March 8, 2022
* The runaway dollar continued to gain on Monday
* Gold & Silver are up big in the early trading today…
Good Day… And a Tom Terrific Tuesday to you! Well, it’s a Tom Terrific Tuesday to you if you woke up this morning, and are healthy and able to do physical things you want to do… It’s also a terrific day if you own Gold… But I’ve been telling people to buy Gold for so long now, that I doubt anyone that reads this letter hasn’t heeded the call to buy it… There’s still no agreement between the baseball players and owners, and the more I think about that, the more it ticks me off… What a bunch of babies! They just don’t see that the game is played for the fans, not for themselves, and until they do see that, we’ll continue to not have baseball being played… UGH! The Classic IV greet me this morning with their song: Spooky… We used to play this song in the first band I played in called the: Soul Wonders Revue… There are some good stories there for another day…
Well, there’s no stopping the runaway bus that’s also known as the dollar right now… And you certainly don’t want to step in front of it… The dollar continued its assault on most currencies yesterday, as the BBDXY gained another 3 index points to close the day at $1,204… The euro didn’t lose any additional ground yesterday, and the Aussie dollar gave back about ¼ of a cent of its recent gains… I would look at the slippage in the A$ as a buying opportunity, but then again, that’s just me…
Gold, as I told you yesterday, was testing the water, and tried to stay above $2,000 but the price manipulators wouldn’t’ have any of that! And Gold closed the day up $25.70 to end the day at $1,999.60… just a shade below $2,000… Silver couldn’t find a bid yesterday, as it was all about Gold, and Palladium, and Silver closed down 7-cents to end the day at $25.76… I had a dear friend, call me yesterday, as ask me what they should do with their sivler bars… I told this person to hang on to them, for it was in my opinion that Silver was going to continue to rise in price, and could very well return to the $50 price it held back in the day, when a major news outlet called to interview me, and I told them that Silver had become the new Gold… I wish I had saved that article from back in the day, it would be fun to read what I had to say back then…
Probably the same things I say now! HA! The price of Oil gave back some of its most recent gains and closed below the $120 handle yesterday… Sill up for the day, but down from where it was overnight… Bonds were sold yesterday, and the 10-year’s yield rose to 1.80%… Remember in bonds, the price / yield move in opposite of each other, so as the yield rises, the price of the bond goes down…
In the overnight markets last night…Well, the dollar buyers decided that the rise in the dollar was enough for now, and the dollar slipped just a bit in the overnight trading. The BBDXY slipped to 1,203, and the euro climbed back above 1.09… Gold has pushed through the $2,000 level and is up $16.80 in the early trading today, while Silver is joining in today, with a 70-cent gain to push Silver over the $26 handle!
Gold gained $7 on Thursday last week, then gained $36 on Friday, and followed that up with a $25 gain yesterday, and is up another $16 in the early trading today… So, using my new math skills that brings Gold’s rise in the past 4 days to $85! I find this to be quite good, especially for the sloth-like moves that Gold usually makes when rallying…
Have you seen what Nickel has been doing lately? This commodity has gained a break-neck pace. and yesterday good friend, Dennis Miller, asked me if I thought Nickel was next in line to be manipulated downward? I replied that I didn’t think so, for Nickel is not a commodity that individual investors hold, and so it’s not a threat to the dollar’s dominance… I sure hope I’m correct there, for the fact that we sure don’t need another price manipulated asset!
Here’s the snippet of a story on Reuters this morning, “Western countries could face oil prices of over $300 per barrel and the possible closure of the main Russia-Germany gas pipeline if governments follow through on threats to cut energy supplies from Russia, a senior minister said.
The United States is willing to move ahead with a ban on Russian oil imports without the participation of allies in Europe, two people familiar with the matter told Reuters. So, what would a U.S. ban on Russian oil mean for the world?”
Chuck again… I can answer that question… I would mean that the rest of the world would see gas prices that would choke a horse, and that would bring about a very weak economy… So, how do those cuts in the Oil production pipelines look now, Potus? I’m just saying…
Ok, I’ve been reading a few articles on line from people that should know better, but… apparently, they don’t… These writers seem to believe that our current inflation problem is a direct result of the war in Ukraine… Wait! What? So, before I go into a tirade on this, I’ll let Dave Gonigam in his 5 Minute Forecast explain to you: “Yes. All the inflation of the last year? It can be palmed off onto Putin now. Ditto for any new (and inevitable) supply-chain snags. None of it has anything to do with the second-order effects of lockdowns and money-printing anymore. History began on Feb. 24, 2022, and if you suggest anything to the contrary, you’re a deplorable Putin-loving seditionist. Don’t you know there’s a war going on?”
So, don’t let anyone sway you into believing that today’s inflationary problems are caused by the war in Ukraine… What a bunch of Bunk! I just get so worked up about this stuff, but realize that it comes back to my media training… I was taught to “deflect and redirect” the conversation… And that’s what the Gov’t is trying to do now… By blaming this all on Putin…
Did you know that then US secretary of state James A. Baker made a promise to former Soviet leader Mikhail Gorbachev during a meeting on February 9, 1990. In a discussion on the status of a reunited Germany, the two men agreed that NATO would not extend past the territory of East Germany, a promise repeated by NATO’s secretary general in a speech on May 17 that same year in Brussels.
But the Soviet Union was dissolved in 1991… So, who’s right in this instance? I’ll let you decide… but for my money, the west provoked the bear, and now we have to deal with that…
Ok… this is not a platform for discussing these things, so I must move on…
The U.S. Data Cupboard yesterday, saw Consumer Credit (read debt) soar from $19 Billion in December to $24 Billion in January… I guess all those credit card bills came home to roost, eh? And at a time when the interest rates on those credit cards are going to go higher… Look folks, individuals can’t just print currency to pay for their debts, like the Government can, so be careful with those cards…
Today’s data cupboard just has the Small Business Index for Feb, which has been inching higher each precious month… I’ve questioned that rise, but to no avail… I figure that’s just another of the games that the Gov’t plays with data prints to make us all feel as though it’s all seashells and balloons… I guess all those “help wanted” signs in the windows of small businesses are really signs that everything is great, and they’re fully staffed!
To recap… the dollar continues to soar, and there’s no stopping it now, so the question arises just how high can it go? Gold flirted with $2,000 yesterday and closed at $1,999… Ch uck talks about the so-called promise between the West and the Soviet Union, that Putin now believes carries over to the Russian Federation… And how some writers are saying that the inflation we are seeing right now is caused by the war in Ukraine… Chuck joins forces with the 5 Minute Forecast editor, Dave Gonigam in debunking that thought!
In the overnight markets the dollar took a pause for the cause, and Gold is back to gaining in the early trading today, pushing past $2,000… Silver is up 70-cents to trade past $26, Bonds are getting sold once again, and the price of Oil has gained back the $2 it lost yesterday…
For What it’s Worth… I had 3 different people send me this article yesterday, and that was after I had read it on the website! Pam and Russ Martens ask the questions about who’s on the hook for all the credit default swaps with Russia, and that article can be found here: The Big Question on Wall Street Is Which Banks Owe $41 Billion on Credit Default Swaps on Russia (wallstreetonparade.com)
Or, here’s your snippet: “here is a known $41 billion in Credit Default Swaps (CDS) on Russian debt. There is likely many billions more in unknown amounts. There are also billions more in Credit Default Swaps on state-owned Russian corporate debt and non state-owned Russian corporate debt.
In addition to Wall Street not knowing which global banks and other financial institutions are on the hook to pay out on the Credit Default Swap protection they sold in case of a Russian sovereign debt default (or Russian corporate debt default), there is also approximately $100 billion of Russian sovereign debt (whose default is looking more and more likely) sitting on the balance sheets of foreign banks.
Put it all together and you have the makings of a replay of the 2008 banking crisis when banks backed away from lending to each other because they didn’t know who would fall next from toxic subprime exposure. That led to a liquidity crisis and the unprecedented involvement of the Federal Reserve secretly pumping trillions of dollars into the megabanks on Wall Street and their foreign derivative counterparties.
The cost of buying a five-year Credit Default Swap on Russian debt has spiked from 5 percent of the total value of the debt in early February to 46 percent last Friday to 58 percent this morning. The market has now priced in an 80 percent likelihood of default.
Russia’s debt was downgraded to junk status on February 25 by Standard and Poor’s. On March 3, Moody’s and Fitch downgraded the debt by six notches, also placing it in junk territory.
Reuters reported on February 28 that Citigroup has $10 billion in exposure to Russian loans and various other types of Russian exposure. Given Citigroup’s history of understating its subprime exposure during the financial crisis of 2008, that $10 billion may not be the whole story. On February 1, Citigroup closed the trading day at $66.56. It closed last Friday at $56.59 – a decline of 15 percent.”
Chuck again… yes, asking all the right questions as usual for Pam and Russ Martens, with the problem being we won’t get any answers until, it’s too late!
Market Prices 3/8/2022: American Style: A$ .7288, kiwi .6760, C$ .7800, euro 1.0911, sterling 1.3717, Swiss $1.0794, European Style: rand 15.3040, krone 8.9634, SEK 9.9417, forint 353.64, zloty 4.4937, koruna 23.4505, RUB 133.84, yen 115.70, sing 1.3628, HKD 7.8196, INR 76.92, China 6.3171, peso 21.33, BRL 5.0684, BBDXY 1,203.82, Dollar Index 98.99, Oil $122.29, 10-year 1.85%, Silver $26.46, Platinum $1,157.00, Palladium $3,041.00, Copper $4.74, and Gold… $2,016.40
That’s it for today… I had a great day “out” with good friend Kevin yesterday. And then last night I went out to the deck with my Bose speaker to play music from my phone, and for me to sing along out loud… And I was joined by my backgammon buddy, JoAnn, who was once a famous singer in Canada… JoAnn LaBelle, I believe her name was then… I think the cows in the region were complaining about the sounds coming from the deck, with JoAnn and Chuck singing out loud! HA! Not because of her, but because of me! She has a beautiful, sultry kind of voice, that will melt your heart! Well, our Blues get back on the ice tonight at home, after a swing through the North East that left them with only 1 point… Elvin Bishop takes us to the finish line today with his song: Fooled Around and Fell In Love… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself! Be Positive, Test Negative!
Chuck Butler