Gold, Copper, Oil, The 10-year, All Tell Us That Inflation Is No Big Deal!

A Pfennig For Your Thoughts
 
June 23, 2022
 
* The dollar got sold on Wednesday… 
* More price manipulation at the COMEX on Wednesday… 
 
Good Day… And a Tub Thumpin’ Thursday to one and all! The very hot day yesterday led to an absolutely beautiful evening and night here in my little river town. I sat outside to watch the Cardinals/ Brewers game, with good friend, Mike, and neighbor Paul, and we brought home a winner, with only today’s day game left in the series that has the Cardinals up 2-1 so far… So far, this year, the Brewers and Cardinals have split their games, and if the Cardinals can win the day game today, that would give them the edge so far this season, and a 2-game lead in the division… It was simply beautiful outside last night… especially since the Cardinals won! Tonight is the night we go to the Fabulous Fox for the Sebastian Maniscalco show… I’m really excited to see this guy live, for his specials on TV have had me in stitches, laughing out loud! I hope Kathy enjoys his humor as much as I do… The Jefferson Starship greets me this morning with their song: Miracles…
 
Well, after getting bought in the overnight markets Tuesday night, the dollar went back to getting sold in the U.S. session yesterday, with the BBDXY losing 4 index points! The real “mover” against the dollar this year has been the Russian ruble, as it proves daily what happens when you back your currency with something other than the good faith of the Government. But, ever sine the Swiss National Bank (SNB0 hiked rates late last week, the franc has been gaining daily VS the dollar… It’s as if the SNB came riding in on their proverbial while horse to save the franc, that was very near to parity with the dollar… I might remind everyone looking to stock up on francs, that the currency is still a negative yielding currency…
 
Gold is up one day, down the next, up one day, down the next, in this never ending pattern we seem to be stuck in… Gold lost $6 in trading yesterday, after gaining $7 the day before… UGH! Gold closed the day yesterday at $1,833.70. Silver found a way to gain 10-cents on the day, their one thin dime allowed Silver to close at $21.76… The price of Oil slipped again and traded at the end of day with a $103 handle. And bonds… for the life of me I can’t figure out what’s going on with bonds… It’s as if the buyers are counting on the Fed Heads to pivot and go back to buying bonds, and printing currency… That Must be the reason for the 10-year Treasury’s yield to drop to 3.15% yesterday!
 
To further that thought, I pulled this from Kitconews.com yesterday: “The Federal Reserve’s hawkish stance is not sustainable, and it is likely that not only will the world’s largest central bank stop raising rates altogether by the end of the year, they will reverse course and lower rates, according to Keith Neumeyer, CEO of First Majestic Silver.
 
Speaking to Michelle Makori, Editor-in-Chief and Lead Anchor of Kitco News at the Prospectors & Developers Association of Canada conference in Toronto, Neumeyer said that the Fed’s monetary policy pivot will likely occur by Q4 of 2022 and spur another bull rally in the precious metals.
 
“Once we see the Fed back up its current policy, it’s going to raise rates by probably two or three more times this year…once the market really does crack is when I’m expecting it to happen, then I think you’ll see the Fed turn around and start reducing rates. That’s going to be the beginning of the next big cycle in gold and silver,” he said.”
 
Ok, regular “readers” of this letter, know that I said over and over again that this dance is gonna be a drag, no wait! I said over and over again that I think the Fed Heads will think that they have done enough to combat inflation, and will want to wait to see the effects of their previous rates hikes before moving on, and when they do that, they will begin to buy bonds, and print currency, along with cut rates once again… So, you can see that others are jumping on the bandwagon here… I’m just saying…
 
In the overnight markets last night… There’s been little to no movement in the dollar overnight, with the BBDXY trading at 1,256 to start the day today. Gold is up $4 in the early trading today, and the price of Oil has bumped a bit higher and trades with a $105 handle this morning. And the apparent Blue Light Special on the 10-year Treasury is still shining brightly, and the yield on that bond has dropped to 3.02% this morning… 
 
So… according to the price action in Copper, Gold, Oil, and the 10-year Treasury, we can all breathe easier, and forget about inflation, it’s not real, it’s not here now, or will be tomorrow, right? These inflation indicators are telling us this, folks… I’m just not going to sit by idly and watch this either! It’s not right! Ok, Mr. tough guy, just what are you going to do to correct these things? Hmmm…. I guess I got carried away there, sorry… But watching these things get sold, when they should be (historically speaking) soaring, is just too much! I can’t take it any longer! Serenity NOW! 
 
Well, mortgage rates were climbing once again, and a 30-year mortgage (who gets those these days?) had an over 6% rate… The housing boom has finally found the pin in the room to pop the bubble! And folks looking for new houses, are being told that there aren’t any to buy… Ok, don’t tell me the supply chain disruptions have come to new housing too?
 
So, with all this mess in the economy, why isn’t the dollar getting sold like funnel cakes at a Sate Fair? Because the Fed Heads are still saying that they’re going to continue their assault on interest rates, and take them higher… That’s why… Hmmm… that would mean that dollar trades are dealing with fundamentals, right? I just don’t see that working for them too long…
 
What we have here is akin to the shootout at OK Corral! Either the markets will win, and prove the Fed Heads to be the town idiots they are, or, the Fed Heads will win and keep hiking rates and staying out of the bond market… And bring the economy to within a whisker of a collapse… So, you get to choose which door you’ll opt for… Hmmm. Monty, I take what’s behind door #2… We might be scraping the bottom of the barrel with this option, but at least inflation will be tamed… Hopefully, that is… 
 
So, did you hear about the moratorium on gas Taxes that the POTUS introduced yesterday? I understand what he’s dong, he’s trying to save the democrats running this fall from having to explain to their voters why inflation isn’t hurting them… (As if!) But, did the U.S. suddenly find a surplus of Tax Receipts that they can use to offset this loss of tax receipts/ income? Of course they didn’t, they are simply going back to the well that provides them deficit spending… and deficit spending is what got us into the inflation cycle now isn’t it? 
 
Now, I’m no fan of taxes… I hate them, I curse that them, and I pay them… reminds of the lyrics to song: The tax man taken all my dough, and left me in my stately home, all I’ve got is this sunny afternoon… So, any time the Gov’t reduces taxes I’m all for it, that is, until I see that there’s nothing to offset this loss of tax receipts/ income… I had better move on there before I say something that gets me into trouble!
 
The U.S. Data Cupboard today finally has something for us to view and throw darts at! Today we’ll see the Initial Weekly Jobless Claims for last week. This data has seen the weekly numbers rising in recent weeks…
 
Yesterday, Fed/ Cabal/ Cartel, Chairman Jerome Powell went before the Senate Banking Committee, and had this to say, ““I’m trying to lower demand growth — we don’t know that demand has to actually go down, which would be a recession,” Mr. Powell said. He later added that “this is very high inflation, and it’s hurting everybody, and we need to do our job and get inflation back on a path down to 2 percent.”
 
Chuck again… yes, talking out of both sides of his mouth, and not making any sense at all! I guess he learned that from Big Al Greenspan… Memo to Jay Powell: Ahem, demand growth is already waning Jay, witness the negative -1.6% GDP in the 1st QTR and the Atlanta Fed’s GDP Now system showing that the 2nd QTR will also be negative, and at best flat! You may be able to throw stuff out there at the dumb as a box of rocks Senators, but you can’t get that stuff past me!
 
To recap… The Tuesday night overnight session had the dollar being bought, but that buying was not handed over to the U.S. session, where the dollar got sold once again, with the BBDXY losing 4 index points yesterday… Gold has been up one day, down the next this week, and sees to be spinning its tires… In the overnight markets last night….
 
Before I head to the Big Finish today, I want to apologize for the tardiness of the letter this morning… I had an awful night, and then when the alarm went off this morning, I couldn’t answer the bell… Just another sleepless night curtesy of Chemo… 
 
For What It’s Worth… There’s something happening here, what it is, ain’t exactly clear… The link to this article was sent to me by long time reader, Bob, and it’s about how the BRICs may be scheming to develop a new Reserve Currency, and it can be found here: BRICS developing global reserve currency – Putin (informationclearinghouse.info)
 
Or, here’s your snippet: “President Vladimir Putin said on Wednesday that the BRICS countries – Brazil, Russia, India, China, and South Africa – are currently working on setting up a new global reserve currency.
 
“The issue of creating an international reserve currency based on a basket of currencies of our countries is being worked out,” he said at the BRICS business forum.
 
According to the Russian president, the member states are also developing reliable alternative mechanisms for international payments.
 
Earlier, the group said it was working on setting up a joint payment network to cut reliance on the Western financial system. The BRICS countries have been also boosting the use of local currencies in mutual trade.”
 
Chuck again… OH-NO! longtime readers may recall the BIG deal I made out of the formation of the BRICS, (Brazil, Russia, India, China, South America) and how they would be a force to reckon with in the future… Well, it looks like the future is now, and I don’t like it one iota!
 
That’s it for today… Can you believe that next weekend will be the 4th of July weekend? How’d that happen? It seem only yesterday I was singing: June is busting out all over! I’ll be all by myself next week, once again… This house that I had built 33 years ago, is not a big house, I was never tempted to buy a McMansion, but when I’m here by myself, it sure seems big… But, I’ll survive, I always do… I bet my former colleagues, Jen and Christine still think a man can’t function alone… My darling granddaughter, Delaney Grace will be in a play tonight that I will attend… Can you believe that my little Delaney Grace will be starting High School this fall? She’s such a sweet young girl, I hope High School doesn’t jade her… Tom Petty and the Heartbreakers take us to the finish line today with their song: Mary Jane’s Last Dance… I hope you have a Tub Thumpin’ Thursday today, and a Wonderful Weekend ahead, and don’t forget to Be Good To Yourself!
 
Chuck Butler
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A Pfennig For Your Thoughts