April 22, 2020
* Currencies were flat yesterday but have moved overnight!
* The price of Oil recovers to close above zero!
Good Day… And a Wonderful Wednesday to you! Well, Monday will be a day I never forget, as I saw something that no one ever before saw, and it was an Oil price that was negative…. Well, the negative state of the price of Oil didn’t last long…. But from what I read, the June contract is already negative…. What an absolutely beautiful day here yesterday, after the last couple of weeks, being cold, gray, gloomy, the sun came out, the sky was umbrella blue, and I sat outside reading most of the day, that is, except for my daily afternoon nap! I know that longtime readers want to know this stuff, so here goes…. The tumor in my mouth is back, and this time instead of it growing taller, it’s growing wider, which is giving me all kinds of problems eating. I figure this is short-term, since I’ve only been on my new chemo drugs for 10 days, and this lack of eating is helping me lose some weight, and that can’t be a bad thing, eh? Roxy Music greets me this morning with their song: Love is the Drug….
Well, it was a “nothing day” in the currencies as they all traded sideways with the dollar. As I said the other day, this sure seem to be the way that the currencies should be trading right now, as everyone has problems, and the U.S. has them worst because of its size…. So, if you’re a currency trader, you don’t want to buy any more dollars, but you also don’t want to take on any of the currencies…. I would say Ahem to them right there and point to rubles, or Singapore dollars, but then that’s just me….
Gold had a very interesting day… As I sent the letter out yesterday morning, Gold was down $27 in the early trading, and sat at $1,668…. But when the day was over, Gold had a $2 gain, to $1,688, but…. That was a $29 turnaround! Show you can’t keep a good asset down!
OK… regarding Gold…. According to Ed Steer’s Saturday letter that can be found: www.edsteergoldsilver.com It would take 91 days of current production of physical Gold to equal the amount of short Gold contracts that exist…. But you know this thing with Oil not having any place to get it delivered because of all the supply, got me thinking about Gold…. So…. What would you think would happen IF everyone that bought Gold forward, would demand delivery of their contract? All those short positions would have to deliver Gold they don’t have…. That would mean they would have to go into the market and buy Gold at the current spot price, and all those buys would certainly drive the price higher, right? In Oil we have too much supply, and in Gold we don’t have enough…. Think about that for a while and then see if I made any sense!
Or…. What IF the CFTC (commodities regulator) got some cajones and decided to limit the short positions to the amount of Gold above ground? Now that would be a game changer right there folks, but as I’m going to explain a little later in the letter, the Fed has no intention of ending price manipulation, for now, that is….
Any-old-way….. Gold this morning is up $15 and is back above $1.700! Imagine, if you will, for a moment here…. that there were no engineered takedowns of Gold this past week, we would probably be looking at a Gold price of around $1,800….. I’m just saying…
And I don’t think I have to tell you this, but…. With the collapse of the price of Oil, the Petrol currencies of Russia, Brazil, Canada, Norway, Mexico and even the U.K. have all been sold for a pack of cigarettes this past week…. And in a case of you live by the sword, you die by the sword…. The Russian ruble always leads the Petrol currencies higher when the price of Oil is climbing, and so it is to the ruble to also lead the Petrol currencies lower in times like this…. UGH!
In other news, it’s earnings season, and with that might just come some major downgrades for the Corporations…. Just last Friday, Moody’s warned it may cut the ratings on $22 billion of U.S. collateralized loan obligations – a fifth of all such bonds it grades – as a result of the collapse in cash flows due to the Covid-19 pandemic. Uh-Oh…. Things just continue to get worse for the U.S. economy folks…. What’s next I hear you asking…. Well, I’m glad you asked, because….
Last night the Senate unanimously approved a nearly $500 Billion aid package Tuesday. The bill will replenish a small business payroll fund and provide new money for hospitals and testing. The bill will now go to the House for their approval…. OK, I’m on board for hospital money, and I guess small businesses that have remained open with little earnings but keeping on their payroll. Why’d it take so long for this to be done? Politics, folks… in our time of need, the damn politicians are still quibbling over ridiculous stuff…. Listen for the rhetoric from the House…. I’m ashamed of our political representatives…. I really am, they should be ashamed too!
I’ve been asked a lot lately to explain what’s going to happen with all these fiscal implementations, including money printing, bonds of all kinds buying, monetizing the debt, and so on…. So, I sat down an decided to just come out with what I could see happening at the end of this COVID-19 economic shutdown…. But let’s get this straight… These are things I see COULD happen, I’m not saying they will! Ready? Ok, no turning back now, folks…. And before I say these things…. These aren’t things I want to see happen, but they are things I see could be happening…. Oh, and these aren’t things that will happen today, tomorrow, next week, but a sometime down the road….
First and foremost, The Fed needs inflation…. Keep that in mind as we go through this…. They need inflation to be orderly as it rises, not spike, which would get people all in a fuss…. But like the frog in the pot of boiling water…. The Fed needs for us to not realize what they are doing, which is simply inflating the debt away, but as inflation rises, it’s like a tax on you and me, and so they can’t have people seeing what they are doing.
And there we have a disconnect between the Fed’s need for inflation, and their need to manipulate the price of Gold to keep it from getting too inflationary…. OK… now the good stuff….
Basically, I see a plan to get the major countries of the world to have equal amounts of Gold, has been going on for a long time now…. And Russia’s announcement recently, that they were discontinuing their Gold purchases, led me to believe that they had met their goal and are now on par with China, the U.S. and Germany. Japan is so far outside of this group, they would have better luck finding a needle in a haystack than to find Japan in this group!
In a further point about Russia. They said they were discontinuing their massive Gold purchases, but then it was reported yesterday that they had bought 9 Tonnes last month. You see it was a case of the gold miners having no place to sell their Gold, with the COVID-19 going on, so the Russian Gov’t stepped up and bought their supply from them to keep the ball rolling…. Ok, now back to our regularly scheduled programming….
The reset of the price of Gold couldn’t be accomplished until all major countries were ready to come to the negotiating table with equal negotiating tools…. And now we have the Fed Reserve either on the brink of, or already insolvent…. And the debt in this country has gotten to a point now that it’s beyond reckoning with…. We could see the Gov’t adopt austerity measures to get this back on track, but…. We all know that’s not going to happen! So, what’s left? Default on debt…. OR…. accept the IMF’s offer to back the debt with SDR’s…. Be careful when you invite the wolf into the hen house folks….
On another front, we have the IMF and their SDR’s (Special Drawing Rights)… Basically, the IMF would issue SDR’s that were Gold backed, which is why it was important for all major countries to be equal with Gold… We would still use dollars folks…. But…. They wouldn’t be worth a plug nickel, but the price of Gold would be reset in this scenario at or above $10,000….
This would bring about the inflation that the Fed needs to inflate away the debt…. And eventually, things would normalize, and most people won’t even know the change happened…. Except their inflation problem, and if inflation does soar, then other problems will come of it…. Social unrest, being the main problem…. So, there!
Longtime readers my recall my “Chuck’s Debt Solutions” that I came up with many years ago in a Sunday Pfennig. Yes, for all you new to class, we used to write a Sunday Pfennig that was more in-depth and had guest writers…. Well, consider this little voyage down the road, with me as another brain storm by Chuck!
The U.S. Data Cupboard is empty today… no data prints, even the 3rd tier data reports are nowhere to be found today…. Tomorrow the weekly Jobless Claims will show us how much more rot is on the employment vine…. And we’ll see the Markit PMI, which should be interesting…. not the national ISM but something to chew on for sure….
To recap…. The currencies were flat to a bit stronger on Tuesday, Gold had a turn on Mr. Toad’s Wild Ride, but ended up on the day… And the price of Oil in the current market rose above zero, but I see that the June futures market still has Oil in negative territory…. Chuck goes through things he sees could be coming down the road…. Are you ready for this?
For What It’s Worth…. Longtime reader, Bernard, sent the link to this article last night, and in reading it I knew it was going to be the FWIW article today…. Its written by Michael Snyder, and posted at Zerohedge.com and is about how Americans won’t be able to handle what’s to come, and it can be found here: https://www.zerohedge.com/health/most-americans-are-not-going-be-able-handle-what-lies-ahead
Or, here’s your snippet; “Based on how Americans are handling the COVID-19 lockdowns, it is hard to be optimistic about what will happen when a really severe crisis hits us.
Yes, this pandemic is definitely a great tragedy. There are more than 700,000 confirmed cases in the U.S. and more than 40,000 Americans have died. But it isn’t the end of the world. I am sorry to tell you this, but COVID-19 is not the worst thing that we are going to face. In fact, it is not even close to the worst thing that we are going to face. So it is a bit disheartening to see so many Am About 40% of people say they’ve been eating more snack foods since the outbreak began, with 26% admitting they’re finding comfort in chocolate, specifically, according to a Harris Poll of 2,013 US adults conducted over the weekend.
If overeating was all that we had to worry about, I could live with that.
But it turns out that Americans are also indulging in a whole bunch of other self-destructive behaviors during this time. At a moment in our history when alcohol-related deaths in the U.S. are already at an all-time high, heavy drinkers have decided that this pandemic is a perfect opportunity to drink even more…
One in five said they are guzzling more alcohol, though that number was higher, at 30%, among those 18 to 35 — or millennials and Gen-Zers.
In areas that have been hit extremely hard by COVID-19, sales increases have been especially dramatic. In New York City, one liquor store owner says that it is “like New Year’s every day” during his city’s lockdown…
With the initial surge of panic buying over, wine and marijuana sales are still way up, presenting an opportunity — and a challenge — for the businesses scrambling to meet the demand spikes and shifts in consumer behavior.
“It’s like New Year’s every day,” said Mark Schwartz, the owner of Little Mo Wine and Spirits in the Crown Heights neighborhood of Brooklyn, New York, who has seen alcohol sales shoot up fourfold.
Of course while they are eating and drinking they need something to do, and so the average American is streaming approximately eight hours of shows and movies every single day…
The average American is passing the time amid the new coronavirus pandemic by streaming roughly eight hours of shows and movies every day, a recent survey shows.
OnePoll surveyed 2,000 Americans with access to at least one streaming service and found that not only was the average person watching eight hours’ worth of content but also likely went through three series in a week alone, StudyFinds reported.
Americans responding to this pandemic so poorly.”
Chuck Again… yes, and he gets into gambling on the rise too… Look, I know its boring at home with no neighbors over to talk to etc. but…. Read a book! There’s no reason why all these bad choices are being made…. Read books, learn how to play the guitar, or piano, listen to music (it’s really good for the soul), play gin rummy with your partner, learn a new language, there are so many other choices than the bad ones Mr. Snyder talks about in this article…. Not that I’m thinking that I’m the moral guidance counselor here, but there are times that people need to be taken by the shoulders and shaken to get thier attention….
Currencies today 4/22/20 American Style: A$.6340, kiwi .5997, C$ .7075, euro 1.0878, sterling 1.2383, Swiss $1.0336, European Style: rand 18.7835, krone 10.6660, SEK 10.0502, forint 326.30, zloty 4.1676, koruna 25.2852, Silver $14.94, Platinum $753.95, Palladium $1,967.27, and Gold… $1.701.61
That’s it for today…. I find it to be fun to watch the old baseball games on TV at night… Last night it was Game 3 of the 2006 World Series…. Spoiler alert, the Cardinals won this World Series in 5 games, beating the heavily favored Tigers…. I guess it wasn’t a spoiler alert, since the series was played 14 years ago! 2006, if I remember was quite the year for me, as I spoke 35 times that year…. That means I was traveling and speaking a ton! Of course it wasn’t 35 trips, because some trips I had more than 1 speaking gig…. And then 2007 was rolling along with as much travel and requests from different organizations for me to speak, until…. June 2007, when I was told that I had Stage 4 Kidney Cancer…. things have never been the same for me since, and that’s what I think the COVID-19 virus problems are going to do for us now…. Things will never be the same….. I leave you this morning with my second fave song by Chicago (Back when they were called the Chicago Transit Authority), the song: Beginnings takes us to the finish line today…. OK, now go out there today and Be Good To Yourself!