June 17, 2021
* Currencies & metals get sold down the river on Wednesday
* Fed admits that prices are rising faster than they forecast!
Good day… And a Tub Thumpin’ Thursday to you! The letter is going out late today, no biggie, just another day when I didn’t want to answer the bell… Boy did the Fed throw a spanner into the works yesterday! Or, as I used to say… the Fed threw a cat among the pigeons….. I’m glad I was at the ballgame and wasn’t following their statement. Speaking of the ballgame, what an absolute beautiful day it was, and we saw an excellent pitched game by both teams, and to top it off the Cardinals won 1-0 with a walk off win in the bottom of the 9th, to send the crowd home happy… Chicago greets me this morning with their song: Free…
Well, where do I begin? I may as well get to the losses and then explain why that all happened… The dollar was king yesterday, but only after the FOMC meeting, and the announcement following. The currencies are trading this morning with prices that look very strange. There were only two currencies that held their ground VS the dollar yesterday, The Brazilian real and Chinese renminbi / yuan.
The BBDXY went from 1,123 in the morning to end the day at 1,139… That’s quite a leap folks… The euro took the brunt of the dollar buying, and fell through two figures, down to 1,1934 this morning. But that’s nothing compared to the losses Gold & Silver suffered yesterday.
Gold lost $46.80 on the day to end the day at $1,812.90, and the selling hasn’t stopped today, with Gold down another $23 in the early trading today, to bring the shiny metal below $1,800… And Silver couldn’t hide from the dollar buying either, with a $71-cent loss yesterday, and another 49-cent loss this morning…
The price of Oil continues to trade with a $72 handle, and was spared yesterday… The 10-year Treasury got sold too, with the yield rising from 1.48% yesterday morning to 1.57% today…
So, what did Fed Chairman Powell say in the press conference after the meeting that caused all these losses? Well, let’s break this down… first, the : Fed officials surprised markets after their two-day meeting with a forecast for two rate hikes in 2023, after previously predicting none. And second… The Fed also said it discussed tapering its bond program, as expected, but it provided no timeline on when it would begin the process.
The Fed did also admit that inflation is rising faster than they projected 3 months ago, and that’s the reason they feel they will need to hike rates in 2023…
The key here is they are saying 2023… if I not blind, and can see a calendar, that’s 1 1/2 years from now… There’s a whole lot of good and bad that can happen between now and 2023… So, why were the markets so moved to push all these asset classes to lower levels? Well, for one, they were surprised by the statement… And they got their panties all in a wad, when Powell, sounded so hawkish…
There are tons of things I’m thinking about all this, and the one that keeps coming forward in my brain is my concern that remains about whether the central bank can continue to manage the path away from its extraordinary policies smoothly. I doubt they will be able to, but that’s a discussion for another day.
The other thing that gets me is the markets didn’t punish the Fed for their continuing mantra of inflation is only Transitory… The Fed admitted that prices are rising faster than they forecast 3 months ago… So, if their forecast for prices is wrong, then their forecast for rate hikes is probably going to be wrong too…
I know what the Fed is thinking here folks… That inflation is rising faster than they expected, and their hands are tied for now to combat it, so they’ll try to jawbone inflation down with talk of rate hikes 1 1/2 years from now…
And in the end… What they have done is give every procrastinator a buying opportunity… When was the last time you could get Gold below $1,800 or Silver below $27, and pick your currency, they all have levels that are way below their recent levels…
One more thing about the losses in Gold & Silver… These losses were not completely brought on Gold owners selling… Once the Fed press conference was over the price manipulators saw an opportunity to really stick it to Gold & Silver, and they showed up at the COMEX with arms full of short Gold or Silver paper trades… These no good, varmints should be taken out to the north 40 and, well… I guess I need to stop there…
So, the negative print for Retail Sales on Tuesday was forgotten about, nothing to see here, move along… And it was all about the stupid Fed talking about rate hikes in 2023… What will inflation be in 2023? The Fed didn’t tell us what their models say about that and that would be the reason for their rate hikes… This is all shrouded in darkness to me folks, and therefore I’m going to just go batten down the hatches until this all blows over…
There’s only the Weekly Initial Jobless Claims in the U.S. Data Cupboard today and they haven’t moved the markets in a long time, so basically there’s nothing to see in the Cupboard today, and tomorrow, there are no prints scheduled, so an end of the week with not much to trade off of…
To recap… The Fed surprised the markets with hawkish comments yesterday that led to a discussion about when they see rate hikes, and that turned out to be 2023… They admitted that prices are rising faster than they forecast 3 months ago. But never apologized for saying that inflation is only Transitory… The currencies & metals got sold like funnel cakes at a State Fair, and look to be still on the selling blocks this morning.
For What It’s Worth… Well, I mentioned the price manipulators above, and this article talks about how they went about bringing the price of paper Gold down yesterday… The good folks at GATA sent this to me and it can be found here: Comex Gold Trading Was Form vs. Substance Today | Investment Research Dynamics
Or, here’s your snippet: “In his commentary a few hours ago at Investment Research Dynamics in Denver, Dave Kranzler wrote it’s unlikely that anyone either bought or sold real gold at the smashed prices reported on the New York Commodities Exchange Wednesday afternoon after the Federal Reserve made its latest announcement about the U.S. economy. The smash was entirely a matter of derivatives:
But then of course most gold trading in recent years has been a matter of derivatives, not actual metal, and derivatives have vastly inflated what the world considers the gold supply — and the world cooperates by continuing to give credence to derivative prices rather than prices for real metal in hand. This is the racket the world lives in.
Mainstream financial news organizations pretended t o construe the Fed’s statement as being on the tough side because, while it acknowledged that inflation is high, it contemplated two increases in interest rates — two years from now!
In a free market less controlled by derivatives, such silliness from the Fed might have sent monetary metals prices soaring. Instead somebody heavily sold gold futures in New York and prices crashed.
Just who did all that selling?
Of course financial news organizations didn’t ask, but the sellers were almost certainly the major investment banks trading on behalf of the U.S. government, banks that are always short the metals, never long. — because they are not trading for themselves. The consistency of their position implies a practice not of seeking profit — nobody seeking to maximize profit sells all at once, as was done again today — but a practice of executing policy for an entity that needs monetary metals prices suppressed.
Of course on days like Wednesday, this work may seem useless — as useless as the World Gold Council and the mining companies it purports to represent. But Wednesday was actually a demonstration of the government’s weakness, not its strength. For Wednesday was another reminder that subtlety no longer works in gold price suppression — that the government is being forced into the open to keep the gold price down and no longer can afford not to be seen and thus no longer can keep from being exposed.
The challenge now is not so much of exposure — that long has been accomplished — but one of making people care about the injustice being done. Understandably, even most people who know what is happening — including the journalists, newsletter writers, mining company executives, and the financial people — are still too scared to care.
But there will come a point when a few more people are inspired enough to care and find their courage, as in the great scene from “On the Waterfront,” where a diminutive and aging steve dore decides he has had enough from his union’s gangster boss:
On what seem like bad days, the best advice may come from two very different and often adversarial but nevertheless world-changing figures from history.
“The day may dawn,” Churchill said, “when fair play, love for one’s fellow men, and respect for justice and freedom will enable tormented generations to march forth serene and triumphant from the hideous epoch in which we have to dwell. Meanwhile, never flinch, never weary, never despair.”
And from Gandhi: “When I despair, I remember that all through history the way of truth and love has always won. There have been tyrants and murderers, and for a time they seem invincible, but in the end they always fall. Think of it — always.
Yes, there’s still going to be a great day, and some of us may even live to see it:
Chuck again… long winded snippet, yes… but one that needed to be read… pieces of this snippet belong to Dave Kranzler and others to Chris Powell…
Market prices 6/17/21: American Style: A$ .7569, kiwi .7014, C$ .8107, euro 1.1934, sterling 1.3952, Swiss $1.0926, European Style: rand 14.0975, krone 8.5533, SEK 8.5345, forint 296.88, zloty 3.8061, koruna 21.3747, RUB 72.13, yen 110.73, sing 1.3403, HKD 7.7650, INR 74.07, China 6.3978, peso 20.52, BRL 5.0399, BBDXY 1,139.66, Dollar Index 91.79, Oil $72.08, 10-year 1.57%, Silver $26.56, Platinum $1,102.00, Palladium $2,827.00, Copper $4.30, and Gold… $1,789.80
That’s it for today… Well, Sunday is Father’s Day… Longtime readers will recall me going all sappy about my dad in the past… There was a recent Prager U. video about the need for fathers… I agreed 100%… I know I needed one in my life to teach me how to be a man… gentleman, a scholar, a good person… I miss my dad, and wish he were here to help me understand the things that are going on today… So, if your dad is still around, be sure to give him a hug and tell him you love him… I know I would if I could… I don’t have a poem for fathers today… sorry… My beloved Cardinals head to Hotlanta for 4 games and need to keep their better play going on the road… Elvis, yes Elvis takes us to the finish line today with his song: One Night… I hope you have a Tub Thumpin’ Thursday today, and Please Be Good To Yourself!
Chuck Butler