A Call For A Return To A Gold Standard…

And now… Today’s A Pfennig For Your Thoughts…

March 27, 2018

* A “nothing day” for the currencies…
* Media hype gets traders all lathered up…

Good Day… And a Tom Terrific Tuesday to you! Good news from the oncologist yesterday. The tumor in my jaw has shrunk significantly, which I already knew, but the effects of the medicine on my body functions, haven’t shown up, yet, so it’s all systems on Go! My last full day in S. Florida, where the frigid weather up north never gets to, and that makes me very happy! Dave Loggins greets me this morning with his song: Please Come To Boston… Which I’m sure the people of Boston are singing to warmer weather!

Well, it was a “nothing day” for the currencies yesterday, but they held their ground and inched higher in some cases, and lower in other cases.. Gold found a way through the short Gold paper traders’ gauntlet, to gain $6.40 on the day, and the price of Oil held steady Eddie. As with many things these days, the media got the markets all lathered up late last week and over the weekend, on the news of a Trade War, and then the news feed faded and the markets are left to trade on its own…

And that’s what we saw yesterday. One day it’s all about buying the euro, and the next day, not so much… Oh well, I carry on despite the flaws of trading currencies these days…

Yesterday, I meant to talk about the rise in pound sterling, as it was trading as high as 1.4225. This move higher came about because of the news that the BREXIT negotiation might not cause a hard landing for the U.K. economy… But that was yesterday, and today the pound is getting sold on the news / rumors that BREXIT negotiations aren’t going well… See what I mean? The media gets the markets all lathered up about something one day, and then no follow up the next day…

This will continue to go on, until it doesn’t… Yes, one of these days, the markets will ignore the media’s hype about something, and when that happens, this trading pattern will have ended… But until that day, we have to be careful and not go feet first into the traps that the media sets…

Trends are the things that move markets in sweeping moves that take years to play out. There can be volatility within those trends, like the stuff we’re seeing now, but eventually the asset will return to the underlying trend.

I’m not seeing any love being sent the direction of the Petrol Currencies, which is weird, given the upward push of the price of Oil. The Russian ruble, Norwegian krone, Canadian dollar/ loonie, and Brazilian real, all are stuck in ruts, neither gaining or losing ground VS the dollar these days. I think Petrol Currency traders have figured out the media hype trading pattern and aren’t falling for it any longer. Well, not until Oil breaks out of this $62-$65 range, and makes a strong move toward $70…

I’ve been doing some reading about the pending Credit problems for bond issuers… It’s some scary stuff folks… And I don’t mean to cause you to hide in your rooms after reading this, but I do need to let you know what could happen, so you can prepare your investments accordingly…

I’ll keep it to the broad strokes to keep from getting from too detailed… But first, promise me you’ll put away the sharp objects… OK, are we finished? OK… here goes…

Basically we’re looking at the high probability that we could see a credit default coming… And here’s why… Basically, corporate bond issuers took advantage of the Fed’s zero rate circus and issued bonds by the boat loads, but it’s my opinion that these corporations didn’t use the funds generated by the bond sales to increase their business like corporations have done for eons before now. Instead, it’s my opinion that these corporations took the bond proceeds and bought their own stocks, buy backs if you will, to prop up their stock price, and in the end the Captains of these Corporations receive HUGE bonuses for the performance of the company’s stock…

So, there’s nothing in the till to pay off these bonds, and as they come due, they will have to be refinanced, but at a much higher interest rate, because the Fed has moved their zero rate circus to another city. These higher interest rates can’t be paid by the bond issuers… Uh-Oh! Or even worse, no one will buy their refinanced bond… Double Uh-Oh!

So, you can relax now, that’s all over… Whew! There’s not much happening in the U.S. Data Cupboard, until we get to Friday’s edition, when Personal Income and Spending will print. Today, we’ll see the latest Consumer Confidence report, and it’s expected to rise once again… That’s fine, go ahead and get real confident, and complacent about the economy, for when that happens, a Minsky Moment will be upon us in a heartbeat, and it will be too late baby, now it’s too late, though I really did try to make it…

And before that happens what should we be backing up the truck to? You get a shiny star if you said, Gold! OK… well, Gold did gain $6.40 yesterday and is taunting the price manipulators’ line in the sand at $1,350… Hmmm… This line in the sand will be long forgotten, and out of the rear view mirror, in my opinion, once everything begins to come crashing down upon us… I really don’t like to talk like that, because it sounds so gloom and doom, but when you hold Gold it softens the gloom and doom…

To Recap… It was a “nothing day” for the currencies yesterday, as the hype of the Trade War faded yesterday, not gone , but faded yesterday, and that caused some, “take a breather” trading in the currencies. Gold gained $6.40 and is taunting the $1,350 line in the sand drawn by the price manipulators. The U.S. Data Cupboard doesn’t have much for us until Friday, and Chuck goes dark and talks abut credit defaults…
For What It’s Worth… I found this in a round about way.. I first saw it from the GATA folks, then Ed Steer highlighted it, so I check it out, and it’s an article about the need for a Gold standard, and it originally printed on the Wall Street Journal site, but since you have to subscribe to the WSJ to read it, the GATA folks printed it out… I’ll give you the WSJ link and hopefully you can get something from it: https://www.wsj.com/articles/steel-and-aluminum-lets-talk-about-gold-1522005011

Or, here’s your snippet: “I believe in free trade, but I still understand why President Trump is imposing tariffs on steel, aluminum and a range of Chinese products. America’s industrial workers have suffered for a long time, and Mr. Trump is fighting to create middle-class jobs.

Achieving that will take more than righting the last administration’s wrongs on taxes and regulation, a task already well under way. Blue-collar prosperity was eroded along with American manufacturing. From 2000-10, U.S. manufacturing employment shrank by a third after holding steady for 30 years.

President Trump has rightly blamed bad trade deals, particularly those with Mexico and China, for contributing to this meltdown. But the Federal Reserve deserves a share of the blame, too, since its inflationary policies priced out U.S. manufacturers from global trade. Since 2000, their prices have risen nearly 50%, compared with about 25% for German competitors — mirroring the domestic inflation rates in each country. As a result, manufacturers fled the U.S., much the way American families have fled high-tax states.

The solution is to take control of the money supply away from the Fed and give it back to the American people-in other words, to return to the gold standard. Gold gets a bad rap in some history books because of its misuse during the 20th century. This ignores its peacetime record of high growth and nil inflation between 1834 and 1913.”

Chuck Again… I know, I know the so-called snippet was quite long today… but I had to do it that way to get the call for a Gold standard in there…

Currencies today 3/27/18… American Style: A$ .7725, kiwi .7277, C$ .7776, euro 1.2415, sterling 1.4115, Swiss $1.0560, … European Style: rand 11.6559, krone 7.70, SEK 8.2250, forint 251.81, zloty 3.3930, koruna 20.51, RUB 57.09, yen 105.63, sing 1.3084, HKD 7.8465, INR 64.81, China 6.2859, peso 18.33, BRL 3.3076, Dollar Index 89.32, Oil $65.74, 10-year 2.84%, Silver $16.70, Platinum $955.56, Palladium $978.30, and Gold… $1,354.50

That’s it for today… There will be no Pfennig tomorrow morning, as it’s a travel day back home for me. I’ll pick it back up on Thursday morning from my writing desk at home. Thanks to all that sent along welcome back wishes and birthday wishes… When I receive so many, I can’t reply to each one or else I would be at my laptop for days! So, hopefully thanking you all as a collective group works… Going to baseball games, day games at that down here means so much to me. I’ll probably get to go to one or two games back in St. Louis, but down here I get to go to 15 in one month! But spring training is over now, time to head north with the Cardinals! The Four Tops take us to the finish line today with their great song: Reach Out… I’ll Be There. I hope you can make this a Tom Terrific Tuesday, and I’ll talk to you again on Thursday… And don’t forget to Be Good To Yourself!

Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts

 

 

) The Daily Pfennig is no longer published by EverBank and it is now published by Aden Research Group.

Chuck Butler recently joined the Aden Research Group, a research center led by writers and market analysts Pamela and Mary Anne Aden. The Aden Research Group publishes three newsletters:
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