Canada Sells Their Gold Reserves?

* Faith in the numbers goes away.
* Dollar gets sold on Friday, rebounds today.
* Is China sending a message?.
* ECB meets this week, will there be more stimulus?

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

Good Day. And a Marvelous Monday to you! Sam and Dave greet me this morning with their classic R&B song: Soul Man. My first band I played in, The Soul Wonders Revue, played that song. We were a sight, with everyone wearing Gold shiny pants and Gold shirts, and doing the moves with our guitars together while we played. Two members of that band have passed on, so reunion isn’t possible, in case you were thinking that would be a great thing! We always practiced in my basement, and my mom would sit there and listen to us for hours. I can still see her sitting there with a big smile on her beautiful face, telling us how good we sounded.

Well, I wasn’t sitting there smiling on Friday. The Jobs Jamboree was something to behold. Well, well, well, who among us were snookered into believing what the BLS printed on Friday was a “real jobs created” report? Come on, you know who you are! Remember on Friday morning, I had given you an example of how the BLS had taken the January negative report from the surveys, and performed a “seasonal adjustment” to make it a positive report? Well, February’s report was also “seasonally adjusted” by the BLS. Now we don’t know what kind of tricks the BLS played with the report, do we? But do we have to know exactly before we begin to question what they tell us? No. we do not! And here’s the bugaboo for the BLS, the dollar and the U.S. economy going forward.

It’s all about “faith in the numbers”. The BLS, as I described in Friday’s Pfennig, “seasonally adjusted” the jobs data in January from a negative print to a positive print. Once that news gets around, and it’s getting around now, the markets lose faith in the credibility of the people presenting the data. Remember the old saying about computers. Garbage in, Garbage out? Well, I think the markets are getting the memo on the garbage in from the BLS and that’s causing the garbage out.

The other thing that is pretty telling about the jobs situation is the fact that the Avg. Hourly Earnings fell in January and annually. That’s a bad sign for the economy, in that IF we are really adding jobs, they are not “bread winner” jobs, and that won’t be good for the economy.

So, I wanted to make certain that everyone is crystal clear on why the Gov’t accountants and officials were dancing in the street on Friday, but the dollar could not mount a rally, not against the currencies, and not against Gold. Is that clear? Crystal!

I was inundated with emails from readers on Friday, with info regarding the Jobs data, put together by everyone from David Stockman to Bob the Blogger, and they all told the same story that the majority of the jobs that were created during February, were service jobs in the restaurant industry. WOW! I thought. But then there were other things I thought.

It’s crazy, I know, to just keep going on like this month after month, with data that just needs more massaging than the previous month. It reminds me of what my mother taught me as a young child. Once you tell one lie, you have to keep telling them, until the original lie becomes so unrecognized. Here’s another take on the data. Trim Tabs, a privately run independent company that monitors actual real time payroll withholding tax info issued a report two days ago which said the number of new jobs created in February was between 55,000 and 85,000, based on actual withholding tax data. If you are employed, payroll taxes are automatically extracted. This data cannot be manipulated. It reveals the truth. No seasonal adjustments, tweaks or phantom jobs added. It’s pure tax data.

Now, who’s going to argue with that? It’s pure tax data, no birth/death model needed! Besides, how can the BLS look into the markets’ collective eyes, and say they added 129,000 jobs for the birth of new companies in February, when everyone knows (because I told them, HA!) that the U.S. has seen more “deaths” in companies for the last 4 years. And to think that they (BLS) continue to go back to the well, over and over and over again with this pile of dookie. And the media outlets eat it up, that’s all I could find on the TV on Friday, were reporters talking about the great jobs creation number for February.

And that’s it for me! I’m not talking about this anymore today, I’m worn out already and it’s still dark outside! So. As I said above, the dollar got sold VS the currencies on Friday, and Gold mounted a rally, only to get sold off toward the end of the day, ending up down $6, but is up more than $8 this morning. This morning, though, the dollar is staging a comeback, and has most of the currencies on the losing side of the ledger. With only the Chinese renminbi, and Russian ruble able to remain on the positive side of the ledger this morning. Is this a delayed reaction to Friday’s jobs data? I doubt it. I think it’s more a case of the moves on Friday were strong, and probably too strong when traders looked back on the day.  I would put this activity today in the category of, “we went too far, too fast” on Friday.

The Chinese renminbi was allowed to appreciate, by a large margin I might add, in the overnight fixing, adding to the larger than the average bear margin appreciation that the renminbi posted on Friday. I told you Friday that the Annual meeting of the Chinese Party was taking place this past weekend, and while a lot of the news coming from the meeting hasn’t been made public yet, the message I do believe is clear. The large appreciations going into the meeting, and coming out of the meeting, tell me, that the Chinese are serious about keeping the renminbi stable, and then see what shakes out of the slowdown. They may have to come back to the drawing board to review this, should the slowdown deepen and go on and on. Annual GDP was forecast to be in the 6.5% to 7% range, which signifies a stabilization of the economy. But that’s just a forecast, folks, not much to make of it other than the Chinese leaders think that this slowdown is going to end soon..

We all know that Central Bankers wear rose colored glasses when it comes to forecasts, right? And the Chinese are no different in that regard.

The loonie is getting sold this morning. Did you see the 60 Minutes piece on Canadian Prime Minister, Trudeau? I saw snippets, preferring instead to take advantage of the opportunity to watch my Blues on TV. But, I have something to talk about regarding Canada, that’s really pains me to do so. Well, I didn’t want to talk about this, but I was edged on by readers who not only sent requests to Pfennig Replies, but also comments on the Pfennig web site at, who wanted me to talk about Canada selling their Gold reserves. Can you believe they did that? And do you know what this reminds me of? Well, I’ll tell you.. Back in the late 90’s when all the European countries were getting their balance sheet to look better for admittance into the Exchange Rate Mechanism (ERM) the precursor to the euro, and they had to meet the criteria of the Maastricht Treaty, they sold Tonnes and Tonnes of Gold. And then watched in horror as the price of Gold began to rise a couple of years later.

Now, I’m not saying that just because Canada sold its Gold reserves (I don’t believe they sold “all of their Gold reserves” ) that it means that Gold is going to rise like it did 13 years ago. All I’m saying is that Canada sold at the low price so far this year, and they are already watching in horror as the price of Gold has risen since their sale. It’s sort of like me in reverse. I buy something and it goes down. Central Banks sell something and it goes up!

Any-old-way, I didn’t like that Canada sold Gold reserves, making them the only G7 country without Gold reserves, that is as long as you believe that the U.S. still has Gold. I have no idea why Canada decided to do this now, makes no sense to me, and I know I’ve said it before that I’ve been a fan of Canada, well this news hit me in the gut, but if you’re a fan, you’re a fan, and it’s like when your team trades your favorite player (Ted Simmons) and you want to be mad at your team, but you can’t.

And the euro has stopped its 4-day rally as traders suddenly remembered that the European Central Bank (ECB) meets this week, and with CPI (consumer inflation) falling in January, that the ECB could very well announce more stimulus for the economy, and that would not be good for the euro, so traders are getting a head start on that trade! I’ll talk more about the ECB and more stimulus as we go along with week. But for now, the euro is getting sold, but remains above $1.09, as I write.

The Russian ruble is the only Petrol Currency taking advantage of the latest bump upward in the price of Oil this morning. Oil has risen to a $36 handle. I know, I know, that’s a far cry from where it was more than a year ago, but it’s far better than the $28.88 price it held on 2/11, less than a month ago!

I see Gold has added to its early morning rally, as I write and is now up more than $10, and trades with a $1,270 handle. And Platinum is back to $1,000! Things are looking brighter for the precious metals, so why am I so leery of what’s going on? Oh, that’s right, the wolf is always at the door. Remember that but also keep in mind that the wolf runs away when the hunter comes looking for it. And we could very well be at that point…

Well, the U.S. Data Cupboard on Friday, had more than just the Jobs Jamboree to print. Yes, life did go on after the Jobs Jamboree, and the U.S. Trade Deficit for January printed. Don’t look now but the Trade Deficit is getting out of hand once again, as it beat the expectations for $43 Billion (I said $44 Billion) and printed at more than $45 Billion! Exports were down -2.2% VS December, and the non-petroleum deficit was a whopping $62 Billion. That’s right, “real goods” had a deficit of $62 Billion! Here’s where the rubber meets the road on this deficit folks.. Exports are going to continue to be a drag on GDP, and as long as the dollar remains in this stronger trend, exports are going to continue to suffer. Yes, the foreign demand is slow, causing a strain on exports too, but if your currency isn’t making the exports uncompetitive, then you would still be able, as a country, to export something to someone. But that all gets thrown out the window when you have a situation like we have now, with all the currencies playing in the Currencies War, and the dollar being the one that is the other side of the trade.

And don’t look now but Factory Orders are a real problem in the U.S. This data has printed negative more times than it has positive in recent months, and the 2015 year on year data printed last week, and well, it’s just not painting a pretty picture folks. In 60 years, the U.S. economy has not suffered a 15-month continuous YoY drop in Factory orders without being in recession. Today’s -1.9% YoY drop may indicate that the train is leaving the station for Recessionville.

I know that I spent an inordinate amount of time on the Jobs data today, which some of you maybe questions why I did so, given my claim that “I just don’t care anymore” about the BLS report. But, it was the BIG NEWS of the day, and I just had to put my look under the hood, and around every corner, hat on and spend some time there. But with Stocks going up, the currencies and metals rallying the markets sent a message. The Bond boys were the only ones snookered by the jobs data, and bond yields rose.

To recap. The Jobs Jamboree on Friday, was a blow out number, and the markets didn’t care! Stocks went up, currencies and metals rallied, and only bonds were losers on the day. The usual suspects were out in force punching holes in the BLS jobs report on Friday, and Chuck is no different, pointing out some actual hard data on taxes that might have everyone looking differently at the BLS going forward. Canada sells its Gold reserves, and makes Chuck think of the sad day in his past when he learned that his Favorite all-time Cardinals player, Ted Simmons had been traded. And China’s annual meeting ended with the renminbi being allowed to appreciate by a large margin.

For What It’s Worth. My good friend, Dennis Miller, the retirement guru, as I call him, writes a letter each week that is centered around those that retired, or those that are getting ready to retire, and what is effecting them with regards to finances, investments, and other things. I subscribe to his letter, and I don’t see why you wouldn’t also! Anyway, here the link to the story I’m focusing on today, and it takes you to his website, where you can subscribe! Click here:

Or here the snippet. “What happens when a retiree can’t pay his bills? The tragic photo of the Greek pensioner in the Express Tribune still haunts me. What a horrible feeling it must be to work hard your entire life, save your money, play by the rules, and then have your retirement hopes and dreams pulled right out from under you.

Could Americans end up in the same situation?

In 2008, the government passed the TARP (Troubled Asset Relief Program) bailing out the insolvent banking system. It was supposed to be a one-time event resulting in a quick recovery leading to a booming economy. It didn’t happen and has spiraled out of control. The Federal Reserve instituted several Quantitative Easing (QE) measures resulting in what is now labeled ZIRP (Zero Interest Rate Policy).

Safe, good interest bearing investments no longer exist. The impact on retiree’s income, 401 (k)’s, IRA’s, annuities and pension plans has been well documented.

Many countries are now punishing savers with negative interest rates – meaning savers pay the bank for holding their money. Imagine having a $1,000 Certificate of Deposit and a year later it is worth $950, minus inflation losses.”

Chuck again.. Thanks Dennis! I read his stuff with much interest since I’m nearing the retirement age with every day that passes! But don’t worry, with Alex only in his 2nd year of a 6 year college program, I’ll be around for a while! And let’s not forget that EverBank is one of the few banks in the country that didn’t need TARP money, and that we have not contemplated implementing negative rates, instead we choose to reward savers with our yield pledge to always remain in the top 5% of Competitive Accounts . There’s a description that you should look at regarding that, and you can find it on our website:

Currencies today 3/7/16. American Style: A$.7410, kiwi .6760, C$ .7490, euro 1.0950, Sterling 1.4150, Swiss $1.0003, . European Style: rand 16.3795, krone 8.5417, SEK 8.5175, forint 282.65, zloty 3.9492, koruna 24.7030, RUB 71.85, yen 113.55, sing 1.3822, HKD 7.7685, INR 67.09, China 6.5113, pesos 17.79, BRL 3.7508, Dollar Index 97.62, Oil $36.40, 10-year 1.90%, Silver $15.67, Platinum $1,001.18, Palladium $560.50, and Gold. $1,270.96

That’s it for today. A good two game trip for the Blues. With just about 17 games remaining in the regular season, it’s time for them to go on a run, and get really hot going into the playoffs, so that they don’t experience another early exit from the playoffs. It’s too early to tell anything about my beloved Cardinals, who I’ve seen play 3 games in the last 5 days.. and I wondered why I missed one! It’s been a good run of absolutely beautiful days here, and while the sun is supposed to be around this week, the northerly winds return, making it chillier than usual. But still warm, and that makes me happy! Kathy, Dawn, Rachel, Braden and Everett all arrived back here from a trip to Disney World, and the place went from very quiet, to louder than a political party convention! But those two boys, my grandsons, are so funny to watch. Braden wanted to sit out with me to watch the stars last night, but he got too cold, and we had to go in. (it wasn’t cold, just windy).. Well, the sun is coming up, and everyone will be waking soon, so I had better get this out the door before I get distracted by them! I hope you have a Marvelous Monday, and be sure to Be Good To Yourself!

Chuck Butler
Managing Director
EverBank Global Markets
Editor of A Pfennig For Your Thoughts