Currencies Resume Their Attack On The Dollar…

A Pfennig For Your Thoughts
August 11, 2020
* Gold gets whacked badly in early trading today… 
* Chuck poses as a CEO…. 
Good Day… And a Tom Terrific Tuesday to you! Well the first day back in the saddle left me with some riding marks…. HA! It’s just me and Alex for the next few days here at the old ranch… Which used to mean that we would be wearing out the phone connection to Pizza Man Pizza! But Alex eats better these days, as he keeps his young Iron Man figure… By the time I was his age (25) I had lost all desire to maintain my Atlas shape, and had begun the slow march to where I am now… So, good for him! I made us some Dijon pork chops last night… One of my specialties! I’m not good for the sides though… The Moody Blues greet me this morning with their song: The Other Side Of Life… 
Front and Center this morning, the short sellers of Gold are really taking out their frustrations on the rise of the Gold price in the early trading today… Gold is down $48 in the early trading today, and the only thing I can see that would relate to the drop in price is that the Covid-19 virus infection rate in the U.S. has dropped… Oh, and that Russia says that they have a vaccine ready to administer to people…  So, other than a few profit takers, and some skittish people regarding the virus being brought under control. The main sellers are of the short variety… 
So, let’s take some time to review the facts…. Has monetary stimulus by Central Banks, including our Fed Reserve, been pulled back? No, in fact, there are plans for more stimulus, which is nothing but currency printing… And have interest rates suddenly reversed their downward trend? No, in fact, interest rates are remaining near zero, and will continue to remain there for some time! And have Treasury yields risen to bring them out of negative territory? No, in fact the 10-year Treasury’s yield is just .54%, but when you factor in inflation, the rate is negative… 
Take this drop in the price of Gold for what it is…. A buying opportunity… I’m just saying… 
Well, as I suspected yesterday, there is a major battle brewing in the White House VS Congress, after President Trump, signed an executive order to spend money… I told you that this was an attempt to take the control over the purse strings in Congress away from those bickering elected officials… I just want to point out something, that Bill Bonner pointed out yesterday in his letter…
“Of course, there is no mention of “executive orders” in either the Bible or the Constitution. As for the Lord… We’ll let Him speak for Himself. But the Constitution is clear…
No Money shall be drawn from the Treasury, but in Consequence of Appropriations made by Law.”
Chuck again… So now, we not only are being given fake money, but now its illegal money… But then the representatives that have allowed the printing of currency instead of the use of Gold & Silver as our money, should all be rounded up and taken to jail…. And just because this has been going on for a long time, doesn’t make it right… There comes a time when you have to stomp your foot down, and say “no mas”! Hey, if a very proud boxer can bring himself to say “no mas”, then we should be able to say it to our representatives!
OK…. Yesterday, the currencies did nothing VS the dollar, but in the overnight markets, the dollar got sold…. The euro is back to 1.18, and the Aussie dollar (A$) is within spittin’ distance of 72-cents this morning! Gold lost $6 on the day, but Silver gained 81-cents! Gold was bound to have to go back and fill in the gaps after it shot higher by large amounts each day the last 10 days… So… like I just said, this would be considered a “dip”…. Use it to your advantage…. Because the next leg up for Gold will take it to $2,500… of course that’s my humble opinion, and I could be wrong…
So… were you aware that the Treasury will have over $2 Trillion in new borrowings between July and December? The July to Sept period is expected to be $947 Billion, and the Oct. to Dec period is expected to be $1.216 Trillion…
Now those numbers are bad enough, folks, but think about the whole year… The April to June borrowings were $2.753 Trillion… And the January to March borrowings were $515 Billion…. So add them all up, and we get $5.4 Trillion that will need to be financed with Treasury issuance, and that $5.4 Trillion will be added to our current debt… 
And those estimates for the coming months were done before the next stimulus bill gets passed, or the deficit spending the President signed over in a an executive order on Sunday…  I’ve heard that the Democrats won’t be satisfied with any amount below $2 Trillion….  So, you might as well add $2 Trillion into your computations for debt this year! Aye, aye, aye…. I need serenity now!
The Fed is hell bound and whiskey bent to get inflation rising, as quickly as they can get it going, and money printing will go a long way toward them reaching their goal of higher inflation. But the velocity of the money being printed, is the key… if money gets stashed away, then the velocity of money doesn’t spiral higher, and trigger inflation… And with the position of most people’s pocketbooks / savings balances right now being so battered, I can’t see people rushing out to spend their new found currency… Do you? I would think at this point people have either learned a lesson about having savings the hard way, or they are licking their wounds, but grateful they had savings… And therefore a replenishing of those savings or even a start up of savings will be in order… Where’s the velocity coming now?
OK, enough talk on that, but basically I’m just trying to explain why investors are flocking to Gold & Silver right now… Governmental tensions, Geopolitical tensions, negative yields, money printing out the yahoo, and a few other things really have Gold & Silver in the driver’s seat…. Yeah, driver’s seat…. Pick up your feet…. Got to move to the trick of the beat. There is no lead. Just take your place in the driver’s seat! A little Sniff n’ the Tears for you this morning!
A few years ago, I mentioned the song Driver’s Seat in the Pfennig, and later that day I received an email from a guy who said he was the bass player for Sniff n’ the Tears…. How cool was that? We actually ended up talking on the phone, as we had lots to talk about, with me being an old bass player myself!
Funny how I always have a “story” to tell about something related, eh? Well, when you have the life I’ve had, there are a ton of stories to tell!
As I told you yesterday, the U.S. Data Cupboard was taking a pause for the cause this week, with little to report until Friday’s reports. But that doesn’t mean there isn’t anything in the Data Cupboard… For instance today we’ll see the color of July’s Producer Price Index (PPI), which is wholesale inflation, and which there shouldn’t be any… unless… You know, if I was a business owner, and I had widgets to sell to the public, and suddenly those widgets aren’t selling, would I raise the price of the widgets so that if I sell 1/2 of them my net is the same, or would I reduce the price of the widgets to make them more attractive? What would you do? 
Me…. I think I would raise the prices, in an attempt to recover my profits….  But, the thing I would do is downsize the widget, so that I’m giving the public less of a product at an increased price…  
Bet you didn’t think I would take that track, eh? Our Chuck, a CEO that everyone despises? No way! Well, think about it, Companies have already done the downsizing of their widgets, and kept the prices the same. The only thing left for them to do is increase the prices, which would send wholesale inflation higher, and that would feed the stupid CPI (consumer inflation) and the wheels on the bus go ’round and ’round…. 
Today’s Data Cupboard will also have the small business index for July… I can’t imagine in my wildest dreams that this survey of small businesses will be good… 
To Recap… Well, the currencies & metals didn’t do much yesterday, but in the overnight markets, is where the action was… The dollar got sold VS the currencies overnight, but Gold is getting whacked in the early trading today, and was down $48 at last check… Chuck gets help from Bill Bonner to explain what the Constitution says about who gets to spend the currency in these United States of America… 
For the FWIW article today, I have a real treat for you! Instead of an article, I have a recent video interview with the GREAT Mogambo Guru! Mike Maloney, whom many of you know of, does the interview, and when I watched it, I just kept going back in my mind the time TGMG (The Great Mogambo Guru, and I had lunch together while I was in St. Pete Florida…  So, here’s the link to the interview… enjoy!
I also have this, which will tell you about the media… What I’ve always complained about them for, and more… Check this out… 
I had a dear reader send me this…. And I thought that it was worth repeating here in the Pfennig…
John Swinton was a NY Press guy…. Check out what he said oh, so long ago…
“One night, probably in 1880, John Swinton, then the preeminent New
York journalist, was the guest of honor at a banquet given him by the
leaders of his craft. Someone who knew neither the press nor Swinton
offered a toast to the independent press. Swinton outraged his
colleagues by replying:
“There is no such thing, at this date of the world’s history, in
America, as an independent press. You know it and I know it.
“There is not one of you who dares to write your honest opinions, and
if you did, you know beforehand that it would never appear in print. I
am paid weekly for keeping my honest opinion out of the paper I am
connected with. Others of you are paid similar salaries for similar
things, and any of you who would be so foolish as to write honest
opinions would be out on the streets looking for another job. If I
allowed my honest opinions to appear in one issue of my paper, before
twenty_four hours my occupation would be gone.
“The business of the journalists is to destroy the truth, to lie
outright, to pervert, to vilify, to fawn at the feet of mammon, and to
sell his country and his race for his daily bread. You know it and I
know it, and what folly is this toasting an independent press?
“We are the tools and vassals of rich men behind the scenes. We are
the jumping jacks, they pull the strings and we dance. Our talents,
our possibilities and our lives are all the property of other men. We
are intellectual prostitutes.”
Chuck again…. Just about tells it all, and oh, so many years ago too!
Market prices 8/11/20: American Style: A$ .7186, kiwi .6610, C$ .7532, euro 1.1805, sterling 1.3276, Swiss $1.0973, European Style: rand 17.4845, krone 8.9450, SEK 8.7062, forint 292.19, zloty 3.7297,  koruna 22.1497, RUB 73.52, yen 106.01, sing 1.3765, HKD 7.7499, INR 74.45, China 6.9644, peso 22.32, BRL 5.4358, Dollar Index 93.22,  Oil $42.65, 10-year .54%, Silver $27.21, Platinum $956.00, Palladium $2,2026.00, and Gold… $1,980.45
That’s it for today… not as wordy as yesterday, which should be a good thing, ? Thanks for all that sent “welcome back” notes to me yesterday, they are truly appreciated! Last week, I was away for the 65th birthday for my best friend in the world. I’ve known Mike Karvas since 2nd grade. We’ve been through good times and bad times together. So, happy belated Birthday, brother! my poor beloved Cardinals sure have gone in the other direction, health wise, than the other 28 teams! They can’t seem to shake the virus that has taken over the world… I would think that even if they could begin to play games again, that it’s too late… The 2020 60-game schedule will have to go on without the National League’s winningest team…. UGH! in fact, double UGH!  Paul Young takes us to the finish line today with his big hit song: Every Time You Go Away… And on that sad note (it’s a sad song) I hope you have a Tom Terrific Tuesday today, and will continue to Be Good To Yourself!
Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts