Gold Gets Whacked Again, Thanks To 382,000 Contracts!

A Pfennig For Your Thoughts

August 16, 2018

* U.S. Data Continues to not impress…
* China & the U.S. meet on trade…

Good Day… And a Tub Thumpin’ Thursday to you! I’m ready for some Tub Thumpin’, I’ll tell you that! I received a call from good friend Dennis Miller, the retirementor, yesterday. He informed me that he had picked up quite a few new readers after I told you dear Pfennig readers that you should sign up for his letter! I told him that it was good to talk to someone, other than myself! The Hooters greet me this morning with their song: All You Zombies…

When I hear that song, I’m reminded of the great publisher and writer, Bill Bonner, who refers to things as “zombie”… I sure with the price manipulators in the metals would go zombie on us! Yesterday 382,000 contracts were traded in Gold with most of them directing Gold lower by $19 on the day… Whoa! $19? Yes, $19… Three Dog Night is singing a song on the iPod right now, and they are asking the question, “how can people be so heartless?” Gold is up $4.25 in the early morning trading this morning though, so maybe it can gain back some of that $19 loss yesterday in today’s trading. It certainly has been a rough time for Gold enthusiasts like me, these last two months…

I just can’t get my arms around what’s going on with the dollar bugs… They continue to dance in the streets, while Rome is burning behind them, and they just don’t seem to notice it… Yesterday, the U.S. Data Cupboard was chock-full-o-data and while Retail Sales for July were OK, they weren’t great, and the rest of the data showed more cracks in the economy’s foundation.

The news from the Eurozone has been centered on the Italian bond spreads that we talked about on Monday… The spread between Italian Gov’t bonds and German Gov’t bonds is wide enough to drive a Mack Truck through… Too bad investors can finally find some yield in a Gov’t bond, only to find out the bond is issued by Italy… As a reminder of what I said on Monday… The European Central Bank (ECB) is ending their bond buying program, and have already tapered the amount they buy each month, which included many an Italian Gov’t bond… Without the ECB’s support the lower yields of these bonds, the yield will go where it’s supposed to go… higher, to reflect the Italian economy…

Yesterday, President Trump made a statement that I have to call him out on… He said that the U.S. had always had tariffs… I’m sure he meant since there was trade with other countries and there was a currency to place a tariff on… I am optimistic about a developing story that could be good for ending this stupid Trade War with China… China is sending Vice Commerce Minister Wang Shouwen to the U.S. later this month for low-level talks. If it goes ahead, it will be the first official engagement since negotiations broke down two months ago. Bloomberg reported this news and added that the Chinese currency rallied the most in 6 months on the news…

I’m not sure where they got their info… Yesterday morning, the renminbi was 6.8822, this morning the renminbi is 6.9145… With the renminbi being a European priced currency, the move from 6.8822 to 6.9145 is a loss folks… I’m just saying…

Australia printed some data overnight that should lead to a stronger A$… Front and Center is Consumer inflation Expectations which edged higher to 4.0% this month… They also printed their Employment data for July, which saw their Unemployment Rate fall to 5.3% from 5.4%… Stronger employment, and rising inflation should equal a rate hike…

In the U.K. this morning they saw a stronger Retail Sales report in July than June’s negative -0.2%, with July’s figure printing at 0.7%… That beat the expectations of a 0.2%… So, that’s a good one for the U.K., which hadn’t seen much good data with all the problems of BREXIT still hanging over the economy like the Sword of Damocles.

The price of Oil continues to slide further down the slippery slope… Oil has a price handle of $65 this morning, and on Monday this week it had a price handle of $67… I think the price of Oil has gotten caught up in all the price smashing of Commodities, from the Trade War between the world’s two biggest economies.

Inflation around the world, (well probably not in Japan!) is rising, and Commodities should be rising too, but aren’t. That leads me to believe that there could be a huge explosion of upward prices in commodities once the Trade War gets worked out or ends… And IF that were to happen the Commodity Currencies of Australia, New Zealand, Canada, Russia, Brazil, S. Africa, etc. should respond accordingly.

And finally, the stupid productivity report printed in the U.S. yesterday for July, and it showed a gain of 2.9%, which gets highlighted because productivity has averaged 2.6% for the last 10 years… But I wouldn’t put too much into this increase, for it’s just one month…

To recap… The currencies continue to be under the spell of the dollar, and the paper short Gold trade were in abundance yesterday as Gold got whacked $19 on the day. Rome is burning, and the dollar bugs don’t care, or haven’t noticed yet… Good data in Australia, and the U.K. overnight should be pushing these currencies higher, but that’s not happening… UGH!

For What It’s Worth… I want to thank longtime reader Bob, for sending this along, as this is a true FWIW article! it’s about how Gov’t agencies are going to be allowed to alter reports (I thought they already did that! HA!) and it can be found here: https://fas.org/blogs/secrecy/

Or, here’s your snippet: ” In an apparent departure from “generally accepted accounting principles,” federal agencies will be permitted to publish financial statements that are altered so as to protect information on classified spending from disclosure.

The new policy was developed by the government’s Federal Accounting Standards Advisory Board (FASAB) in response to concerns raised by the Department of Defense and others that a rigorous audit of agency financial statements could lead to unauthorized disclosure of classified information.

In order to prevent disclosure of classified information in a public financial statement, FASAB said that agencies may amend or obscure certain spending information. “An entity may modify information required by other [accounting] standards if the effect of the modification does not change the net results of operations or net position.”

Agencies may also shift accounts around in a potentially misleading way. “A component reporting entity is allowed to be excluded from one reporting entity and consolidated into another reporting entity. The effect of the modifications may change the net results of operations and/or net position.” See Statement of Federal Financial Accounting Standards 56, FASAB, July 5, 2018 (final draft for sponsor review).”

Chuck again… gotta protect sensitive data right? I shake my head in total disgust…

Currencies today 8/16/18… American Style: A$ .7272, kiwi .6587, C$ .7620, euro 1.1370, sterling 1.2699, Swiss $1.0063, European Style: rand 14.4745, krone 8.4625, SEK 9.1966, forint 284.65, zloty 3.7905, koruna 22.5980, RUB 66.98, yen 110.91, sing 1.3762, HKD 7.8493, INR 70.28, China 6.9145, peso 19.02, BRL 3.8837, Dollar Index 96.57, Oil $65.01, 10-year 2.88%, Silver $14.60, Platinum $780.25, Palladium $863.50, and Gold… $1,179.11

That’s it for today… I received a text yesterday from my former colleague and friend, April Showers… She sends me a text every now and then asking how I am… That’s so sweet of her to do… Thank you April Showers! How about those Cardinals? 8 in a row! If the front office had only listened to me and made the changes they made last month earlier this year… I’m just saying… In 1964 it was a young Lou Brock, in 1982 it was a young Willie McGee, in 1985 it was a young Vince Coleman, and this year it will be a young Harrison Bader that leads the team to great heights! Chris Stapleton takes us to the finish line today with his song: Tennessee Whiskey… And it’s time to say goodbye for today and this week… I hope you have a Tum Thumpin’ Thursday, and remember to Be Good To Yourself!

Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts