Currencies Rally On Unknowns…

A Pfennig For Your Thoughts

April 29, 2021

* Powell leaves traders nothing concrete to trade on
* The price of Oil jumps higher! 

Good Day… And a Tub Thumpin’ Thursday to you! I really feel like going out and doing some Tub Thumpin’ myself today… But I have a cable guy coming this afternoon, so there goes that idea out the window! Maybe tomorrow, when the sky clears, the rain stops, and the sun comes back out, it would be a better day to do some Tub Thumpin’! Two years ago, I dumped the cable and went to YOUTUBE TV, because we could get it in Florida too… Well, that was all fine and dandy, until the YOUTUBE folks got in a peeing contest with Bally’s Regional Sports, who carry my Cardinals and Blues games… Now I have to jump through hoops to watch them both… But not any longer! I’m going back to cable, today… Speaking of my Cardinals… their bats went into a funk again last night, and they lost….Steely Dan greets me this morning with their song: Black Cow… “so drink your big black cow and get outta here”…  

Well… what a turnaround by the currencies and metals yesterday! And wouldn’t you know it, the press conference that saw Cartel Chairman, Jerome/ Jay Powell tell everyone that while he thinks the economy is improving, the Cartel is going to keep rates at zero, and keep the monthly purchases of $120 billion in Treasury and mortgage-backed bonds going for a while longer when he’s sure the economy has recovered, and the COVID cases are dwindling to near nothing, got everything going… So, when will that be? Only the Shadow knows…

So… yesterday morning pre-FOMC, the Dollar Index was 91.05 and had risen throughout the previous night, but… once Jay Powell’s words were heard, the dollar selling began again in earnest! The Dollar Index dropped to 90.60 at the close of the day, and the euro rose through the 1.21 handle, to 1.2131 when U.S. traders handed over their books to the Asian traders, last night… But the currencies weren’t the only beneficiaries of Powell’s words… Gold, which in the early trading yesterday was down $5.20 ended the day up $5.70, which makes that a $10.90 turnaround… And Silver which was down a hefty 43-cents in the early trading ended the day only down 7-cents… So, Gold closed Wednesday at $1,782.50, and Silver closed at $26.29…

The markets don’t like unknowns, and I’ve explained this before many times in the past.. They like to trade on something solid… not something with shadows, and unknowns! And the unknown was left out there for traders to figure out yesterday, by Jay Powell… There’s just too many questions out there like what happens if…. the economy stumbles? And how will the Cartel explain their yield curve control while they are selling bonds? And will the first rate hike be 25 BPS or 50 BPS? And there are more to talk about, but you get the drift, there are unknowns, and traders don’t like unknowns! Period!

Earlier this week I said that if the euro trades above the 1.21 and keeps moving higher through the level, that we would have a good sing that the dollar is preparing for a long ride on the slippery slope…

The Overnight markets… there was little movement in the currencies, and the euro begins the day at 1.2130. The Dollar Index weakened to 90.57 overnight, and the A$ has climbed to 78-cents! Gold is down $4.90 in the early trading today, while Silver is up 18-cents… The overnight traders didn’t seem to think that FOMC was a BIG DEAL… So be it… They’re finished for the week… So, I’m sure they didn’t want to make an large moves and have them hanging around all weekend… 

The price of Oil has really jumped higher this week and the last 24 hours haven’t changed that mode… The price of Oil is trading with a $64 handle this morning, and this news has awakened the Petrol Currencies… The Canadian dollar has risen to 81-cents, and the Norwegian krone is pushing stronger too this morning. And this rise in Oil price won’t help all those that think that inflation is nothing to worry about… 

Things are looking better in the Eurozone economy too… So, it’s not just a sell dollars/ buy euros trade, it’s a sell dollars to buy euros because they have something going for them right now… German 10-year Gov’t Bonds (Bunds) hit their highest yield in 2 months, and they appear to be heading higher… Which in my opinion could be a reason for buying euros right now…

Speaking of Gov’t Bonds… Globally there are more $18 Trillion in negative yielding Gov’t Bonds outstanding… That means some knucklehead bought a negative yielding bond, and instead of getting paid interest, he has to pay interest to own the bond… OOh, that sounds too good, I want some at the market, I can’t get enough of them! NOT! AS IF! To me, any country that sells negative yielding bonds, has no regard for their currency… The U.S. doesn’t sell their bonds with negative yields, but after owning them, and the buyer takes into consideration the inflation rate, then these too are negative yielding…

Last May, almost a year ago, I told you that it was my belief that the debts of the world would cause a collapse of the financial system that we all know and love… And that would bring about a default or two or three or more of countries and their debts… I included the U.S. into this mixture of defaulting countries… I still believe that this is all going to come down the pike and when it does it’ll be like an avalanche… Too much Debt… Too much fake money… Too much willingness to deficit spend more, and no willingness to stop, will be the icing on the cake, folks…

I was reading a report yesterday regarding the food delivery chain, and the writer expressed the belief that by the end of this coming summer, food stores will have empty shelves… The supply chain has been so disrupted, and getting it back in order is taking much longer… Now that’s some scary stuff, eh? I don’t want to be a Chicken Little but come one, did we really think you could shut down everything and then just start it back up without hiccups? I’m just saying…

OK, getting back to Gold for a moment… The good folks at GATA sent me a note yesterday, and they were talking about technicals. They admit that they are fundamentalists, but when the technicals line up with the fundamentals, like they are now with Gold, a HUGE rally could be in store…

Basically, Gold has been in a downtrend since reaching $2,100 late last summer, and more recently, Gold has been range bound, $1,700 to $1,800… But now.. “The chart has provided some clues, however, that suggest the bulls are finally regaining traction and the market is potentially gearing up for a breakout above $1,800 in the coming weeks.” -GATA 4/28/21

The U.S. Data Cupboard today has the usual Initial Weekly Jobless Claims, which have really been on the downward slope the last two weeks… We had a false dawn with the Claims dropping about 2 months ago, and then they shot back above 700,000 for a few weeks in a row. So, it’s anybody’s guess what this number will be today… In addition, we’ll also see a final revision to 1st QTR GDP, which should be a whopper!

Tomorrow’s Cupboard has March prints for Personal Income and Spending… Well, I guess we’ll see what people did with their stimmy checks, eh? It’ll all be here tomorrow… If I were a betting man I would bet that U.S. receivers of stimmy checks, banked the bonus from the Gov’t, or paid down credit card debt… Not many stimmy checks were taken down the store to buy a new big flat screen TV… And the Personal Spending data for March that prints tomorrow, will be the big payoff on my bet! 

To recap…. The currencies and Metals had huge turnarounds yesterday, which came via Jerome Powell’s words in his speech following the FOMC Meeting… He basically said that the Cartel will keep interest rates at zero, and continue buying $120 Billion in bonds per month, until the economy proves that it can stand on its own two feet, and Covid cases are nascent… He hinted that if all things go as planned the Cartel would look to begin tapering their bond holdings/ purchases, in the 4th QTR this year… There’s no guarantee that any or some of that will even come to fruition… So, dealing with unknowns is not currency traders’ cup-o-tea… so they sold dollars, turning around early morning losses in Gold and currencies…

For What It’s Worth… For many years now, I’ve told you dear readers that the way to end Price manipulation, is to demand delivery for all metals contracts… If everyone who bought Gold or Silver and bought it physical, took delivery, the COMEX would fall apart, and take with it the price manipulators… I’ve said that for years! Well, Craig Hemke of the TF Metals Report, writing for Sprott, does a good job explaining what I’ve been saying for years and years, and it can be found here: Blog – The People Have the Power (sprottmoney.com)

Or, here’s your snippet: “There are many of us “keyboard warriors” who believe that the current fractional reserve and digital derivative pricing scheme is unfair and rife with fraud. There are also a handful of system apologists who claim that the current scheme is fair and equitable and that silver is abundant. Well, there’s one way to find out. Let’s do this.

If you regularly read these weekly columns, then you’ll recall this post from last week. If not, please read it now before you continue: A Time to Fight Back

In summary, it’s time to get to The Truth, and we the people have to power to uncover it. The pricing scheme has endured for decades, and the alchemy that drives it has left in its wake a system where no one knows for certain how much physical gold and silver exists with clear, undisputed title. Oh sure, if you own and hold physical metal, there’s no dispute at all. However, if you hold a futures contract, an unallocated account, or an ETF, all you hold is price exposure to an overleveraged system. This leaves you with an incalculable counterparty risk that you may not have even considered before today.

With this in mind, a grassroots effort to buy and hold physical silver took hold in late January and lasted into early February. The sudden rush of physical silver purchases drained the existing physical supply and created a stress in the just-in-time delivery system that the bullion banks maintain.

The effort was substantial enough that even the LBMA, in their Q1 silver report, admitted to a physical supply strain.”

Chuck again…Just think what could have been had the pressure remained on the COMEX for a few more weeks? We might be finished talking price manipulators!

Market prices 4/29/2021: American Style: A$ .7800, kiwi .7263, C$ 8141, euro 1.2130, sterling 1.3956, Swiss $1.1007, European Style: rand 14.2446, krone 8.1728, SEK 8.3364, forint 297.07, zloty 3.7653, koruna 21.2826, RUB 74.68, yen 108.98, sing 1.3253, HKD 7.7625, INR 74.07, China 6.4798, peso 19.98, BRL 5.4153, Dollar Index 90.57, Oil $64.94,  10-year 1.66%, Silver $26.47, Platinum $1,224.00, Palladium $3,008.00, Copper $4.52, and Gold… $1,776.60

That’s it for today… Things were looking good for a moment or two last night, as our Blues stomped their way back from 1-3 deficit to win 4-3, and while that was happening, the Cardinals were going ahead 3-1… But then the Cardinals, as I said above, lost… Let’s Go Blues! Day game at Busch today, wish I was going, but I can’t! UGH! Darn responsibilities! I have so many cable linescoming into the basement from the different providers I’ve had through the years… Charter, Dish, U-Verse, and finally no cable YouTubeTV… Yes, I used to have this big Dish on my rooftop, and to me the Dish delivered the best picture quality, but wind and rain was a real downer for the Dish… I don’t have any plans for the weekend, so I think I’ll really do some Tub Thumpin’ tomorrow! Yeah, that’s the ticket! And my first wife was a young Elizabeth Taylor! HAHAHAHAHA! John Lovitz cracks me up! And this is the last Pfennig of April… When I talk to you on Monday, God willing and the Creek don’t rise, it’ll be May! R.E.M. takes us to the finish line today with their song: The One I Love… “This one goes out to the one I love, this one goes out o the one I left behind”… I hope you have a Tub Thumpin’ Thursday, and follow that up with a Fantastico Friday tomorrow, and while you’re doing that, please take time to Be Good To Yourself!

Chuck Butler

Creator & Editor of:

A Pfennig For Your Thoughts