May 18, 2023
* Currencies & metals get whacked this week…
* What’s up with Copper? I’m glad you asked!
Good Day… And a Tub Thumpin’ Thursday to one and all! Well, it was a fairly nice evening last night, so I sat outside to watch my beloved Cardinals play the Brewers. I was joined by good friends Duane and Paul, and we rooted the Cardinals on to a victory. The Cardinals seem to have turned the corner, and it couldn’t have come at a better time!
The Big Bad, Big Spending, Dodgers come to town for 4 games, This will tell if the Cardinals have indeed turned things around… My bloodwork at the oncologists’ office yesterday, showed no problems from the new chemo, so far… So I have that going for me, eh? Bob Dylan greets me this morning with his song: Knockin’ on Heaven’s Door
I’m glad I had a day to sit on what I would have said about Tuesday’s engineered takedown of Gold & Silver, yesterday… But I’ve had a day to cool down, and be more civil about talking about the short paper traders… Why? I have no idea for I abhor these short paper traders with all of strength.. The took Gold down $27 on Tuesday, and they took Silver down 34-cents… The short paper traders didn’t even wait to see if Gold & Silver were going to start the day up… The short paper traders started their engineered takedown from the get-go on Tuesday…
The dollar on Tuesday was up, with the BBDXY showing a plus 2.56 index points on the day. The dollar followed that gain on Tuesday with another on Wednesday of 2 index points in the BBDXY. The euro has not garnered one bit of love from the ECB’s rate hike last week, and if the euro isn’t booking any gains, the rest of the currencies, for the most part, aren’t booking any gains either! I always call these days, when everything seems to be against a dollar rally, but you get one anyway, Days that the dollar bugs know in their heart of hearts that the future of the dollar looks grim, so they build it up and build it up, so that when the selling does start, it starts at a higher level…
The price of Oil stealthily move higher to a $72 handle on Tuesday, and ended up being the star performer on the day… The 10-year Treasury’s yield is climbing again… The Fed Heads can’t have that… You see, the Fed Heads have a banking crisis on their collective hands, and the main reason for the banking problems has been bank runs on deposits… Well, if bond yields are rising, and banks are paying very low interest rates, guess where the deposits are going to go? to the higher yielding account. And so the Fed Heads can’t have the Treasury yields looking so attractive… I’m just saying…
In the overnight markets last night… Oh heavens have mercy! The dollar bugs are dancing in the street right now, laughing and singing songs about how the dollar is the king… All hail the King! The BBDXY is up 3 index points to start our day today… Why all this dollar buying when there are so many questions about the future of the U.S. Empire, and its currency? Well, I guess you could say, that the dollar is like a star that’s burning out and that star will burn its brightest right before it burns out… This could take awhile folks, so I suggest you hunker down, close the hatches and only look out if you think you might want to take advantage of these cheaper prices in currencies and metals…
Speaking of metals, Gold is down again this morning to start the day, today its down $6… Silver is getting whacked again and opens the day down 32-cents… UGH! I do believe the short paper traders have achieved thei goal, which was to scare the living daylights out of every potential buyer of metals, so that they take their money and go home, and forget about diversifying their investment portfolio… But what about the Central Banks? Aren’t they still buying large amounts of physical Gold? You know what? My spider sense is tingling again… So, here’s the thought that’s racing through my brain right now after typing that last sentence… Who’s to say that it isn’t the Central Banks directing the bullion bsnks to get the price of Gold & Silver down, so that their upcoming purchases of the metals are at cheaper prices?
Hello? Yes, is this the Bank of Canada? Yes, how may I assist you? Well, this is JPMorgan and I’m returning your call to me, I assume you need for me to short Gold & Silver some more, to really achieve a cheaper price to buy, is that correct? By George, you’ve got it Governor! Yeah, I’m seeing this happening as I write, in my head that is… None of this is fact, it’s all what I see happening in my brain… Hey, wait a minute here, didn’t your brain not have any blood in it when the blood clot caused your strokez And shouldn’t that have whacked your brain, so that you don’t think straight any longer? Well, yes, and no… So, I’m not going to blame my weird thoughts on my stroke… I had these before the stroke, and I’ll continue to have them… So there!
Where’s Glinda the Good Witch when we need her? She could float in, and tell us the wicked witch is dead, and that it’s ok to come out, and buy metals again…
There was more selling in the 10-year overnight and this morning its yield is just a tick below 3.60%… If you skimmed over the letter today and missed the part where I talk about how this rising yield is causing the Fed Heads sleepless nights, you might want to back track and read it… And Oil is still inching higher this morning… wishy-washy trading remains in Oil… I’m just saying…
Many years ago I wrote a piece for the defunct Currency Capitalist, a monthly newsletter issued by the Sovereign Society, and in that piece I wrote about how China was signing currency swap agreements with countries, that would remove the dollar from the terms of transaction with each participating country. I know I’ve told this all before, but in case anyone missed class those days… I said then that this was nascent at the time, but if China continued on with their quest to gain a wider distribution of their currency, this was the way to do it, and after a couple of years, when everything in China was shut down, China is back and this time, not just going after the low hanging fruit, but instead going after the Bigger Boys of trade… i.e. Saudi Arabia, Brazil, and others…
And now there’s this news: “The Standard Chartered Renminbi Globalisation Index (RGI), the UK bank’s proprietary measure of international yuan usage, rose 26.6 per cent in 2022, topping the 18.5 per cent growth recorded in 2021, Standard Chartered said in a recent research note.”
So, their plan is working, folks… And soon China will have the widespread use of their currency, that is one of the requirements of a reserve currency… China’s bond markets still have some catching up to do, but I wouldn’t put it past them to hustle up some bond guys to show them how, and then that’ll be the end of that problem!
Just thinking ahead folks… Before I was a currency trader, I was a foreign bond trader…. And for a period of time I did both jobs! (bet you didn’t know I was a multi-tasker, eh? ) And so I can see exactly how the Chinese could go about enlarging their bond capabilities, very quickly! For those of you who have been around the block a time or two, my recall when Deutsche Bank (DB) decided many years ago, that they would expand their banking into the U.S. and the way to do that was to go head first into Wall Street… It didn’t take DB very long before they were doing bond deals like they had always been in the business! How did DB do that, I hear you asking?
Ahhh, grasshopper, come sit… DB hired a big time bond slinger to come in and bring his crew, and start building their capital markets division… Soon, they were up and running… I see China taking a page from DB playbook on this…
And we knew this day was coming… Earlier this week, it was reported that, the US government now has to spend more each year on servicing its immense debt burden than it spent on national defense in 2022.the US government now has to spend more each year on servicing its immense debt burden than it spent on national defense in 2022. Now, that’s just rediculus, if you ask me… Right now, no new debt can be issued, unless there is a maturing debt to offset the new debt… The days are getting shorter for the Gov’t folks involved in gettng the debt escalator to go higher… And in the middle of negotiations, the POTUS, left D.C. and went to Japan… So apparently he doesn’t care if the country defaults… UGH!
OK, the U.S. Data Cupboard on Tuesday had April Retail Sales… and even though the BHI was correct, the report was positive .4%, the economists that looked at the report were not impressed… Apparently they thought that tax returns, and spring sales would boost Retail Sales higher… Industrial Production, in April, was up .5%, after spending a couple of earlier reports either flat or negative…
Yesterday’s Data cupboard just had some housing data Building permits, and Housing starts… And both were up slightly… And today’s Cupboard as the usual for a Tub Thumpin’ Thursday, the Weekly Initial Jobless Claims… This data last week showed a huge jump upward in Claims… Wel have to see it that was a one an done, or will we continue to see higher claims numbers each week?
To recap… The dollar is getting bought, and Chuck thinks he knows why… Gold & Silver saw an engineered takedown on Tuesday, and followed tht up with more losses yesterday… The price of Oil has jumped higher by $2 this week, and the 10-year’s yield is rising, and Chuck explains how that has to be making the Fed Heads sweat a little…
For What It’s Worth… Earlier this week I carried on about how the short paper traders were shorting Copper, when there was a supply issue with Copper, and had asked my economics professor to explain his theory of how supply and demand determines price… Of course I didn’t really ask anyone, that question, but I still don’t get it… And this article from Bloomberg, talks about how there is a Copper problem in Chile, and it can be found here:
Or, here’s your snippet: “André Sougarret won global acclaim in 2010 as the chief engineer on a rescue of 33 Chilean miners who’d spent more than two months trapped 2,300 feet underground. Now, as chief executive officer of Codelco, he must attempt another difficult feat: digging the world’s No. 1 copper producer out of its current hole.
At the state-owned behemoth, output is running at its lowest in a quarter century, costs have surged, and profit has slumped—all at a time when Chile’s government needs more money to fight festering inequalities and the world needs more copper for batteries and electric grids as it transitions away from fossil fuels.
Codelco’s production is down by about a fifth from only six years ago. After a double-digit-percentage drop in 2022, it’s expected to fall as much as 7% this year, to 1.35 million metric tons.
Ore quality is deteriorating around the world as existing deposits are depleted and new ones are more difficult and costly to develop. “There’s no easy mining left—not in Chile nor the rest of the world,” said Sougarret at a shareholders meeting on May 2.”
Chuck again… and for those of you keeping score at home, Copper’s price has fallen to $3.69, when just two years ago it was at $4.25… And during these last two years, the supply continued to drop, and the outlook for more supply dropped… So… Where’s the investigative journalism when you need them to look into this?
Market Prices 5/18/2023: American Style: A$ .6651, kiwi .6255, C$ .7438, euro 1.0841, sterling 1.2483, Swiss $1.1131, European Style: rand 19.2279, krone 10.7751, SEK 10.4483, forint 341.40, zloty 4.1725,
koruna 21.8376, RUB 79.91, yen 137.57, sing 1.3420, HKD 7.8275, INR 82.35, China 7.0031, peso 17.60, BRL 4.9287, BBDXY 1,236.56, Dollar Index 103.12, Oil $72.93, 10-year 3.59%, Silver $23.53, Platinum $ 1,073.00, Palladium $1,474.00, Copper $3.70, and Gold… $1,976.26
That’s it for today… An absolute beautiful Chamber of Commerce Day here yesterday, that followed 4 days of rain and tunderstorms… The fact that those rainy days were over, was enough to make the emergence of the Sun yesterday a cause for celebration! The Critics haven’t liked Season 3 of Ted Lasso, but to me, it’s been just as good as the first two Seasons… Good thing I’m not a film critic! Well, next week, will be my grandson, Braden’s 12th birthday, and we will celebrate his birthday this weekend, since my wife and i won’t be here next week! Have I told you lately that I love my oncologist? She is super with me, and I love her attention to detail… And as long as she sees to it that I stay alive, she’ll always be number 1 in my book! The Buckinghams take us to the finish line today with their 60’s song: Mercy, Mercy, Mercy… The Buckinghams were a Chicago group, that recommended the band: Chicago to the record producer! I hope you have a Tub Thumpin’ Thursday today, and a Fantastico Friday tomorrow… We’ll talk again on Monday… until then, please Be Good To Yourself!
Chuck Butler