Gold Finally Moves Past Its Line Drawn In The Sand…

A Pfennig For Your Thoughts
 
June 1, 2021
 
* dollar gets sold to end the week last week
* Yesterday’s U.S. holiday, left markets without any direction… 
 
Good day… And a Tom Terrific Tuesday to you! And welcome to June! Pfennig Tradition calls for this: June is busting out all over, all over the meadow and the hill… I sure hope you had a relaxing and fun holiday weekend, and you took a minute yesterday to think about those soldiers that have given the greatest sacrifice to our country. I had to get “dressed up” twice over the weekend for the wedding celebrations of Kathy’s niece. I don’t know how I used to “suit up” every work day, back in the day… I’m a shorts and polo shirt, and tennis shoes kind of guy these days! I’m still feeling the effects of the blood loss last week, but I am feeling more normal as each day goes by… Blood, Sweat & Tears greet me this morning with their song: Spinning Wheel… Most people don’t catch this, but in this song the music time goes to 5/4, which is common for jazz, but not rock and roll!
 
So, it’s been a few days since we last talked… In that time we saw more rotten economic data, and the dollar get sold, albeit, not like funnel cakes at a State Fair, but more like “gee we’re going to sell dollars, but not let’s not get anyone upset”… We also saw Gold move back above $1,900, a level that seemed to be a line drawn in the sand for the shiny metal, and Silver move back above $28… So, wrap all that up, tie it with a pretty bow, and you’ve got what’s happened in the markets I care about and write about since we last talked.
 
For the record… Gold closed Friday at $1,908.10, and Silver closed at $28.15… The BBDXY was down on Friday and closed the week at 1,116.55, and the Dollar Index was 89.85… Both of these showing that the dollar was weaker, but not by a wide margin…
 
In the overnight markets last night… There was nothing going on trading wise as the dollar is sitting about where it was at the close on Friday, as we start the day… Gold is down $2.30 in the early trading and Silver is up 14-cents, so a hodgepodge of prices to start the trading day… I don’t believe the small loss in Gold is anything to be concerned with, as it will probably get turned around today, as I see things… The price of Oil is pushing higher once again and this morning it trades with a $68 handle… but don’t worry about it, for there’s no inflation, it’s only a transitory number…. As if! 
 
So, we start the week with the dollar weaker, once again, that is until the PPT spends some of their treasure chest of Exchange Stabilization Funds (ESF) Gold & Silver biding their time, drinking their wine, trying to decide what to do. (James Gang). And the markets looking as confused and convoluted as ever before… This week, we’ll see lots of data, but not much of it is “real economic data”, that is until Friday, when the May Jobs Jamboree prints… You may recall that last month the so-called experts said 1 Million jobs would be created in April… But they were sadly mistaken when the crooks, I mean the folks at the BIS reported just 264,000 jobs created in April, and as I pointed out last month, even that number was goosed higher by the BIS after the surveys were received, and showed that real job growth for April was negative!
 
For this month’s forecast, the so-called experts are calling for 674.000 jobs created in May…  Remember when I kept reporting the business failures during the pandemic and kept repeating my thought that many of those businesses wouldn’t be coming back? Well, good friend, Dennis Miller of www.milleronthemoney.com sent me this note yesterday… Check it out…
 
“While while 16 million people are still claiming state or federal unemployment compensation….
 
My observation…….. When the pandemic hit many small businesses were closing their doors. We lamented, “those jobs are not coming back!” It looks to me like the government has sent out so much money they may have proved us wrong…..instead the workers may not be coming back.”
Yes, businesses are finding out that they’re going to have to up the ante with wages and benefits to lure these people that don’t feel they need to work as long as the government keeps sending them checks, back to work, and that’s going to push wages higher and isn’t that one of the items that the naysayers to rising inflation right now, point to? That there’s no “wage inflation”? Well, it appears that argument is being thrown our with the bathwater!
 
OK, onto other things… Reuters reported yesterday that China has directed financial institutions to hold more foreign exchange in reserve, a move that analysts say could help temper a rally in the yuan after the currency hit a three-year high against the dollar on Monday.
 
The People’s Bank of China said it will raise the FX reserve requirement ratio for financial institutions to 7% from 5%, from June 15. The increase will make it more expensive for banks to hold dollars.
 
Man these communists sure seem to know how to take the fun out of the markets, eh? HA
 
Speaking of Communists, well, they used to be and in some ways still are, although they have become quite capitalistic in recent years, Russia, reported some good economic news in the face of the economic sanctions still hanging over them like the Sword of Damocles…. Here are three pieces of news reported by the RT.com “: Russia’s industrial production surges over 7% in April.
 
Russian unemployment falls to 5.2%, almost back to pre-coronacrisis levels.
 
Exports of Russian crude to US soared to 12-year high despite ongoing political tensions.—
 
You know, and all you longtime readers will recall me saying this over and over again in the past, that Russia is an “Oil play”… And while the price of Oil has recovered a lot in the past year, the Russian ruble has not… So, what gives? Well… in my humble opinion, it’s investors that think it’s unpatriotic to buy and own rubles… It took quite some time before investors got over the fear of being unpatriotic when it comes to the Chinese renminbi / yuan, and while I’d like to think I’m a patient man, I know in reality that I’m not… And so my patience grows thin with these investors that fear that owning rubles are unpatriotic…   
 
I was looking at Google the other day, and came across an article that said, that “two additional stimulus checks may be coming my way”… I thought, OMG! That’s impossible! No wait, we’ve already seen that 3 stimmy checks were possible, so instead of saying that’s impossible, I’ll say that’s ridiculous! And you know how you’re not supposed to read everything on the internet as the truth? Well, I’m going to put that one down as false info! And hope it goes away!
 
I was reading Doug Casey’s latest letter on Sunday, and got to a part that I had to share with you… Doug was talking about the every increasing money supply, and referred to the Magic Money Tree people here: “Eventually, of course, such irresponsible economics will cause any country, no matter how powerful, to collapse economically, no matter how many Keynesian economists such as Thomas Piketty, Paul Krugman, and Larry Summers declare otherwise.”
 
You tell ‘em Doug!
 
Ok… so the U.S. Data Cupboard this week will conclude with the Jobs Jamboree on Friday, leading up to Friday, we’ll see all kinds of data like the ISM manufacturing index, Vehicle sales, Productivity, and the Beige Book (Fed regional reports). We’ll also see the Weekly Initial Jobless Claims, and the ADP Employment Report… So, a busy data week, just not full-o-market moving data….
 
To recap… Since we last talked, the currencies and metals have moved positively VS the dollar, albeit at a slowed pace… In the overnight markets last night,  not much went on, except the price of Oil is pushing higher again.. Also, Chuck talks about Russia, China, people not coming back to work, and the potential for wage inflation…
 
For What It’s Worth…. Man-o-man, did this article really stick out like a man with a hatchet in his forehead when I came across it this past weekend… It’s an article about the Fed increasing their powers and how people are starting to notice, and it can be found here: The Fed keeps expanding its powers, and that’s making some nervous (cnbc.com)
 
Or, here’s your snippet: “The Federal Reserve seems to be having an identity crisis.
 
Not that long ago, the U.S. central bank was seen solely as a watchdog of the nation’s financial system as well as the entity charged with using its various policy levers to control inflation and keep unemployment low.
Nowadays, well, things have changed.
 
In recent months, the Fed has extended its responsibilities as a bank regulator to the fight against climate change. Where once the Fed used its power over interest rates to control inflation and keep borrowing costs low, it now is taking on the role of making sure job gains are spread equally among income, racial and gender groups.
 
If this doesn’t sound like your parents’ Fed, or even legendary former Chairman Paul Volcker’s, you’re not alone.
 
Wall Street increasingly has noticed the central bank’s expansion of its mandate, and some are none too happy about it.
 
“They shouldn’t be getting involved in these things even if progressive politicians want to drag them in. They have to have the courage to say ‘no,’” said Christopher Whalen, a Fed veteran and former investment banker and now head of Whalen Global Advisory. “Since 2008, they have capitulated on so many fronts I don’t even recognize the institution anymore. The bank I worked for is gone.”
 
Of course, 2008 was a pivotal year for the Fed.
 
That was the year Wall Street stalwart Lehman Brothers collapsed, part of a series of cataclysmic events that sent the U.S. and global economy into its worst tailspin since the Great Depression.
 
To put the economy back on its feet, then-Fed Chairman Ben Bernanke, then-Treasury Secretary Hank Paulson and then-New York Fed President Timothy Geithner headed the “Committee to Save the World.” The group put together an array of programs that ultimately did save the economy but also embarked the nation on an era of unprecedented influence for the Fed.
 
Over the years, the symbiosis between the Fed and Treasury has only strengthened.
 
Now, the dynamic has gotten even more intense. Powell and Yellen, who worked together on the Fed for nearly six years, now run the Fed and Treasury respectively.
 
The Fed has long been considered immune to outside pressures, free to move interest rates and otherwise implement policy in the way it deems most appropriate, outside of political concerns. The fear is that the Powell-Yellen dynamic could change that.”
 
Chuck Again… Yeah, maybe they are extending their mandate, but who’s going to stop them? Congress? Yeah, right, and I’ve got a bridge to sell you too! This is getting really bad folks… I want my old fed back, you know, the one that monitored interest rates, and inflation… Times change, but not always for the better, and the Fed is a classic example of not for the better!
 
Market Prices 6/1/2021: American Style: A$ .7732, Kiwi .7258, C$ .8298, euro 1.2223, sterling 1.4180, Swiss $1,1118, European Style: rand 13.7706, krone 8.2705, SEK 8.2607, forint 283.96, zloty 3.6545,  koruna 20.8360, RUB 73.34, yen 109.60, sing 1.3228, HKD 7.7590, INR 72.84, China 6.3672, peso 19.91, BRL 5.2278, BBDXY 1,116.82, Dollar Index 89.87, Oil $68.04, 10-year 1.62%, Silver $28.29, Platinum $1,182.00, Palladium $2,890, Copper $4.60, and Gold… $1,904.80
 
That’s it for today… Well, I took Kathy and her relatives to the airport this morning already… I’ll be alone for the next 16 days… I know, I know, it’s not a big deal, but, it will be interesting to see how many times my kids check on me while she’s gone… Man, did we ever experience a cold spell last week! It was the end of May, and the temps weren’t anywhere close to normal for that time of year! I had to switch to long pants and long sleeve shirts, with my hoodie! Maybe June will bring more normal temps our way…. My grandkids, all four of them, had a part in the wedding this past weekend, and little Evie stole everyone’s hearts as she walked down the aisle with her rose petal basket… Then she had to go to the hospital with the croup cough that night… It’s her second hospital visit in here first 19 months… Poor thing… Delaney was a junior bridesmaid, and was the cutest of all the bridesmaids! And Braden and Everett were “ring security”… And brother did they have a blast at the reception! Ok, time to get going… The Electric Light Orchestra (ELO) take us to the finish line today with their song: Telephone Line… I hope you have a Tom Terrific Tuesday, and Please Be Good To Yourself!
 
 
Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts