, it was thrown to the curb, and a new debt ceiling number was announced…  These days, we don’t even have the dog and pony show for the Debt Ceiling any longer… It’s a Deficit Spending Palooza… And that, folks, is going to be end of the financial system that we all love…  bye, bye… 

The U.S. Data Cupboard on Friday last week, as I said above, was to blame for the dollar weakness, and April Retail Sales were flat 0.0% after the large March number, which I had explained last month was due to the stimmy checks…  In addition we saw Industrial Production fall in April from March’s 2.4% to just .7% in April…  And then finally, the Consumer Sentiment report for the first two weeks of Mayl fell… can you believe that one?   Well, it did… from 88.3 to 82.8… I guess that weakness in Bitcoin caused that! 

So… all in all, the data from last week was not good, and very sketchy…  Uneven if you will… And that doesn’t spell a strong economic recovery, and I can hear the naysayers of inflation yelling from the rooftops that inflation is only transitory…  But like I keep telling you, dear reader, this is not your father’s cyclical inflation… This is systemic inflation, the kind that caused by money printing, and stimmy checks…  That’s my point and I’m sticking to it!

This will be a week of no real economic data printing…  Yes, we’ll still have the Weekly Initial Jobless Claims print on Thursday, but even this print has become hold news, as the claims have been falling for weeks now… The problem here is while the Claims may be falling there’s still 16.4 Million receiving Unemployment benefits… Yikes!  So, most of the data this week will be housing stuff, which we all know is getting oh-so similar to 2007…. 

To recap… The currencies, metals and Oil all rallied on Friday, on some very weak economic data in the U.S.  Chuck points out that it took the euro and gold about a week to get back to the levels they traded at before the engineered takedown by the PPT….  So, there was about a week of buying at a cheaper levels in place… Chuck makes a Big Deal out of the fact that Kitco.com printed an interview with Frank Holmes who talked about price manipulation, something that Kitco had not done previously… And the data cupboard is basically empty this week with some housing data, and the Fed’s meeting minutes.

For What It’s Worth… Well, I talked about this article a couple of times last week, and Thursday it finaly printed. I’m talking about the Dennis Miller article that I did a lot of work on , about looking at 5 years inot the future…   And it can be found here: www.milleronthemoney.com 

Or, here’s your snippet: “CHUCK: Hold on tight, here we go down the rabbit hole…

So, losing the advantages I outlined would bring about quite a few changes in our economy, our value of the dollar, which affects your buying power, and life as we know it…

Any future weak dollar trend could easily trigger the loss of the reserve currency status, affecting everyone:

  • A sudden dollar collapse would create global economic turmoil.
  • Investors would rush to other currencies.
  • Investors would rush to other assets, such as gold and commodities.
  • Demand for Treasuries would plummet.
  • Interest rates would rise, and possibly very high.
  • U.S. import prices would skyrocket, causing inflation.
  • The cost of commodities like Oil would increase.

As an example, I used to compare gas prices. In the U.K., gas costs $8 a gallon as compared to the U.S. being $3. We would all pay what everyone else in the world pays for gas.

Remember when the Beatles appeared on Ed Sullivan in 1963? They showed pictures of their home town, Liverpool, England. Those pictures are as depressing now, as they were then.

The U.K. lost the reserve currency status after World War II; 20 years later they still hadn’t recovered, economically, and psychologically.

The U.S. would probably have to default on some debts; causing a major shift around the world out of dollars, and stocks. I’d expect damage to your investments, psyche and your buying power.”

Chuck again… Part II of this article will be out this Thursday, and I don’t think it’s anything you’ll want to miss… But as my good friend Rick B, said after reading Part 1… “I had to hide away the sharp objects”…

Market Prices 5/17/2021: American Style: A$ .7760,  kiwi .7212,  C$ .8260, euro 1.2156, sterling 1.4105, Swiss $1.1103, European Style: rand 14.1378, krone 8.2623, SEK 8.3484,  forint 289.53,  zloty 3.7325,   koruna 20.9773, RUB 73.96, yen 109.20, sing 1.3351, HKD 7.7673, INR 73.25, China 6.4318, peso 19.89, BRL 5.2709,  BBDXY 1,120.15,  Oil $65.50,   10-year 1.62%, Silver $27.76, Platinum $1,234.00, Palladium $2,957.00, Copper $4.63, and Gold… $1,851.80

That’s it for today… Well, I was right, and my wife was wrong…. She said I needed to go to the doctor, that I didn’t sound good… And I told her it was just a cold that would take 10-14 days, and that’s exactly what happened! I’m still dealing with allergies, but that’s nothing unusual… Last Thursday night, I was invited to attended a former colleague’s last day in World Markets… I had hired Antione years ago, and so I was included in the send off… And guess who else was there? My longtime friend, and former boss, Frank Trotter! There will be a family wedding on Memorial Day Weekend, coming up, and Kathy asked me if I had something to wear to a wedding… And I thought, hmmm, good question since I’m down 3 pant and shirt sizes! I guess I had better look into that and not wait until the morning of the wedding!  The Band, A-ha takes us to the finish line this morning with their hit 80’s song: Take Me On… The range in this guy’s voice is incredible! Alright, I hope you have a Marvelous Monday, and I trust you will Be Good To Yourself!

Chuck Butler

 

So-Called Transitory Inflation Soars!

May 13, 2021

* Currencies & metals get sold in a move to protect the dollar

* Markets believe that the Fed will hike rates to combat inflation? 

Good Day… And a Tub Thumpin’ Thursday to one and all! Well, besides the pain in my stomach from the pulled muscle, I do believe I’m through with the cold… A strange reaction to the inflation data has me really full of you know what and vinegar this morning! My beloved Cardinals couldn’t find their bats last night and lost, but our Blues played well and won their next to last reg. season game last night.  So it was a win one, lose one night… The Eagles greet me this morning with a song from their first album: On The Border…  Not a radio hit song, and not on their greatest hits, but a song that I always liked, and so it’s on my iPod!

Well, what have we here? A sign that the BLS is finally coming on board that inflation is roaring like a lion in our faces? In April, the Consumer Price Index for All Urban Consumers rose 0.8 percent on a seasonally adjusted basis; rising 4.2 percent over the last 12 months, not seasonally adjusted. The index for all items less food and energy increased 0.9 percent in April (SA); up 3.0 percent over the year…  So, if you don’t drive, or eat, then your inflation rate is lower…  I still don’t get the reasoning behind taking food and energy out of the equation… Sure they can be volatile, but it’s not like people don’t use them!

That’s right 4.2% rise in the last 12 months…  Of course the BLS has a long way to go to catch up with John Williams’ Shadow stats, where he shows that CPI is actually 8% if we calculated it like we used to before Clinton and Greenspan implemented hedonic adjustments to the index…  Now, 8% kind of feels about correct, don’t you think?  And what do you think Gold did after this data print yesterday?

Well, it was scrambling to stay afloat, that’s what! The price manipulators made sure of that, as they showed up at the COMEX’s opening with arms full of short Gold (& Silver) paper trades… These no good varmints knew, like I did, that CPI was going to show a rise in inflation, so they made sure that there was no chance that the Gold bugs would be able to push Gold’s price higher on the data print…

So… here was the mindset of traders and investors yesterday… “Hey, let’s buy dollars, because they are going to come with runaway inflation!”  I say hogwash, this selling of currencies and metals had the PPT’s finger prints all over it… There’s just no way, that an intelligent trader, or investor saw the inflation data yesterday, and said, “Ooohhh, boy a buying opportunity for dollars”….  

I will say that one of the reasons given for the dollar run up yesterday was that with inflation soaring, the Fed will have to address this very soon with rate hikes…  And to that I say, Balderdash!  The Fed isn’t raising rates for at least another year, folks… Their Chairman said as much when last asked about inflation rising…  The Fed truly believes like  some economists that this inflation is only “transitory”…  Yeah, like income taxes, and removing Gold from backing the dollar were only temporary measures… 

So, the currencies got sold, Gold got sold, Silver got sold, bonds got sold, stocks got sold, shoot Rudy, even Bitcoin got sold, hmmm, Oh we did have a winner, winner Chicken dinner rising asset class yesterday, and it was… drum roll please… the price of Oil….  But that has been corrected in the overnight markets and now the price of Oil is under pressure too… What were Oil traders thinking, having the audacity to move the price of Oil higher, when everything else was getting the snot kicked out of it? They should have known better… But now they do! 

The price manipulators sold Gold down $22.50 to close the day at $1,1816.40, and Silver got sold down $64-cents, to close the day at $27.08….  The BBDX rose on the day from 1,120 in the morning to 1,126.68 at the end of the day…  As I looked at the currencies last night, I didn’t see one currency that held its ground yesterday, even the Steady Eddie Chinese renminbi/ yuan, lost ground on the day…

What to make of all this is confusing… The dollar bugs think the Fed is going raise rates to combat rising inflation, and Chuck thinks they are so wrong, they’re almost right!  That’s one of my fave sayings through the years, and I haven’t used it in a very long time! I think that this type of inflation, which, as I’ve explained previously, is systemic inflation, that’s created with fake money, stimmy checks, and more fake money…  An economist that I truly admire and follow, Dave Rosenberg, doesn’t see it this way and continues to say that the rise in inflation is only transitory…

Of course I never heard what he had to say about the rise in Wages that were reported a week or so ago…. But que sera sera….  I guess only time will tell, who’s right about this inflation and who’s wrong…  Bill Bonner had a great line in his letter yesterday, He asked if “inflation had brought its big pillow and suitcase to stay awhile”?  

In the overnight markets there was more dollar buying, as this totally incorrect theory, of the Fed needed to hike rates is permeating through the Global markets. The BBDXY is up to 1,127 this morning, and all the currencies, including the Aussie dollar (A$) and N.Z. dollar / kiwi, which had previously defied the dollar buying have finally succumbed and have lost major ground in the last two trading days.  

Well this is the day that Dennis Miller’s letter on the loss of the reserve currency status for the dollar comes out, and to add salt and pepper to the sauce, one of my fave economists, Danielle Di Martino Booth, had this to say over at Kitco.com, “U.S. dollar’s status as reserve currency is in jeopardy, ‘I’m bold gold, silver & platinum.”  

It must pain here to see what the price manipulators do to these metals from time to time, don’t you think? I say that, because it pains me… Now, I’m not one to worry about the actual price of Gold because I know I’m not selling my Gold or Silver, but I worry about short term Gold & Silver holders, and how they think these store’s of wealth metals are a commodity that gets traded daily…  Oh, well… it is what it is… and there’s nothing I can do about it, so I’ll move along here for these are not the droids we’re looking for… 

In other news yesterday the St. Louis Post Dispatch reported that Missouri Gov. Mike Parson followed several other Republican governors Tuesday in announcing plans to exclude Missouri from federal pandemic unemployment aid — ending a $300-per-week boost and extra weeks of unemployment pay, and chopping all benefits for gig workers and the self-employed, starting June 12th.

As you may know the Gov’t extended the unemployment benefits to Sept, but Parsons said that he thought the benefits were keeping people from looking for a job…  He’s probably right on that, for the most part, as thee would certainly be some unemployed people out there actively looking but not finding what they need… Because as I said about a year ago, some of those jobs aren’t coming back… And now we’re seeing that in living color… 

So, this will certainly cause some people some major problems… Just like when they also get the notice that they need to start paying rent or their mortgage payment again, and they look around to see if the Gov’t is handing out more fake cash, but…. Uh-Oh… There’s none to be had…  I feel for these people in this predicament, I don’t want to make it sound like I’m Mr. Freeze, with a cold heart to them… Just pointing out that there will be troubles ahead for the economy, and not all will be wine and roses going forward.

Today’s Data Cupboard will have the usual Thursday fare of weekly Initial Jobless Claims, which have really fallen in numbers in recent weeks… And again there will be a slew of Fed Head speakers out spreading lies… (My opinion)

To recap… Well inflation according to the BLS is soaring higher, to the tune of 4.2% in the past 12 months, or 3% less food and energy.  So, like I said above, as long as you don’t drive or use gas to heat your house or pool, and don’t eat, then you’re golden! Chuck thinks that the reason to buy dollars yesterday is hogwash, and the selling of the currencies and metals was all due to the PPT, protecting the dollar once again… here’s a memo for you dollar bugs… One of these days, your protection  isn’t going to be able to come to your aid, and then whatcha gonna do?

For What It’s Worth…  Since today’s edition of the Pfennig is all about inflation, I thought the FWIW article needed to be a good follow up, and I think I have one for you… Longtime well thought of and king of economists, James Grant, gives us his thoughts on inflation and the Fed’s ability to contain it…and it first appeared on Peter Shiff’s website… And it can be found here: Jim Grant: The Fed Can’t Control Inflation | ZeroHedge

Or, here’s your snippet: “In a recent talk, Jim Grant, investment guru and founder of Grant’s Interest Rate Observer, echoed Peter, saying the Fed can’t control inflation.

During a webcast sponsored by State Street SPDR ETFs, Grant said he thinks “there’s a gale of inflation of all kinds in progress,” adding that he believes it will take the Fed by surprise and “overwhelm our monetary masters.” Grant said, inflation is “clear and present and will manifest itself in our everyday lives.”

That sounds like the exact opposite of Powell’s “transitory” mantra.

Peter has said that once the Fed is forced to admit that inflation isn’t transitory, it will be too late to take action. Grant made a similar prediction, saying inflation will “catch the Fed flatfooted. In response it will “prevaricate” – meaning speak or act in an evasive way. In fact, that already seems to be the central bank’s strategy.

The question is can the Fed actually control inflation. Grant doesn’t think so.

I think the Fed is under the misconception that it controls events. Sometimes, events control the Fed, and I wouldn’t be surprised if this was one of those times. The Fed thinks that not only can it control events, but it can measure them. It believes it can pinpoint the rate of inflation.”

Grant believes that the economy can only tolerate 2.5% real rates. If that is breached, he thinks the Fed will have to resort to yield-curve control. If it does actually try to shrink its balance sheet and sell bonds, it will drive bond yields even higher. Fed bond-buying is the only thing propping up the bond market right now.”

Chuck again… Well, one of the many things that I learned from Frank Trotter was to listen to what Jim Grant says… And I always have… And Jim Grant is correct that the Fed only has so many arrows in its quiver to use for rate hikes, before all hell breaks loose in the financial system…

Market Prices 5/13/2021: American Style: A$ .7710,  kiwi .7158,  C$ .8248, euro 1.2070, sterling 1.4034, Swiss $1.1012, European Style: rand 14.1040, krone 8.3826, SEK 8.4354,  forint 295.69,  zloty 3.7640,  koruna 21.1848, RUB 74.32, yen 109.56, sing 1.3350, HKD 7.7672, INR 73.59, China 6.4444, peso 20.13, BRL 5.2454,  BBDXY 1,117.17,  Oil $64.43,    10-year 1.70%, Silver $26.90, Platinum $1,208.00, Palladium $2,902.00, Copper $4.74, and Gold… $1,814.10

That’s it for today… What a way to lose a game last night for my beloved Cardinals… strike out a guy with a 101 mph heater, and he reaches base because the catcher couldn’t handle the pitch… That runner came around to score the winning run…  UGH!  I was just looking over my picture board here that looks at me at my writing desk, and noticed that I have a slew of pictures of Alex, four of Andrew, and three of Dawn, a lot of Delaney, a couple of Everett and Braden, and the rest is hodge podge of pictures, with only one with little Evie. It’s a picture of me holding her when she was just hours old, and you can already tell I’m smitten with her! Don’t know why I went through that, but I did… Cat Stevens takes us to the finish line today with this song: Moonshadow… “I’m being followed by a moonshadow, moonshadow, moon shadow”…  Now, if you’re like me (heaven help you!) that song will be an earworm for you all day!  I hope you have a Tub Thumpin’ Thursday today, and please Be Good To Yourself!

Chuck Butler

Dollar Reserves Held By Central Banks Fall to 59%…

May 12, 2021

* Currencies drifted on Tuesday… 

* Gold fights back on Tuesday to erase an intraday loss! 

Good Day… And a Wonderful Wednesday to you…  As the group Chicago sang many years ago, I’m feeling stronger every day….  The pain in my stomach from the pulled muscle, is not as sharp of a pain, but still painful… I’ve got a ton of stuff to talk about today, so the markets will be playing second fiddle to all my thoughts today… That sure was a nice win for our Blues on Monday night, in L.A. after sleeping all day I had no problem staying up for that late game! My beloved Cardinals are in Milwaukee, to play the Brew Crew… And last night they won 6-1, with some 11th inning home runs… Crosby, Stills, & Nash greet me this morning with their love song: Suite: Judy Blue Eyes…

Well it was a real strange day on Tuesday in the currencies and metals…  At one point in the day, Gold was down $18 and I thought, “oh no, here we go again, another engineered takedown”, but then Gold’s fortunes turned around and the shiny metal ended the day up $1.90, to close at $1,838.90, and Silver fought through some short selling too, and wound up 36-cents on the day to close at $27.73.

The currencies kind of drifted on the day… there were some that lost a little ground and some that didn’t…  And that leads me to my first discussion of the day… Ok, after all my complaining about the Dollar Index yesterday, former colleague, Neil George, sent me a note and told me I should use the Bloomberg Dollar Index, which includes the Chinese renminbi/ yuan. I looked into it, and saw the weightings in the index, and saw the inclusion of renminbi, and also saw that euros make up 32% of the index, so not as much as the Dollar Index I currently use… So, from now on the Dollar Index I refer to will be the Bloomberg Dollar Index (BBDXY). It will take some time to get used to it, but over time I do believe it will give us a better illustration of what the dollar is doing on a trade weighted basis… 

So, the BBDXY ended the day yesterday at 1,119.20, after starting the day at 1114.14, so you can see that the currencies lost a little ground to the dollar yesterday. But just like the metals, the currencies were down by a larger amount early only to comeback strong at the end of the day. Hopefully that will be a harbinger for the overnight & today’s price action…

In the overnight markets…Well hope springs eternal I guess… But the dollar kept up the pressure on the currencies overnight, and the BBDXY rose to 1,120.33 in the overnight trading.  Gold is down $3 this morning, and Silver has lost 23-cents in the early trading.  I find these down figures for the metals to be something that could very easily be reversed, given that today we’ll see the color of the stupid CPI which even with all its hedonic adjustments, should show inflation rising, which should be a good thing for Gold & Silver. 

Well, recall last month when there was all the talk of a stock market collapse on a certain day, but the collapse never happened…  On Monday this week I had planned to talk about the newest call for a collapse but with me being sick didn’t help that discussion along…  Yes, Monday, May 10th, was supposed to be the latest armegeddon day for the stock market… And while the Dow actually lost a percentage point or two, it certainly wasn’t a collapse…  So, to me these people are doing nothing but crying wolf… yes, the wolf exists, as everyone and their brother knows that the stock market is overvalued by lengths… So, the possibility of a stock market collapse is reality, but calling it on a certain day to happen? Well, eventually, it will happen, and they will be the ones that said, “I warned you”…   

Ok, so all this talk of a market collapse on Monday, must have gotten the folks at www.wallstreetonparade.com looking into the possibilities… And you won’t believe what their research showed, but don’t worry, I have it for you here…

“The data shows that just prior to the dot.com bust on December 31, 1999 that resulted in the Nasdaq stock market losing a stunning 78 percent of its value from peak to trough, the total stock market value was 1.77 times GDP.

At year-end 2007, prior to the greatest Wall Street collapse since the Great Depression, the total stock market value was 1.34 times GDP.

As of December 31, 2020, total stock market value represented 2.10 times U.S. GDP. Siblis Research further shows that as of March 31 of this year, total stock market value in the U.S. stands at a breathtaking $49.1 trillion. (That includes U.S. based public companies listed on the New York Stock Exchange, Nasdaq Stock Market or OTCQX U.S. Market.)

A $49.1 trillion stock market is larger than the combined GDP of the four largest industrialized nations (U.S., China, Japan and Germany) according to International Monetary Fund data.”

Chuck again… So… maybe the end is near, but again, it’s long overdue, but being able to say it’s going to bust a button on X day, is getting a little too much for me…

But what it does do for us is to remind us to update our stop losses…  These are very important in you retaining profits you have in stocks folks… Because when the bottom falls out getting your stock sold at your price will be quite difficult…

Deficit spending has been a bane of mine for as long as I can remember… I remember yelling at walls for Bush’s deficit spending, then Obama’s, then Trump’s, and now Biden’s…  I finds this all to be worthless spending on boondoggles, and bonuses… The misallocation of tax payer funds, has continued down a long path of good money chasing bad programs…  And to highlight what I’m talking about here’s longtime friend, and publishing guru, along with best selling author, Bill Bonner…

“And while the feds have been wasting resources for generations, the rate of loss has recently gone much higher than usual.

In the 1970s, Washington reliably frittered away about 27% of GDP. Now, it’s over 40%. That doesn’t count the trillions in private waste and malinvestment caused by the proliferation of regulations and edicts, not included as federal spending.

All together, directly and indirectly, half of U.S. GDP is probably misallocated… or misspent.”

Chuck again…  I find this all to very likely ruin, our future folks… Yours, mine, your kids and grandkids, my kids and grandkids, and I try to sit them down and talk to them about this stuff, and it all falls on deaf ears, like deer caught in headlights, but one day, when the lights go out, they’ll call me on the phone and ask me why I didn’t warn them….   

And finally…. Yesterday, I mentioned the article that will have episode 1 from Dennis Miller, will run tomorrow, and how we explore what it will be like when the dollar isn’t the reserve currency any longer…  And to that, another good friend of mine, Craig, sent me this link to an article on Kitcom.com, that talks about how Central Bank reserves around the world are seeing their dollar holdings drop… Here’s an excerpt from that article:

“The reach of the U.S. dollar as the global reserve currency is declining as central banks around the world reduce the share of U.S. dollar reserves, according to the International Monetary Fund (IMF).

“The share of U.S. dollar reserves held by central banks fell to 59 percent—its lowest level in 25 years—during the fourth quarter of 2020,” IMF cited its own Currency Composition of Official Foreign Exchange Reserves (COFER) survey.”

Chuck again… And in my opinion, we will continue to see the percentage drop even lower… As the currency printing continues, thus debasing the value of the current stock of dollars… When the drop in reserves comes to a crescendo…  We will probably wake up to find a digital currency had taken over our dollar balances at the bank…. 

The U.S. Data Cupboard yesterday showed that their were a record number of job openings in the U.S. The number was 8.1 Million… So, do the reverse math on that, and you get over 8 Million people not interested in working any longer, as long as the Gov’t keeps sending them stimmy checks, and tax credits for children, etc.

Today’s Data Cupboard will have the stupid CPI (consumer inflation) will print for April… Don’t expect this index to reflect the items I showed you yesterday that had increased…  That’s not what this index is geared to do… Instead it’s geared to lie to you… And tell you there is no inflation to be fearful of… I didn’t pay attention to any of the Fed head speakers yesterday, for I’ve been told enough lies to last a lifetime!

For What It’s Worth…  Ok, when this article first came to my attention, I blew it off because it was behind a paywall at the tellegrapch.uk.co website… But then Ed Steer came to my rescue with a snippet of his own of the article in his letter yesterday, and so unless you pay for a subscription to the Telegraph.Uk.co, this snippet will be it for this article by Ambrose Evans Pritchard…

Here’s your snippet: “The U.S. Federal Reserve and Treasury are repeating one of the most disturbing episodes of the 1940s and risk stoking a destructive inflationary boom, a leading monetary watchdog has warned.

The Center for Financial Stability (CFS) in New York says U.S. money supply data is flashing a red alert and that excess reserves in the banking sector threaten to set off an “explosion of lending” as the recovery accelerates.

The Fed is riding a tiger by the tail and may have great difficulty extricating itself from a torrid monetary experiment that is reaching its limits.

The CFS said its “divisia” measure of the broad M4 money supply rose 24 percent in March from a year earlier, and narrow its M1 variant rose 36.9 percent. “Those monetary growth rates are potentially alarming,” said Professor William Barnett, the institution’s director.

Barnett said de-facto collusion between the Fed and the Treasury is much like that of the 1940s, when the Fed served as a fiscal agent for Democratic administrations and mopped up the vast bond issuance needed to pay for the Second World War and its aftermath.

Inflation reached 17 percent by mid-1947 and creditors were gradually expropriated in what amounted to a stealth default stretched over several years.”

Chuck again… For all the work that Ed Steer puts into his letters each day, I salute him, and would recommend signing up for his letter to anyone! You can find him at www.edsteergoldsilver.com

Market Prices 5/12/2021: American Style: A$ .7806,  kiwi .7234,  C$ .8176, euro 1.2135, sterling 1.4137, Swiss $1.1068, European Style: rand 13.9938, krone 8.2641, SEK 8.3291,  forint 294.67,  zloty 3.7415,  koruna 21.0396, RUB 74.12, yen 108.75, sing 1.3283, HKD 7.7661, INR 73.45, China 6.4146, peso 19.97, BRL 5.2256,  Dollar Index 1,120.33, Oil $65.54,  10-year 1.61%, Silver $27.50, Platinum $1,243.00, Palladium $3,000.00,  Copper $4.83, and Gold… $1,835.90

That’s it for today…  Thanks again for all that sent along get well wishes… I haven’t had a cold like this in many years, and with today being the 9th day of the cold, means that it’s just about to give up haunting me… And I’ll say good riddance! What a strange game last night for my beloved Cardinals. The Cardinals hitters couldn’t find their way out of the infield for 10 innings, and then in the 11th inning they exploded for 5 runs! Good thing the Cardinals pitching was up to the task…  What’s up with the cool temps here in the Midwest?  We won’t see 70 degrees this week, and we’re in the 2nd week of May!  I had requested that we turn the heat back on in the house, as I sit here each day with a hoodie on, and wrapped in a heavy blanket! But as usual my requests fell on deaf ears… And so I await warmer weather to return to the Midwest…  Linda Ronstadt takes us to the finish line with one of the saddest songs ever: Long, Long Time…  So sad… Well, I hope you have a Wonderful Wednesday, and will Be Good To Yourself! 

Chuck Butler

 

Back From The Living Dead…

May 11, 2021

* currencies can’t hold their gains from Friday, on Monday.. 

* Gold & Silver with steady under the radar increases… 

Good Day… And a Tom Terrific Tuesday to you! Well, yesterday, I told you that rest and sleep were my best bets to healing, and so I basically slept all day… I didn’t wake up until 5:00 pm in the evening! My cold seems to be waning, for it’s been 8 days and I usually have a cold last 10-14 days… But this pulled muscle in my stomach is killing me with pain! I can’t even begin to describe how painful that is every time I move, walk, bend over, breathe! I’m trying Salonpas Pads on it now, and it does take away the sharp pains, a bit… Any help there is much appreciated! I want to thank all you dear readers who sent me notes yesterday, they did put a smile on my face, probably the first one in days! So, thank you very much!  Chicago greets me this morning with their song: Hard To Say I’m Sorry….  This song was recorded after the death of Terry Kath, and was their Peter Cetera sappy period… 

Well… have you ever slept all day? That had to be a first for me… I’ve said that I thought I was going to sleep all day, but that was a far cry from actually doing it like I did yesterday… So, Monday, May 10th, was a wasted day in my life… Hopefully, that’s over and done with! I do feel a bit stronger this morning, so I’ll attempt to get through a normal length Pfennig today…

So… Have you read all those spin doctors reports about how the BLS Jobs report was only 266,000 and not 1 Million?  These people must have put some real money on that jobs report, because they will not or can not accept the numbers for what they were…  I hate to be the one to burst their bubble, but the BLS added 298,000 jobs to the total, after receiving the surveys… And that means that the surveys said there were negative 32,000 jobs in April…  Why does it take me each month, to go through the BLS report and pull this stuff out? Where’s the financial journalism out there? Oh, well, the lies, just keep coming from the Cartel, Treasury, Wall Street, Gov’t, and whomever else is on the roster to tell lies!

The currencies couldn’t add to their Friday gains on Monday, but the moves weren’t exactly strong by the dollar bulls.. The Dollar Index started the day at 90.20 and ended the day at 90.23… Whoopee! The Dollar Bugs won the day! Ahem…  Well, they won the day only against the currencies, which are heavily weighted in euros, in the Index….  Currencies like the Aussie dollar (A$) and N.Z. dollar / kiwi, aren’t included in the index… And yesterday, these two kept chugging higher, with the A$ closing the day at 78.36-cents, and kiwi at 72.68-cents…

I could tell you that years ago I wrote a piece in the Pfennig about how the real Dollar Index should be changed to include the Chinese renminbi, Aussie dollar, and kiwi …  If it had been changed prior to the last weak dollar trend, the dollar would have had even greater losses and probably would have caused some major changes in the world… .But… it wasn’t… and so we go on another day, pretending that the Dollar Index is 90 something…

Gold & Silver found a way to gain on the day, this despite a slew of short paper trades showing up at the COMEX…  Gold gained $9.70 for the day to close at $1,841.90 , and Silver gained a whopping 8-cents to close at $27.62…  I read a report on Bloomberg.com where the writer said that Silver buyers are waning with Silver above $27…  Nowhere in the report was there any mention of how the Silver buyers aren’t waning, but instead, having to offset the short paper trades!  Poor financial journalism. Once again!  And for those of you keeping score at home, the short trades in Silver represent 160 days of production…  While that is down from the 185 number a few months ago, it’s still very large, and I thank Ed Steer for that information that he supplies in his Saturday letter each week! 

In the overnight markets, the currencies are fighting back to regain their lost gains yesterday, with the Dollar Index falling to 90.13 this morning. Gold is up $2.30 and Silver is up 20-cents as we start the day today. Good steady increases are what we need to see in Gold & Silver…  And with inflation rising faster than a speeding bullet, these two metals should be at the top of everyone’s list of inflation hedges….  I’m just saying… 

Speaking of inflation, I’ve got a real good article for you in the FWIW section this morning, from the folks at Switzerland Gold (Egon von Greyerz)  regarding inflation…  I’m just so sick of all the lies being told by the Gov’t regarding consumer inflation that it turns my stomach to read them… The CPI (consumer Price Index) lies, the Cartel Chairman lies, The Treasury Sect. lies,  and so I found it soothing to read this article, at least there is some real good financial journalism somewhere!

In the report, there’s a list of Commodities that are soaring…These are all year to date increases…  here’s the list: 

Gasoline          Up 47%

Crude oil          Up 31%

Heating Oil       Up 8%

Propane           Up 26%

Natural Gas      Up 15%

Lumber             Up 70%

Corn                Up 54%

Wheat              Up 41%

Sugar               Up 14%

Cotton              Up 12%

Lean Hogs        Up 56%

Beef                 Up 12%

So, there’s your teaser for the FWIW article today… 

This Thursday, readers of good friend, Dennis Miller’s www.milleronthemoney.com will get a real two-episode treat… I did a lot of work on this attempt to describe what it will be like when the dollar is no longer the reserve currency of the world…  I even attempt to “Go Back To The Future”…  I’m no Michael J. Fox, but I think I did it pretty well…

 

The U.S. Data Cupboard yesterday was empty… no wonder the dollar bugs rallied, for there was nothing there to show the dollar as overvalued… Today’s Data Cupboard has just two pieces of data that aren’t really market moving… We have the Small Business Index, and Job Openings… There will also be a slew of Cartel Head speakers… so more lies to be distributed!

To Recap… The currencies couldn’t add to their gains on Friday, but the moves were muted for the dollar at best… Gold & Silver gained on the day, dispite another round of short paper trades being thrown at the COMEX… Chuck is fed up with all the lies being told about inflation… And he’s not in the mood to deal with more lies today, but will have to as a slew of Cartel speakers will be out and about to spread more lies today…

For What It’s Worth… Well, I teased you a bit above with this would be about, and it’s a very long article that you should read in it’s entirety as I only have so much room for the snippet… It’s Switzerland Gold’s Matthew Piepenburg on inflation and it can be found here: Keep It Simple: Gold vs. a Mad World – Matterhorn – GoldSwitzerland

Or, here’s your snippet: “Psychologists, poets and philosophers have written for centuries that many who have eyes refuse to see, and many who can think, refuse to think clearly–all for the simple reason that some truths, like the sun, are just too hard to look straight into.

Or as others have said more bluntly: “Truth is like poetry—everyone [fricking] hates it.”

When it comes to bloated markets, debt orgies and helicopter money, the rising fun of such “stimulus” is embraced, yet the template for its equally market-tanking, social-destroying and currency-debasing consequences are simply ignored.

The same is true when it comes to the “great inflation debate,” which is simply no longer a debate but a neon-screaming reality playing out in real time and growing more pernicious before eyes otherwise blinded by calming Fed-speak and bogus inflation scales.

Each passing day, the evidence of the inflationary cancer beneath the smiling surface of our still rising markets and “recovering/opening” economy increases, and thus, like it or not, the inflation topic just won’t and can’t be over-stated enough.

In short: Here I go again with the inflation thing…

Extreme US “stimulus,” vaccine rollouts, Europe’s eventual reopening, and rising commodity costs are accelerating the inflationary tailwinds which everyone from grocery store clerks and home builders to Warren Buffet can no longer deny or ignore.

As facts rather than theories confirm, commodity prices have surged from steel to copper, or corn to lumber while precious metals steadily rise against COMEX price fixers, CPI lies and other unsustainable boots to the neck of a coiled gold market positioned for big moves into late 2021 and beyond.

Commodities, of course, represent the cost of goods, and when they soar, retail prices generally aren’t far behind, as seen (and growing) daily in the rise of food, home construction, auto, and other everyday purchases—you know, things that matter.

In short, if every product needed to feed, house, clothe and move consumers is rising by high, double-digits, how can we trust a Fed or CPI scale that tells us consumer pricing is hanging at the “allowed” 2% range?”

Chuck again, like I said above, this is a long article but one that needs to be read in its entirety, so grab a cup of joe and click on the lick above, and get to reading!

Market Prices 5/11/2021: American Style: A$ .7847,  kiwi .7288,  C$ .8265, euro 1.2167, sterling 1.4137, Swiss $1.1088, European Style: rand 13.9679, krone 8.2410, SEK 8.3150,  forint 294.70,  zloty 3.7424,  koruna 21.0124, RUB 73.95, yen 108.88, sing 1.3261, HKD 7.7661, INR 73.33, China 6.4175, peso 19.87, BRL 5.2290,  Dollar Index 90.13,  Oil $64.54,  10-year 1.61%, Silver $27.56, Platinum $1,252.00, Palladium $3,037.00, Copper $4.85, and Gold… $1,839.30

That’s it for today…  Again, I apologize for yesterday’s inability on my part to answer the bell. And I truly appreciate all of you who sent along get well messages…  They do lift me up a bit, so thank you, thank you, thank you! (in my best Gomer Pyle voice)…  Youngest son Alex didn’t make it here to see his mom on Sunday, as he’s venturing the mountains of Utah, and Colorado this week with a few of his pals… I trust he called her… Don’t know because I’ve been in basement for two days now, only venturing upstairs to take a shower, shave, and brush my teeth!  OUCH! I just coughed and the pain in my stomach screamed, OUCH!  Of course had I remained a work out fiend, as I was as a youngster, and still have abs you could count on, this pulled muscle wouldn’t have happened…  So, there!  Me and my pals worked out in a basement with pulleys, and benches, and when we would run out of weights to lift, we would go steal a man hole cover, or two, drill a hole in the middle of it, and voila, we had more weights!  Ok, it was me, I admit I stole something in my life… But the street crew would replace it in a day or two! So, I rationalized my theft…   Bygones, are bygones, right?  I end the Pfennig today with my fave Ray Charles song from 1962… The song is: You Don’t Know Me….  “No, you don’t know the one who dreams of you each night And longs to kiss your lips And longs to hold you tight To you I’m just a friend That’s all I’ve ever been No, you don’t know me” Man I love that song! I hope you have a Tom Terrific Tuesday, and it sure looks as though I made up for yesterday’s short Pfennig… And please Be Good To Yourself!

Chuck Butler

April Jobs Print Only 266,000….

May 10, 2021

Good day…. And a Marvelous Monday to you… This will be the shortest Pfennig on record, as I almost didn’t answer the bell this morning… My cold took a turn for the worse, and I pulled a muscle in my stomach during one of my coughing spells… I can’t breathe without major pain right now… So, sleep and rest is my best bet to healing, and so, with that I’ll talk about the jobs number on Friday, and how it really sent the currencies and metals higher on the day, and that’s it… Sorry, but discretion is being the better part of valor for me today… The Easybeats greet me this morning with a song that usually gets my motor going, but not today, as they sing their song: Friday On My Mind…

Well, so much for those so-called experts that called for 1 Million new jobs in April, eh? The BLS jobs jamboree on last Friday showed that only 266,000 jobs were created…  Now you know me, and how I like to sarcastic, but isn’t 266,000 just a but shy of 1 Million?  C’mon Chuck don’t make yourself giddy or laugh this morning that hurts too much!  The Unemployment Rate rose to 6.1% and all the spin doctors were out to try to make it all sound as if it didn’t happen…

But it did… The Currencies rallied all day on Friday, never looking back, and the Dollar Index closed the week at 90.24…. It had started the week on 5/3 at 91.19… So, not a good week for the dollar… The euro climbed to 1.2158… And all the other currencies followed the euro’s lead.

Gold & Silver had quite the day on Friday too, although, Gold could have ended the day higher, if it weren’t for the short trades that were entered late Friday afternoon… Gold closed the week up $16, and a price of $1,831.70… Silver also saw short trades late Friday afternoon, to limit its rise to only 15-cents, to close the week at $27.54

I’ll just add this.. Gold moved strongly above the $1,800 level which had been a line in the sand for the price manipulators… Now, Gold’s mission should it decide to accept it, is to remain above $1,800 and add to its current level…

I’ll try to have more for you tomorrow…  At least you know that my leeriness with the call for 1 Million jobs created for April, came around to being correct, and things went haywire for the dollar since…

I don’t even want to do a currency roundup today, so I’ll leave you with this…

I hope your Mother’s Day was grand… I was supposed to smoke a whole slew of pork steaks for the Mother’s Day crowd here, but… I just bagged it, couldn’t get going…  I stayed in the basement all day nd kept little Evie away from me, which was so difficult to do, for she was dressed so cute! So, you dear readers aren’t the only ones I’ve bagged!

Be Good To Yourself

Chuck Butler

Yellen Sees No Inflation Problem…

May 6, 2021

* Currencies & metals rally in the overnight markets

* Sam Zell finally bellies up to the Gold window… 

Good Day… And a Tub Thumpin’ Thursday to one and all! Well… This is going to be a short one today folks, I’m beat, draggin’ the line, and feeling like death warmed over…  I won’t opine too much because there was nothing going on yesterday in the currencies… And besides, I just don’t feel like putting my mind to work this morning… I’m sure I’ll be better on Monday morning, and I’ll make it up to you then. Eddie Money greets me this morning with his song: Shakin’…

OK, as I just said, the currencies traded in a very tight range yesterday. The Dollar Index opened the day at 91.30, and ended the day at 91.26…  So, as you can see, little to no movement…  The euro was trading 1.2010 nearly all day and most of last night. I know, because I was wide awake at 1 in the morning, so I checked the markets and didn’t see any movement, so I tried to go back to sleep again…

Gold found a few bids yesterday, and gained $7.60 on the day to close at $1,787.60… Silver didn’t see any bids, and lost 4-cents on the day, to close at $26.56… There was really no new inflation news on the wires, and it sure seems that the only time traders and investors think about rising inflation is when they see new/fresh inflationary data… That begs the question… If you see inflationary data one day, why wouldn’t it still be inflationary the next day? Dolts… all of them, and I’m in no mood this morning for dolts!

In the overnight markets…. It was opposite from what happened overnight on Monday night into Tuesday… The dollar was sold overnight, and this morning the Dollar Index is down to 91.01 from 91.26 last night. And Gold is up $6.70, with Silver up 26-cents in the early trading today. Before we get all giddy about the move in Gold, let me remind you that it was about at this level ($1,793) that we saw the PPT come in and defend the dollar, pushing Gold back down away from $1,800….They could very well, come back to defend the dollar once again, and maybe they won’t… Only the Shadow knows… 

This came in from the good folks at GATA yesterday, as they reprinted a report from the International Monetary Fund (IMF)…  “The share of U.S. dollar reserves held by central banks fell to 59 percent — its lowest level in 25 years — during the fourth quarter of 2020, according to the IMF’s Currency Composition of Official Foreign Exchange Reserves survey.

Some analysts say this partly reflects the declining role of the dollar in the global economy in the face of competition from other currencies used by central banks for international transactions.”

Chuck again… Well I can see the leaders of China and Russia slapping each other on the back and saying atta boy! As I’ve chronicled here China and Russia started their plans to dedollarize a couple of years ago, and it’s beginning to take shape… Remember when I told you that these two countries would attempt to get other countries to dedollarize, and that one of the tools they might use is the threat of not invading them if they jumped on the bandwagon…  Now, I certainly don’t know if that’s even part of their plans, but I think it would behoove Russia & China to have that plan in their arsenal, because sometimes when you want something so badly to can taste it, it helps to have a plan to close the deal…  I’m just saying…

The price of Oil couldn’t keep the $66 handle it was trading at yesterday morning…  Sorry Oil contract holders, for deep sixing the price of Oil by highlighting it yesterday! UGH! But even with Oil price slipping back to a $65 handle, it’s still up by a large margin… Last year at this time Oil was trading at $25…  And there’s no inflation right? Yeah, and I’ve got a bridge to sell you!

Speaking of inflation or, in this case, not speaking of it… This came across on Reuters yesterday, “U.S. Treasury Secretary Janet Yellen said on Tuesday she sees no inflation problem brewing, downplaying earlier comments that rate hikes may be needed to stop the economy overheating as President Joe Biden’s spending plans boost growth.

OK… you’ve got Yellen, Powell, and take your pick of Fed heads, since none of them ever vote contra to what Powell votes… And you ‘ve got: The three Blind Mice… See how they run… or, better yet, you’ve got a case of: See no inflation, speak no inflation, hear no inflation… 

Just how stupid does Yellen think those of us in the America read stuff like that are? I take offense at what I perceive as her attempting to pull the wool over my eye… And that I’m too gullible to know that she’s pulling the wood over my eye!  Ever since Yellen tried to deep six the economy with the rate hikes ahead of the election, I’ve had no use whatsoever for her… period.

Man, I remember the day I pointed out why I thought she was raising rates, and management didn’t like it on iota…. They had me retract that statement the next day…  But those were in the dark ages for the Pfennig… 

The U.S. Data Cupboard  today will have the 1st QTR Productivity data… We, as a country, finished off 2020 in the 4th QTR with a negative -4.2% Productivity… So, I would expect this 1st QTR to be far better than the 4th QTR…  And it’s Thursday, so that means the Weekly Initial Jobless Claims will print this morning… 

Tomorrow is the April Jobs Jamboree… The so-called experts are calling for 1 Million jobs to have been created in April…  As I said yesterday, I’m from Missouri, I’ll have to be shown!

To recap… yesterday saw little to no movement in the currencies throughout the entire trading day, and while Gold found a couple of bids, Silver didn’t, and Chuck thinks that traders are dolts…  And in the overnight markets traders are back to selling dollars, with the currencies, and metals both pushing the envelope across the desk once again… Chuck points out that the last time Gold was trading $1,793, and looking like it was ready to breach $1,800, the PPT stepped in to defend the dollar… 

For What It’s Worth…  Well, first I saw this article highlighted in the 5 Minute Forecast yesterday, then I saw it in Ed Steer’s letter, and thought, if it’s good enough for Dave Gonigam, and Ed Steer, then it’s good enough for a FWIW article for me!  And so this is an article about worldly Investor Sam Zell, finally buying Gold, and it can be found here: Sam Zell Buys Gold To Hedge Against Surging Inflation, “Debasement” Of The Dollar | ZeroHedge

Or, here’s your snippet: “Fed Chairman Jerome Powell insisted once again last week that the inflationary pressures building up in America’s overheating economy would be “transitory” (though the central bank is keeping a close eye on prices in keeping with its mandate), but as Wall Street strategists warned their clients on Tuesday as U.S. equities tumbled, signs that the U.S. economy might be headed toward hyperinflation are getting harder and harder to ignore.

As investors brace for the prospect of a sustained downturn in equities, Sam Zell, the infamous Chicago real-estate investor and billionaire, told Bloomberg that he’s seeing signs of inflation everywhere he looks.

And as Treasury Secretary Janet Yellen hints that the Fed (which she once led) might be forced to hike rates sooner rather than later, threatening lofty equity valuations, Zell is resorting to an old-fashioned inflationary hedge that some investors claim has been rendered obsolete by bitcoin.

Many are questioning whether gold (which has been out of favor seemingly since the financial crisis) has become obsolete in the age of crypto, and Zell acknowledged that even he has mocked investors for believing in the yellow pet rock.

“Obviously one of the natural reactions is to buy gold…It feels very funny because I’ve spent my career talking about why would you want to own gold? It has no income, it costs to store. And yet, when you see the debasement of the currency, you say, what am I going to hold on to?”

Chuck again… Zell also said, “Inflation can be seen all over the place”…  That’s the same thing I’ve been saying now for months… Glad to see you jumping on my bandwagon, Sam!

Market prices 5/6/2021: American Style: A$ .7757,  kiwi .7215,  C$.8179, euro 1.2046, sterling 1.3935, Swiss $1.1003, European Style: rand 14.2548, krone 8.3316, SEK 8.4537, forint 297.41,  zloty 3.8074,  koruna 21.4285, RUB 74.76, yen 109.12, sing 1.3346, HKD 7.7683, INR 73.75, China 6.4726, peso 20.22, BRL 5.4079,  Dollar Index 91.91,  Oil $65.30,  10-year 1.57%, Silver $26.81, Platinum $1,241.00, Palladium $2,992.00, Copper $4.55, and Gold… $1,793.30

That’s it for today and this week… I don’t know if it was the losses by my beloved Cardinals and Blues last night or the nasty cold I have that put me into such a dour mood this morning! The Cardinals did split the double header, but once you win the first game, you should go all out to win the night cap! And I just didn’t see them going all-out… Back in the day, when I used to be the kid’s elementary school Santa Claus, I used to come down with a bad cold like this every December, after having 100’s of kids sit on my lap for a picture… And the only little kid to sit on my lap in the last week was little Evie, and I doubt she gave me this cold… I haven’t had a bad cold in years! I know that the old adage for this is feed a cold, starve a fever… So, maybe that’s what I’m doing wrong! I haven’t felt like eating this week! HA!   Ok, there’s a little life in me this morning…   Sunday is Mother’s Day… So a Happy Mother’s day to all the Moms out there! The band Live takes us to the finish line today with their song: All Over You… This was from their first album, which was a big seller.. Their second album, not so much….  I hope you have a Tub Thumpin’ Thursday, and a Fantastico Friday tomorrow…  Now onto my Mother’s Day poem Tradition…

Mom…

Mom is such

A special word

The loveliest

I’ve ever heard

 

A Toast you,

Above all the rest

Mom, you’re so special

You are simply

The Best!

 

Chuck Butler

 

 

The Price Of Oil Continues To Climb Higher…

May 5, 2021

* Currencies & Metals wrapped a tourniquet around their bleeding… 

* Little to no movement in these markets this morning… 

Good Day… And a Wonderful Wednesday to you! It’s also Cinco de Mayo! More on that in the wrap up at the end of the letter today… Yesterday it was May the 4th be with you, and today it’s Cinco de Mayo, and tomorrow it will just be May 6th…  Oh well, just another day! But that’s tomorrow, we need to live for today! Because only today is promised to us… I, unfortunately, feel like death warmed over this morning, as my cold has taken a turn for the worst… Tommy Tutone greets me this morning with his song: 867-5309…  Sort of like 634-5709 the R&B song from the 60’s!

The currencies never rallied back yesterday, but did wrap a tourniquet around the bleeding they had suffered in the overnight markets the night before. The Dollar Index was trading at 91.30 yesterday morning, and closed at 91.26… So not much movement either way for the currencies. Gold never found a bid all day, and added to its early morning loss to end the day, down $13.20, and close at $1,780.70. Silver suffered the same selling that Gold did, and ended the day down 42-cents, to close at $25.58…

So, some more up one day, down the next for these two asset classes… You know, I’m not sure I ever told you this before in the Pfennig. I used to tell audiences this all the time… But during the dollar’s life as a fiat currency, circa 1971, it has seen 6 completed trends, alternating back and forth between weak dollar trend, and strong dollar trend. The point I’m going to make here is this… During the strong dollar trends, the dollar never recovered all that it had lost in the previous weak dollar trend… So, since 1971, the dollar’s overall direction is down… I used to show a chart of these trends to illustrate how the dollar never recovered all the ground it lost in the previous weak trend…

The reason this came to mind for me is that Gold & Silver have had their trends too… Commodity trends, of which there have been far too many through history to list them… But the great Jimmy Rogers noted in his book Hot Commodities that throughout history, when Commodities began a boom trend, the trend lasted between 17-20 years…  So, while that history might not play out in today’s world of trading, it does give us some idea of how long a strong commodity trend can last…  And just like with the dollar, Gold & Silver saw it’s last completed boom trend, end in 2011 after reaching $1,900, and then never lost all of its gains in the ensuing weak commodity trend…

In addition, regarding Gold & Silver…  The prices stated on line or in the paper for these two metals are the paper prices… They do not reflect the price of buying physical coins and bars… For instance, a dear reader sent me a note yesterday, and told me his local Gold dealer quoted him a price of $2,100 for a 1 oz. Gold coin, and when the buyer questioned the price, the dealer then explained to him that there’s a paper price, and a “real price” for Gold & Silver…

Speaking of silver, there was an article on Bloomberg.com about how the solar panel industry has put in orders for more physical Silver than every before!  I’m telling you this now, so maybe you’ll listen to me later, but not too much later because by then it could be too late baby now, it’s too late… there’s a shortage of Silver out there and demand for physical is high… Let’s see… supply is weak, and demand is strong… seems like a good recipe for a bull market doesn’t it?

In the overnight markets… there’s been little movement in both the currencies and metals… The Dollar Index is back to 91.30 this morning, so not much movement at all… The biggest mover in price is the price of Oil… Oil is trading with a $66 handle this morning.. Oil traders are buying into the thought that the U.S. economy is going to go gangbusters this summer, and people will be driving all over God’s green earth… 

I tend to think that’s getting overly optimistic but I’m not going to step out in from of the moving bus that represents the price of Oil right now… 

OK… I still looked and looked for a reason for the selloff on Monday night into Tuesday, and there was nary a word written about it, so like I said yesterday, we’ll just have to go with some profit taking was the cause…

Alrighty then… I was reading Dave Gonigam’s 5 Minute Forecast yesterday when I came across this little ditty that he reported, “U.S. military planners are preparing for the likelihood of Beijing reuniting with Taiwan by force — “in the next six years,” according to Adm. Phil Davidson, commander of U.S. forces in the Indo-Pacific.”  I couldn’t stop thinking about all the horrible things that could happen if the U.S. decides to back Taiwan…  The losses of ships, planes, jets, soldiers, and innocent civilians would be egregious, and that would before the war escalated to nuclear devastation…  I’m no yellowbelly when it comes to defending our country, but somebody else’s country? Didn’t we learn our lesson in Vietnam?

But starting a war of any kind, would be a way to get people’s minds off the problems at home, right? The dollar is losing value by the boatload, start a war… People are taking to the streets to protest food prices, start a war…   I have shivers going down my spine right now thinking about this stuff, so I’m going to stop right there….

I’m sorry I went down that rabbit hole folks… But people need to be aware of potential problems right?

The U.S. Data Cupboard yesterday had March prints of Factory Orders, and the Trade Deficit… Factory Orders for March did recover from Feb.’s -0.5%, and printed a 1.1% gain, but that gain didn’t meet expectations of 1.3%, so the print was more of a meh…. And the March Trade Deficit came in much larger than Feb’s $70.5 Billion… The March print was $74.4 Billion…  Signaling that the dollar is still too strong for foreigners to buy our goods…

Today’s Cupboard has the ADP Employment Report, and the forecast here is for 800,000 jobs to have been created in April… Well, I’m from Missouri, and I’ll have to be shown that! And since the letter is so late today, I’ve been shown and 800,000 jobs was not what printed! 742,000 jobs were created in April according the folks at ADP…  And 742,000 is still a whopping number.. But remember last April? 20.5 Million people were out of jobs…  Just putting today’s report in perspective… 

To recap… The currencies tried all day on Tuesday to recover the losses they incurred in the overnight markets the previous night, but the best they could do was to wrap a tourniquet around the bleeding and end the day pretty flat… Gold & Silver never found a bid on Tuesday, and suffered further losses as the day went on… You know, I tend to think that any time there’s profit taking in these two asset classes of currencies and metals, the price manipulators use that as a great way to show up at the COMEX with arms full of short paper trades…  Chuck goes down a rabbit hole that you might want to have missed!

For What It’s Worth…  OK, you won’t believe this one…  But you had better sit down, and put away any sharp objects before reading… Ok, back now? Here we go… Late last month, hundreds of people across Southern California woke up to a nightmare: their private security-deposit boxes had been raided by federal law enforcement.  Wait! What? Is that even legally possible you might be asking? Well, the article can be found here: https://www.ocregister.com/2021/04/22/the-fbi-cant-seize-first-and-ask-questions-later/

Or, here’s your snippet: “Late last month, hundreds of people across Southern California woke up to a nightmare: their private security-deposit boxes had been raided by federal law enforcement. Customers of U.S. Private Vaults learned the FBI raided the Beverly Hills company after an indictment for federal crimes. More to their horror, those customers learned their precious valuables were being held at an undisclosed location and that they would need to identify themselves to the FBI to reclaim their property.

Those customers must have been gobsmacked. The governments allegations were against U.S. Private Vaults, not them.  The indictment didn’t allege that U.S. Private Vaults customers had done anything wrong.  And many customers who found U.S. Private Vaults (often through Google) liked the company because renters could keep the keys to their security boxes. U.S . Private Vaults also boasted of faster in-and-out times and better hours than banks, as well as larger security boxes and included insurance. It was even a member of the Beverly Hills Chamber of Commerce!  So, many innocent people who wanted security and privacy for their most valued possessions found it at U.S. Private Vaults.

But to listen to the feds, every one of the companys customers is a potential criminal. The indictment points out that U.S. Private Vaults advertised the anonymity of its services, including the fact it wouldnt force customers to divulge personal information. To the government, any individuals who may want anonymity cannot be law-abiding citizens.

So its little surprise that the government broke into every deposit box at U.S. Private Vaults, emptied them, and took all their contents. Now the FBI refuses to return any customers stuff until he or she comes forward, identifies him or herself as the boxs owner, and submits t o an FBI investigation. In other words, people must prove their own innocence to secure their properties return.

The feds have created a privacy nightmare that demands the courts immediate involvement. The Fourth Amendment guarantees that the people will be secure against unreasonable searches and seizures. Here the government seized the property of hundreds of people, not because the feds had any evidence those people did anything wrong, but because they rented from a business the government doesn’t like.

The Constitution does not abide guilt by association. The government can seize a customers property if it submits evidence linking that customers specific property to a crime. But what the government has done here is completely backwards. The government cannot search every apartment in a building because the landlord is involved in a crime. After all, that apartment is theirs.”

Chuck Again… Man, this really burns my you know what! Civil Liberties, are being taken away from us left and right, and where’s the media reporting the crime of all this?  I shake my head at what we, the People have allowed to be taken from us…

Market Prices 5/5/2021: American Style: A$ .7741,  kiwi .7200,  C$ .8147, euro 1.2010, sterling 1.3907, Swiss $1.0961, European Style: rand 14.3691, krone 8.3368, SEK 8.4894,  forint 298.88,  zloty 3.8067,   koruna 21.4858, RUB 74.95, yen 109.16, sing 1.3351, HKD 7.7692, INR 73.92, China 6.4728, peso 20.16, BRL 5.4391,  Dollar Index 91.30,  Oil $66.25,   10-year 1.59%, Silver $26.53, Platinum $1,233.00, Palladium $3,038.00,  Copper $4.51, and Gold… $1,782.60

That’s it for today… Ok, here’s my traditional Pfennig Cinco de Mayo story…  In 1998, we traveled to Cancun… And walking through a shopping area, there was a guitar player with his sound system playing music… he began to play a song that I knew, and had a microphone plugged into the sound system, so I picked it up and began singing Dust In The Wind… Soon there were tons of people crowded around us…  Ok, so many years ago I first told this story in the Pfennig, on the 5th of May, and a reader responded calling me a MAK… We laughed so loudly and long on the trading desk, that I promised that I would repeat the story every year on the 5th of May…  I doubt that I would even think of grabbing a mic and start singing on the streets these days…  Cardinals & Mets were rained out last night, so as the great Ernie Banks used to say, “Let’s play two”!   I also remember, as a young man, going to double headers, with my cooler, and sitting the bleachers for 5 hours! Those were the days, my friend… those were the days… The Outlaws take us to the finish line today, with their long, and rocking song: Green Grass & Hide Tides…  I hope you have a Wonderful Wednesday, a safe Cinco de Mayo, and will Be Good To Yourself! 

Chuck Butler

 

Arkansas Eliminates Sales Tax On Gold & Silver!

May 4, 2021

* Currencies & metals rally on Monday… 

* But give back most of their gains in the overnight markets… 

Good Day… and a Tom Terrific Tuesday to you! And May The Fourth Be With You! HA!  tried to sit outside yesterday afternoon, to allow the warm sun to dry me up from all the congestion in my sinuses… That worked as long as I remained in the sun, once I came inside…. I had to begin sucking on cough drops immediately!  I watched the baseball game of which, the Cardinals, won 6-5 on the TV and the hockey game, which the Blues won 2-1, on my iPad.   Yesterday, I told you I was going back to sleep, and I did, until 10:30 am… WOW! Sleeping the day away… But I always say, my body tells me when I need to sleep, and I don’t argue with it! You know, that is one thing that I’ve learned since I was diagnosed with Stage 4 cancer in June 2007, and that is… To listen to my body… I know when I need to back off something, etc. Midnight Oil greets me this morning with their song: Beds Are Burning…

Well, before I go on with anything else this morning, I have a quote from Charles Gave, from the John Mauldin letter that I think everyone needs to read and take to heart… here we go! “The idea that maintaining abnormally low interest  rates helps economic growth is a fallacy, says Gavekal co-founder Charles Gave. It mainly helps the rich get richer while depressing  working-class living standards. Such policies historically don’t end  well, yet the Federal Reserve and other central banks are pursuing them enthusiastically.”

Ok… so who’s in on keeping interest rates near zero? Just wondering…

So, I told you yesterday that the all clear horn had sounded and that the Big Bad Wolf had gone away, giving traders the freedom to sell dollars once again… And sell them they did! Gold had a phenomenal day rising $23.80, to close at  $1,793.90. And the Dollar Index reflected the dollar selling by falling to 90.94 at the close, from 91.28 at the close on Friday…  The currencies got back on the rally tracks, and took Gold & Silver along for the ride… Silver had an even better day than Gold, rising 98-cents! That’s a 3.60% gain on the day, to close at $27.00 WOW!  

I guess those wage numbers that I reported to you yesterday, showing wages increasing  1.0% in the 1st QTR and 2.7% year on year, scared the bejeebers out of a few traders, eh? With those increased inflation fears running wild, you might think that the U.S. Treasury 10-year’s yield would have risen… But you would be wrong… Remember the Cartel implemented their Yield Curve Control (YCC) and they aren’t about to let yields rise to combat the inflation they’ve been starved for!

In the overnight markets… Apparently, the overnight markets didn’t see things quite the same way as their U.S. partners last night… The dollar has rallied back and the Dollar Index sits at 91.30 this morning, up from the 91.94 it closed yesterday. Gold has given back $11 of its gains from yesterday, and Silver has given back 16-cents of its gains to, trade back below $27….  I’ve searched the hillside up and down and can’t find anything that tells me why this reversal went on last night… So, it appears to me that it was some quick profit taking… 

Ok, the GATA folks sent me a note yesterday notifying me that the State of Arkansas has now eliminated the sales tax on previous metals…  Well, that’s another state to do this, and I don’t believe it will be the last to eliminate sales tax on precious metals! Here’s some further news on this story…

“Backed by the Sound Money Defense League, Money Metals Exchange, and grassroots activists and coin dealers in Arkansas, Senate Bill 336 will allow Arkansas investors, savers, and small businesses to acq uire precious metals without being slapped with sales and use taxes.

The Arkansas sales tax exemption takes effect on July 1.

Meanwhile, similar bills are pending in Ohio, Maine, Tennessee, and New Jersey as the national backlash against taxing constitutional money continues.”

Chuck again… Just keep peeling back the layers of resistance that individuals have against owning Gold & Silver… 

OK… Well I think we’re going to have to root for a Turn Around Tuesday today, because things are looking like there’s some profit taking going on after yesterday’s big run up. In the currencies & metals.

Yesterday I talked briefly about the supply chain strains.. These are real folks, and from where I sit, in the cheap seats, there are still no signs of the strains ebbing. There are still delays and bottlenecks basically everywhere you look across supply chains. And the micro chips for Cars is just one of the things that have been affected…  I find this to be somewhat embarrassing for the U.S. in that, these are cars made here in the U.S., but they need chips from China or wherever?  Serves us right for not circling the wagons on the production of cars… 

I’m doing a fun (for me) interview with good friend Dennis Miller for his letter… In it, I was asked to describe what it would look like in 5 years if the dollar lost its reserve currency status…  Well, since I WAS the first to talk about this scenario back in 2010, at the Orlando Money Show, I should know a think or two about what things will look like….  Spoiler alert… They aren’t pretty!

The FWIW article today is a snippet from Dennis’ letter last week… When reading the letter, I kept thinking to myself, that the U.S. house of cards, financial system is just waiting for something to topple it… I don’t know what it is, could be a default, could be a bank problem, could be a whole list of things that would topple the house of cards…  And I think it’s important that investors keep that in the back of their minds.. Make sure your stop losses are updated, keep abreast of the news, and watch for signs of decay… 

The U.S. Data Cupboard yesterday had the April ISM (manufacturing index), and it surprised, even me with its weakness. The April ISM fell from 65 to 60, and while 60 is still easily above the line in the sand that determines expansion or contraction (50), it didn’t have a good month in April… Does that tell us that the stimmy check euphoria of March was all over by April?  It could very well be telling us that… I’m just saying… 

Today’s Cupboard offerings include March Factory Orders, which in Feb were negative -0.8%… They are expected to get back on the positive side of the equation during the go-go days of March..  Circling back to yesterday, the total vehicle sales were supposed to print, and didn’t… Makes you wonder if the number is so bad, that they are afraid to print it, doesn’t it? 

To recap…  The currencies & metals had great days on Monday, erasing the memory of pain from late last week… But in the overnight markets, traders there didn’t have the same opinion of what to do with dollars, and both asset classes are giving back big chunks of their gains yesterday… Chuck tells us that Arkansas has eliminated sales tax from previous metals sales… And we talk about supply chain strains… They’re real folks… 

Before I head to the Big Finish today, I have something I want to get off my chest… And that is the naysayers to inflation… I just don’t get what they aren’t seeing… Rising inflation is as evident as a man with a hatchet in his forehead! Shoot Rudy, even that wily codger, Warren Buffet is seeing rising inflation, let’s listen to him, “We are seeing substantial inflation,” Buffett said at the Berkshire Hathaway annual shareholder meeting broadcast exclusively by Yahoo Finance. “We are raising prices. People are raising prices to us, and it’s being accepted.” 

I find it difficult to argue with him here… and still there are naysayers… Hmmm….  And while I write, the price of Oil is rising to trade with a $65 handle…. Oh well, you can lead a horse to water, right? 

For What It’s Worth…  Last week, Dennis Miller’s On The Money, letter was a question about how long can this house of cards last?  And I like it so much that I put it on the docket for a FWIW article, and so here we are! This article is long, so I won’t be able to do it full justice with my snippet, so I’ll depend on you to click on the link found here : How Long Can This House Of Cards Last? What Can We Do? – Miller on the Money

Or, here’s your snippet: “If we constantly borrowed and spent more than we earn while debts piled up; our house of cards will eventually collapse.

Over a decade ago, P.J. O’Rourke warned:

“Alarm bells should be ringing very loudly as the United States contemplates a deficit for 2010 of more than $1.5 trillion – about 11% of GDP….

…. Empires behave like all complex adaptive systems. They function in apparent equilibrium for some unknowable period. And then, quite abruptly, they collapse.”

The 2010 numbers now look tame. The Committee for a responsible Federal Budget predicts:

“In light of the enactment of the year-end spending and COVID relief deal, we estimate the deficit will total $2.3 trillion for Fiscal Year (FY) 2021. …. It would be higher than any other time in recorded history outside of World War I.”

The Wall Street Journal reports:

“The federal debt is projected to almost double to 202% of gross domestic product by 2051….”

Dr. Lacy hunt believes the historic debt levels cause economic activity and the standard of living to decline.

Governments worldwide believe they have a Magic Money Tree spending money they don’t have.”

Chuck again… if you don’t already subscribe to Dennis’ letter, I urge you to go to www.milleronthemoney.com and sign up today!

Market Prices 5/4/2001: American Style: A$ .7717,  kiwi .7136,  C$ .8117, euro 1.2013, sterling 1.3884, Swiss $1.0931, European Style: rand 14.4526, krone 8.3248, SEK 8.4607,  forint 299.65,  zloty 3.7898,   koruna 21.5039, RUB 75.15, yen 109.40, sing 1.3353, HKD 7.7673, INR 74.05, China 6.4727, peso 20.20, BRL 5.4285,  Dollar Index 91.30,  Oil $65.65,  10-year 1.62%, Silver $26.84, Platinum $1,245.00, Palladium $3,064.00, Copper $4.53, and Gold… $1,782.80

That’s it for today… It was a good night for both the Blues and Cardinals last night, as they both won very tight games… Unless the wheels fall off for the Blues, they appear to be in the driver’s seat for the last playoff spot in the Western Div. But there’s still 6 games in the regular season to go, so stranger things have happened to the Blues… they just need to keep winning! And get hot going into the playoffs…  I’ve been having a lot of trouble with the shell on my prosthetic eye… So, I’ll go see the doctor that made the shell, and she’ll probably need to make me a new one… She asked me on the phone if I had lost weight… so, my socket could have changed… The appt. is not for a few weeks, so I have to put up with this shell that keeps giving me fits until then! Well, sitting out in the sun yesterday did help my sinuses, but as the night went on, they began to give me fits again… More sun today, please! May the 4th be with you today… I love that phrase!  Tomorrow is Cinco de Mayo, of which we used to go out and party for… But not any longer, as we’ve become old stick-in-the-muds… I’ll share my annual 5th of May, story with you tomorrow… The Searchers take us to the finish line with their hit song: Love Potion #9…  “I took my troubles down to madam Rue, you know that gypsy with the gold capped tooth.”…  That song always reminds me of fun times back in the 60’s… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!

Chuck Butler

 

Wage Inflation Begins To Creep Higher…

May 3, 2021

* Currencies & metals attempt to rally back this week… 

* Former Mint Director, says there’s a shortage of metals… 

Good Day… And a Marvelous Monday to you! And Welcome to May! Hopefully the crazy weather of April will have given up the ghost, and May will be more certain…  Pfennig tradition calls for me to repeat this little gag… If April Showers bring May flowers, what do May flowers bring?   The answer… Pilgrims! HA! Well, my internet and tv problems got all straightened out on Friday, so I’m a happy camper. My internet speed is now up to snuff with most of the world! Not that you clicked on this email to read about my internet speed!  I’ve come down with a cold… strange, I know… At first I thought it was just allergies, but I know the difference… Maybe too much tub thumpin’ on Friday? Oh, well, the Guess Who greet me this morning with their song: No Sugar Tonight/ New Mother Nature… There’s that Burton Cummings again!

So, when I left you on Thursday last week, the currencies were kicking some dollar tail, and taking names later, and Gold & Silver were seeing some slippage VS the dollar, but the main theme was that the dollar was getting sold, and currencies like the euro, sterling, franc, A$, and kiwi were all beneficiaries of this dollar weakness…  Now, wasn’t it just last week that I talked about how the last time the euro went above 1.21 that the Plunge Protection Team (PPT) came in, bought dollars and put resuscitation paddles on the dollar… Rampart, clear… zap! The dollar was back to being bought again, as all traders cowered to the PPT…

Well, They were doing it again last Friday… Gold got whacked again, the euro got pushed back below 1.21, and all the euphoria in the currencies had the wind taken out it, and now we’re left with the remains, and they sure look messy…  The PPT made sure there were no survivors.. Gold lost $9.50 after valiantly battling back all day, and Silver lost $8-cents.. Gold closed on Thursday at $1,772.00, and Silver at $26.10

Then on Friday, the boys in the band were back at it, pushing on Gold all day once again, but Gold resisted, and only lost $2.90 to close the week at $1,769.10. Silver didn’t battle as valiantly as Gold and lost 19-cents on Friday to close the week at $25.91

Trying to save the dollar… That’s all this was about folks… Sort of like getting a vote of confidence from the General Manager…  The field manager knows all too well that his time is short… And I would think that dollar bugs have to feel that way too… But as long as they have the PPT to keep things from getting out of hand… they’ll have some misguided confidence… 

Ok, I found this article on Kitco.com this morning, and thought it to be very important to my dear readers…  Read these next few paragraphs with all the seriousness you can muster up, because it deserves to be read that way…  take it away, Kitco! 

“A global shortage of physical gold and silver products has created a premium on coins and bars, and this premium is causing a disconnect between the spot price and the “true” price that retail investors need to pay, said Ed Moy, former director of the U.S. Mint.

Moy, who was the director of the U.S. Mint between 2006 and 2011, cites the inability of the mints around the world to keep up with physical coin and bar demand as a reason for this shortage.

“Not only the U.S. Mint, but other Mints around the world, Australia’s Perth Mint, the Mexican Mint, have all run out of gold, they can’t keep it in spot and there’s so many shortages retailers are having problems accessing that gold,” Moy told Michelle Makori, Kitco’s editor-in-chief.

Premiums on these physical gold and silver products can run as high as 20% in some places, Moy said.

“If you go to any of the top retailers for gold bullion and take a look at what they’re charging for an ounce American Eagle gold bullion coin, even though the spot price right now is $1,775 give or take, you’re hard pressed to find a ounce gold coin for anything less than $2,000, and I’ve seen it as high as $2,100,” he said.

One of the main reasons for why the spot prices have not caught up to gold and silver’s premium-adjusted price is that the overall markets are flooded with bullion derivatives, Moy said, but it’s only a matter of time before the short contracts keeping the price down expire.”

Chuck again… You know me folks, I’ve been writing about a shortage of metals for years, and now this article confirms what I’ve been saying? Well, it doesn’t get any better than that for me!  But what this article doesn’t really come out and say is that Gold & Silver will take for the moon when everybody, and I mean everybody demands delivery of the metals on the futures contracts they hold…  once again I ask… Got Gold? 

Well, did you see the Personal Income & Spending data from Friday?  Personal Income was up a whopping 21.1% in March, VS the negative -7.0% in Feb… Ok… didn’t everyone get their stimmy checks in March? So, what’s the hub-bub? This should have been expected…

One thing that wasn’t expected was the rise in wages… Ahhh grasshopper we’ve been waiting for this for years, is it finally happening? Well, let’s see… According to the data, U.S wages increased 1% in the 1st QTR, and also saw a 2.7% increase Year on year…  Now, I have to wonder if all those inflation naysayers are rethinking their position? Inflation is running as hot as a firecracker, are you ready for it? Or, have you fallen victim, or drank the Kool-Aid of those that keep saying there is no inflation?  Well, there’s only one thing to ask…. Got Gold?

Now as far as spending… That was up 4.3% in March, VS the negative -1% in Feb… So, contrary to what I thought most people did with their stimmy checks, thy stimmy checks got spent on NFT’s, dogecoin, and other insane investments… That 4.3% increase in spending will be interesting to see if it can be repeated in April… I doubt it, but maybe pigs do fly?

I don’t mean to make this a day of nothing but data stuff, but it appears that’s what it’s going to be… Last week also saw the final revision of 1st QTR GDP and it was revised upward to 6.4% from the previous revision of 4.3%… The propeller heads had to include the stimmy checks affect on GDP… Well, unless the Gov’t is ready to send out quarterly stimmy checks then the next QTR’s GDP won’t be as exciting as the 1st QTR…  I hate to be the bearer of bad news… But this euphoria over how well the economy is doing is like listening to two insane people talk about how the Mars helicopter works…

You know, you must keep in mind that inflation is like a currency’s kryptonite… So, to me, the PPT was just reducing the base levels of the currencies before they take off to higher ground in response to the raging inflation in the U.S.  

In the overnight markets… The currencies are attempting a comeback, and Gold & Silver are both moving up this morning with Gold up $6.60 and Silver up 18-cents.  The all clear horn has sounded, and now traders can get back to selling dollars, now that they know that the Big Bad Wolf, has gone…  Speaking of the Big Bad Wolf… I saw a cartoon the other day , that 4 squares, in the first square a little piggy built a house of dollars, in the next square a little piggy built a house of euros, and in the 3rd square the little piggy built a house of Gold… In the forth square, the house of dollars and euros were getting blown away, while the house of Gold stood solid, and a caption that read: We all know how this story ends… 

The U.S. Data Cupboard this week will be sporadic with economic prints… Today it will be the ISM for April, which will be strong, because that’s what happens when people get piles of money, and spend it, manufacturers gear up!   There is one piece of data today that should be interesting, and that is the vehicle sales for April… From what I’ve read… There are thousands of cars sitting on lots that can’t be sold, because they are awaiting a micro chip for their system…  Supply chain disruptions, who’d thunk that?  This will be a Jobs jamboree Friday week… 

To recap… The currencies & Metals saw a ton of dollar buying to end the week last week, the PPT was in protecting the dollar, and traders cowered to the all-mighty PPT…  The Dollar Index was trading at 90.57 last Thursday morning, and when the week ended on Friday, the Index was trading at 91.28…  In the overnight markets the currencies and metals are attempting to rally and comeback.. 

For What It’s Worth…  OK, this is really good, folks… I received this letter from the GATA folks, where Chris Marcus of Acadia Investments, as the current CFTC Chairman about his comments regarding the price suppression of Silver… There’s a YOUTUBE of this whole thing of which he is referring to and it can be found here: https://www.youtube.com/watch?v=HSS3zkWYhaY&t=763s

Or, here’s your snippet: “In an open letter to the acting chairman of the U.S. Commodity Futures Trading Commission, Rostin Behnam, published tonight, Chris Marcus of Arcadia Economics asks for an explanation of a comment Behnam made on March 18 that seemed to applaud and implicate the commission in the suppression of silver futures prices.

— you made the following statement: ‘The resiliency and the market structure of the futures market was able to tamp down what could have been a much worse situation in the silver market.

Also at the conference Behnam appears to have congratulated the commission “for utilizing its authority and some of the tools it has within the margin space to control the price and volatility of the silver contracts.”

Marcus also asks Behnam to explain an assertion made on CNBC in February by the research chief for the Goldman Sachs commodities desk, Jeff Currie, who, in regard to silver, said: “The shorts are the ETFs [exchange-traded funds]. The ETFs buy the physical, they turn around and they sell on the Comex to be able to hedge that physical position like any other corporate”:

But if silver ETFs are just accumulations of metal held for the benefit of their investors so their investment can track the silver price, why do the ETFs need to hedge against the metal’s price?

If silver ETFs are hedging their own silver, they are nullifying its potential for price appreciation and essentially rigging the market surreptitiously against their own investors.

The use of gold and silver ETFs to short the monetary metals markets for price suppression at strategic moments long has been suspected by many in the GATA camp.

Marcus’ letter itemizes much more evidence of improprieties in the silver market, but some of them would be explained by manipulative trading undertaken by, at the behest of, or with the approval of the U.S. government if such trading is legal and outside the commission’s jurisdiction.”

Chuck again… Well, this letter to the CFTC chairman for explanation of his comments regarding Silver will probably be wadded up and tossed into the circular basket, by the Chairman… You know, it would be really cool if a Senator or someone like that called the Chairman on the phone, and said, “you need to answer that letter, and do so truthfully”…   And then pigs might fly….

Market Prices  5/3/2021: American Style: A$ .7728,  kiwi .7165,  C$ .8133, euro 1.2048, sterling 1.3858, Swiss $1.0955, European Style: rand 14.4378, krone 8.3003, SEK 8.4385,  forint 298.90,  zloty 3.7815,   koruna 21.4144, RUB 75.21, yen 109.62, sing 1.3317, HKD 7.7676, INR 74.26, China 6.4735, peso 20.26, BRL 5.4361,  Dollar Index 91.19,  Oil $63.80,   10-year 1.62%, Silver $26.19, Platinum $1,202.00, Palladium $3,014.00, Copper $4.47, and Gold… $1,776.70

That’s it for today… except…. Today is the birthday of my good friend, Toni Moody! She’s one of those people that make it a Birthday Month… So Happy Birthday Month, Toni! Well, my beloved Cardinals swept the Pirates this past weekend, and come home to play the pond scum… Just kidding, they’ll be playing the Mets, who used to be BIG rivals with the Cardinals in the mid-to-late 80’s… For a few years it was either the Cardinals or the Mets who won the division… But then the MLB realigned divisions, and now we see the Mets 6 or 7 games a year… and none since 2019!  The weather people will be diligently at work this week, keeping people abreast of the rain conditions for those going to games… Next Sunday is Mother’s Day… So you have a few days to figure out what your mother would like… I used to buy my mom a dozen roses, for she loved flowers, and loved the aromas of fresh cut flowers… My mom and I had a special relationship, she supported me in any endeavor I undertook… I’ll always be indebted to her, for giving me the freedom to make my own decisions…  I miss you mom… You many notice the letter arrived in your mail box a little earlier than usual today… I was up at 3:30 coughing my fool head off, and decided to write and go back to sleep later…  And with that… The Ides of March take us to the finish line today with their song: Vehicle…  “I’m the friendly stranger in the black sedan won’t you hop inside my car”…  I hope you have a Marvelous Monday, and will continue to Be Good To Yourself!

Chuck Butler