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