Dollar Bulls Take No Prisoners!

A Pfennig For Your Thoughts
 
June 13, 2022
 
* currencies & metals get sold first thing this morning… 
* Are our leaders Clueless, and out of touch?
 
Good Day… And a Marvelous Monday to you! A beauty of a weekend for us here in the Midwest… Braden and Evie stayed with us Saturday night, and little Evie was so darned cute! Two years old, and ready to take on the world! Silly girl… I just adore her! Braden spent most of his time on his iPad, but I did get him to go swimming for a while… My beloved Cardinals couldn’t stand prosperity, and sweep the Reds, no… they lost the last game in the series on Sunday… My good friend, Dennis Miller, will be happy that his Tampa Bay Lightening reached the Stanley Cup Finals… I’m really hurting with a tooth ache… Since I had to have almost all my teeth on the right side of my mouth removed for the tumor that kept growing, I’m resigned to chewing only on my left side, and now a tooth on my left side is hurting… UGH! Well, that’s one way to lose weight! The band, Spirit, greets me this morning with their great 70’s song: It’s Nature’s Way… A song that I relate to in a Big Way!
 
The dollar took no prisoners on Friday, and the euro, well I hinted that if the European Central Bank (ECB) disappointed the markets by delaying their rate hike, that the euro would be in trouble, and trouble is what it found… The euro dropped 3 cents in its price, and the markets were in no mood to give the euro a break… Even though the ECB said it would hike rates next month, the markets know all too well that next month, may never come… The BBDXY gained almost 20 index points from where it traded on Thursday morning, and from the looks of the overnight trading there isn’t anything stopping the dollar from gaining more…
 
Gold gained $23 on Friday, and one has to scratch one’s head to wonder what the heck is going on here? The dollar was soaring, and Gold rallied? Go figure, right? I’m not one to look a gift horse in the mouth, so Gold gained $23.80 on Friday to close the week at $1,873.20, and Silver gained 23-cents to close the week at $22.01… The price Of Oil saw a skid of over $4 from its price on Thursday morning… It seems that China is locking down again, and that dampens the demand for Oil, and thus the slippage that we saw late last week in the price of Oil. The 10-year Treasury saw a huge gain in its yield to 3.20%… What’s the reason for all these huge movements in the dollar and bonds?
 
Well, MarketWatch had a report on Sunday, that talked about how the Fed might be considering a 75 Basis Point rate hike this week… What else can they do? Even the hedonically adjusted, stupid CPI (consumer inflation) printed at a 40 year high of 8.6% for May, and prices are not abating, they are rising still! John Williams at shadowstats.com has inflation really at 16.8%… Now, that certainly feels about right, doesn’t it? But to get back to the Fed Heads… If they choose to hike rates 75 Basis Points, they will all but admit that they have fallen way behind inflation, and need to play catch up… I fear that this could be the pin in the room that the stock market bubble will find… I sure hope you all have taken steps to protect your investment portfolios… There’s always the chance that the Fed Heads will only hike rates 50 Basis Points, and if that holds true, then the rot on the stock market’s vine will be exposed, but not as obvious as a 75 Basis Points hike would expose it…
 
So, now, it’s 75 Basis Points on the docket for This week’s FOMC meeting, and that news got the dollar bulls all riled up, and the bond boys looking to mark up yields… But what will the Fed Heads say after they hike rates 75 Basis Points (if they do)? Weill that be the end of their rate hikes, or will they show that they are serious about fighting inflation? Remember me telling you that St. Louis Fed President, James Bullard said that he would like to see the Fed Funds rate at 3.50% by year end? Well, the Fed Heads are still along way from that level, but IF they hike rates 75 Basis Points this week, they’ll be on their way toward that level!
 
A 75 Basis Points rate hike will all but drive a stake into the heart of the housing market… Or at least that’s how I see it happening… I sure hope I’m wrong, but it could very well be, like I said above, the pin that the housing bubble has been looking for, for sometime. I guess at this point we’ll have to wait-n-see what the Fed heads have up their sleeves on Wednesday…
 
In the overnight markets last night… The dollar continued to get bought, an now is 27 index points higher in the BBDXY dollar index, than it was at the close on Friday! That’s right! The BBDXY trades this morning at 1,261, and I can’t see what will stop the dollar bulls right now… Gold is getting sold, and giving back most of its gain on Friday, in the early trading today, along with Silver not getting any love… The price Of Oil remains $118, and bonds are seeing their yields getting marked upward… The 10-year this morning sits with a 3.25% yield… 
 
I just don’t see the rhyme or reason for all this dollar buying because of a 75 Basis Point rate hike… Not when our real interest rates , when taking in inflation, are still negative… And to me, the fact that the Fed Heads will all but be saying out loud that they screwed up and are behind the inflation 8-ball, should be enough, in my mind, to send the dollar to the woodshed… But those days of fundamentals are gone, folks… and I shake my head in disgust!
 
It sure was good to see Gold climb higher on Friday without interference. I received this from the good folks at GATA on Saturday, check it out: “Daniela Cambone couldn’t address gold market manipulation when she was doing interviews for Kitco News, and her successors there still can’t, but this week, now that she is at Stansberry Research, she got around to it during an interview in Zurich with Commodity Discovery Fund manager and financial author Willem Middlekoop.
 
Cambone invited Middlekoop to explain why gold hasn’t exploded with inflation along with other commodities, to which Middlekoop replied: “We know the gold price is managed by selling all these futures, all this paper gold, this silver, through the Comex” — the New York Commodity Exchange. But, Middlekoop noted by way of a graph, the Comex lately has become much more of a physical market with a lot of metal being taken out of it.
 
Then Middlekoop elaborated a bit uncomforably for Cambone.
 
“You’ve been in this industry for a long time,” Middlekoop said. “In your previous job maybe you weren’t allowed to discuss this. But there’s a lot of paper out there and many of those ounces have been sold several times.”
 
Cambone didn’t dispute him.
 
Middlekoop, one of whose books is “The Big Reset — The War on Gold and the Financial Endgame,” also said he thinks an international financial reset involving gold is already under way, as indicated by renewed central bank purchases of the monetary metal and the steady increase of the gold price in many currencies besides the dollar. The dollar, he said, will be the last currency to yield to gold.”
 
Chuck again… Well, it’s about time that other people besides me, are talking about the price manipulation of Gold & Silver using the futures contracts…
 
Oh, and in Ed Steer’s Saturday letter he showed that there are 160 day of production of Silver to cover the short positions in the metal, and 44 days of production to cover to the short positions in Gold…
I love Ed’s Saturday letter for this information…
 
The University of Michigan Sentiment collapsed in preliminary June data, crashing from 58.4 to 50.2 (massively below the 58.1 expectations). The current conditions gauge sank to a record-low 55.4 from 63.3, while a measure of expectations decreased to 46.8 from 55.2. It’s about time Consumers said what’s on their minds, and not be fooled by the Gov’t, who just last week tried to tell everyone that this the most robust economy that they have seen… C’Mon give me a break! If this economy is robust, I’d hate to have to see what they call it in a few months, when the collapse is in… I’m just saying!
 
So, last week the stupid CPI showed consumer inflation at a 40-year high… Inflation, as measured by the stupid CPI, hasn’t been this high since 1981… Let’s take a trip in the time machine back to 1981, dododododododoododo… The first Space Shuttle was launched… The DeLorean Car was first produced, the Iran hostages were released, the air traffic controllers went on strike, and then President Reagan fired them! So, these things were a long time ago, Shoot Rudy, 1981 is a year before my oldest son Andrew was born! And you know what comes next from the Gov’t? Price Controls… Yes, this is not being considered right now, as far as we know, but it will soon.. You can bet your bottom dollar on that!
 
Got Gold? Really… this is not just a silly saying that I add from now and then… This is a question that should be taken seriously… Sure, Gold is not soaring alongside inflation, but in my humble country boy opinion, this is good for all of you who haven’t hedged your investment portfolio with Gold, because the price hasn’t taken off yet… Yet, is the key word here, and in my opinion, which could be wrong, but I doubt it, Gold will take off for higher ground, soon… And when it does, don’t go calling your favorite coin dealer, for he won’t be able to find physical Gold for you… And then Carole King’s song: It’s too late Baby, now It’s too late, will be playing in your head…
 
And to further the discussion about the Gov’t leaders being either clueless, or dumb as a box of rocks, you choose, Sven Heinrich, someone that I’ve used his Tweets before, Tweeted this this morning… “Worst consumer sentiment on record, highest inflation in 40 years, longest bear market since ’08 with the highest household asset location in history & yet Janet Yellen is amazed that consumers are so pessimistic.
One wonders how out of touch decision makers really are.”
 
Yes, I do wonder how out of touch these people are… And like I said above, either they are clueless, or a dumb as a box of rocks, and I truly don’t believe they are dumb… I believe they have decided to play clueless, that way when the whole shootin’ match goes up in smoke, they’ll say they had no idea that this was about to happen… Mark my words on that, folks… I can hear them now…
 
The U.S. Data Cupboard doesn’t have a lot for us this week, but what it lacks in volume, it makes up for in weight… We won’t see much until Wednesday, when May Retail Sales will print, and then later that day the FOMC will announce their rate decision… The Butler Household Index (BHI) indicates that Retail Sales will be disappointing at best… So, in my best attempt to warn you about things that will be happening, I hope you have placed your stop loss trades on your stocks that have profits, you have enough Gold & Silver, and that you are ready to hunker down and wait for the hurricane that JPMorgan’s Jamie Dimon said the U.S. was facing, to blow over…
 
To recap… it’s all about the dollar and the FOMC meeting this week folks… The dollar is taking no prisoners, as the talk has shifted from a 50 Basis Points rate hike to a 75 Basis Points rate hike, and why it helps the dollar doesn’t register with Chuck, but then he’s always thought logically… The Data Cupboard doesn’t have much this week, but what it does have comes on Wednesday…
 
For What It’s Worth… this article, too, was in Ed Steer’s Saturday letter, which I found to be very FWIW worthy… It’s about currency collapse, and so forth, and can be found here: Protection from a currency collapse (goldmoney.com)
 
Or, here’s your snippet: “While markets seem becalmed, financial conditions are rapidly deteriorating. Last week Jamie Dimon of JPMorgan Chase gave the clearest of signals that bank credit is beginning to contract. Russia has consolidated its rouble, which has now become the strongest currency by far. The Fed announced the previous week that its balance sheet is in negative equity. And there’s mounting evidence that we have a nascent crack-up boom.
 
Russia now appears to be protecting the rouble from these developments in the West, while previously she was only attacking the dollar’s hegemony. China has yet to formulate a defensive currency policy but is likely to back the renminbi with a commodity basket, at least for foreign trade. If it is taken up more widely by the members if the Shanghai Cooperation organisation and the BRICS, the development of a new commodity-based super-currency in Central Asia could end the dollar’s global hegemony.
 
These are major developments. And finally, due to widespread interest in the subject, I examine the outlook for residential property values in the event of a collapse of Western fiat currencies.
 
The mechanics of an apocalypse
 
Against the grain of the establishment, for years I have been warning that the world faces a fiat currency collapse. The reasoning was and still is because that’s where monetary and economic policies are taking us. The only questions arising are whether the authorities around the world would realise the dangers of their inflationary and socialistic policies and change course (extremely unlikely) and in that absence in what form would the final crisis take.
 
History tells us that fiat currencies always fail, only to be replaced by Mankind’s sound money — metallic gold, and silver. And now that fiat currencies have seen a rapid debasement followed by soaring commodity and raw material prices, interest rates should be considerably higher. Yet, in the Eurozone and Japan they are still suppressed in negative territory. The reluctance of the ECB and the Bank of Japan to permit them to rise is palpable. Worse still, even with just the threat of a slowdown in the issuance of extra credit by the commercial banks, we suddenly face a sharp downturn in economic and financial activities.”
 
Chuck again… This is a very long article, and if you want more, simply click on the link above…
 
Market Prices 6/13/2022: American Style: A$ .6985, kiwi .6298, C$ .7791, euro 1.0471, sterling 1.2205, Swiss $1.009, European Style: rand 16.0337, krone 9.8562, SEK 10.1344, forint 381.24, zloty 4.4298, koruna 23.6135, RUB 57.23, yen 134.03, sing 1.3890, HKD 7.8500, INR 78.03, China 6.7359, peso 20.27, BRL 5.0422, BBDXY 1,261.00, Dollar Index 104.83, Oil $118.88, 10-year 3.25%, Silver $21.68, Platinum $946.00, Palladium $1,875.00, Copper $4.24, and Gold…. $1,851.39
 
That’s it for today… I do believe that I’m here all week, try the veal, and tip your waitresses! HA! Well the 46th wedding anniversary of Chuck & Kathy, was celebrated with son Andrew, his wife, Rachel, and their kids, Braden and Evie… No biggie… it’s what happens when you live with someone for 46 years! She doesn’t like flowers, she doesn’t want any more jewelry, she hates cards, so, I just hug her and say happy anniversary! Oh, I forgot, I’m not supposed to talk about her in the Pfennig, so if she finds out I did, I’ll know who told her… I was telling everyone a story about how the night before the wedding, 46 years ago, I sat on the front porch of my mom and dad’s home, with my good friends, Robin and Mike, and we proceeded to tell my mom all our high school capers, of which she would say, “I knew that”… Jonathan Edwards takes us to the finish line today with his song: Shanty… I hope you have a Marvelous Monday and please remember to Be Good To Yourself!
 
Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts