Gold Gets Whacked. Again!

* Dollar has the conn..
* Where’s Plan B for the U.K.? .
* Is a global bust in our future?.
* China’s battle for islands escalates.

And now. Today’s A Pfennig For Your Thoughts.

Good Day. And a Wonderful Wednesday to you! I’m in need of a white icing cake donut this morning. Hopefully my telepathic signals will get to our Little Christine in time! HA! Well, the All-Star Game last night was a bust for me, as I’m a National League guy. My beloved Cardinals don’t start back up until Friday, so that’s 2 nights without baseball for me! UGH! What’s a boy to do? HA! The Righteous Brothers greet me this morning with their love song: Unchained Melody. Bill Medley sat this one out, with Bobby Hatfield taking the conn. And what a beautiful song this is.

Well, Gold got whacked yesterday, and whacked good! Ouch! That’s going to leave a mark! But do I care? Not really.Am I worried? Think of Alfred E. Newman, What, Me Worried? No! Gold lost nearly $22 in price yesterday ($21.90) but still remains above the level it traded before the BREXIT decision, so it has that going for it, and besides, there’s always going to be days like yesterday, my momma told me so! Gold is up $4 in the early morning trading today, so that’s a good thing! I’ll have more on Gold for you later, but just wanted to get that out there Front and Center this morning!

The dollar has taken back the conn this morning, but the moves aren’t that big, so it’s not an all-out assault by the dollar on the currencies this morning, more like a gentle reminder that the dollar is still king of the hill, that is for now. I saw a report from Goldman Sachs aka Lola last night, that took me by surprise, in that Lola is calling for the Fed to get back to hiking rates either in September or December. Hmmm. I’m thinking that by December, the Fed is looking to cut rates again, so we are obviously on opposites sides of the fence on this thought, eh? I know that usually I say that what Lola wants, Lola gets, but I think they’ll be still looking for that rate hike come the new year.

But then who knows what the Fed will do? Only the Shadow knows! I was treated yesterday with a video of my fave writer, Grant Williams, who authors the letter, Things That Make You Go Hmmm. And in it he gave me a couple of great pieces of information that should make everyone think. Did you know that since 2008, there have been 650 rate cuts by central banks around the world? That’s 1 rate cut every three trading days, since 2008! And then showing that he could play well with my thoughts on negative yields and the awful things they are going to do going forward, Grant tells us that: 1/4 of the Global Gross Domestic Product (23.1%) will be produced by countries with negative yields or interest rates.

That means, simply that a very large portion of the Global GDP could be at risk. And that could bring about a major slowdown of the Global economy. Now obviously, we’re already experiencing a global growth slowdown, but what happens in a major slowdown of Global growth? Well, we’re going to see more money printing around the world, and guess what each Central Bank will say when the cards come crashing down on this house of cards? “We were doing what the U.S. does”.

Longtime friend, Jim Powell, said it 15 years ago, when the world was all agog about the Global economy. “If we can have a global boom, we can have a global bust.” At that time most people ignored Jim. But not any longer! And when the money printing starts, it will undermine every Central Bank’s remaining credibility, and that’s when things get really hairy. That’s because there’s not much Central Banks can do if things go to hell in a hand basket, and everyone on the earth now knows that!

Ok, I really didn’t mean to start off today with all that stuff, but one thing led to another, and voila! Here we are! But isn’t amazing how my mind quickly drifts off to a Butler Patio subject?

The British pound sterling/ pound is one of the few currencies with a bump higher this morning. I have a few readers that live in the U.K. and one (Ewan) sends me emails regularly, and he sent me one last night, with a copy of a newsletter that he reads, that talks about after BREXIT let the Bull Market Begin. I told him that I admired his optimism, but what’s the Leave voters’ plan for the economy now? They don’t have one! Because they didn’t think they would win, so there’s no plan, and that scares me. It’s an unknown and the markets don’t like unknowns. But he does point out something to me, that I wasn’t aware of, and that is that I haven’t looked favorably on BREXIT in any form or shape. I do like the fact that the One-World Rule people took a hit. I liked that the people voted for taking greater control of their futures. And then, there’s that dang Sword of Damocles again, this time hanging over the referendum’s binding legality. There’s still a chance that the U.K. Parliament, rules the referendum not binding, and votes on the whether the Parliament believes the U.K. should leave the European Union or not. Talk about throwing a spanner in the works!

The price of Oil rebounded again, this time gaining another $1 in the past 24 hours, and trades this morning with a $46 handle, after dropping to $44 to start the week, the price of Oil has rebounded quickly. But recall that a month ago, we were looking at the price of Oil with a $51 handle! So, the anti-dollar assets, of gold, Oil and euros have all lost ground in the past couple of weeks. Does this mean that the what I’ve been talking about with the strong dollar trend looking like it had cracks in the foundation, should be forgotten about? On the contrary! This, to me, and I could be wrong here for it’s just my opinion, but an opinion that has seen 43 years in the financial sector, looks like it could be a breather, and a chance for those that missed getting in at cheaper levels to at least not chase the market higher, and buying cheaper than two weeks ago.

The yield on the U.S. Treasury 10-year has moved higher again, trading at 1.49% this morning. Well, the Bond King, Bill Gross, is back at it. Talking about how investors shouldn’t be touching bonds right now. My guitar playing friend, Steve Sjuggerud, wrote about Bill Gross in his “Daily Wealth” newsletter yesterday, which you can find at I don’t want to spend a whole lot of time on this, as I’ve gone down this road with you dear reader many times before, that buying bonds while yields are so low, just doesn’t make sense to me. So, let’s hear what Bill Gross had to say. “This massive fall in interest rates is thanks to investor fear. Investors are now buying government bonds for safety.

“We’ve hit an extreme in the short term. The dumb money is “all in.” The thing is, when the entire herd is putting its money into one investment, there’s no money left to be made there.

(For example, when the herd bought property in 2008, there was nobody left to buy. That meant there was no demand. and prices fell. It’s the same story in bonds today.)

The dumb money is about to get hurt, likely starting soon, in bonds.” – Bill Gross

Well, when the Bond King talks, people should listen, right? People will do what people do, so don’t let me stand in the way of what you want to do, just know that I won’t be joining you in the Bond buying line!

OK. Well, I talked about Gold getting whacked yesterday above, and I said I didn’t care.. Well, that’s not 100% correct, as I do care, but not so much that I would go yell at the walls because Gold lost a chunk of ground yesterday. As I just said above, that this gives buyers that missed the first run-up in price a chance to buy at a cheaper price than two weeks ago, and they won’t be chasing the market higher, as individual investors tend to do.

I saw a cartoon in Ed Steer’s letter yesterday that I thought was priceless. first it had a picture of a pig building a house and it said, “The first little pig built his house out of dollars”. the next box had another pig building a house and it said,” The second little pig built his house out of euros” . the next box had another pig building a house and it said, “The third little pig built his house out of Gold”. the next box showed the Gold house withstanding all the dollars and euros flying by, and said, “I think you know the rest”.

My friend, Dave Gonigam, who writes the 5 Minute Forecast (the 5) for the Agora Financial people ( had a great graph in the 5 yesterday, that I wish I could copy and paste here for you, but it doesn’t work like that. So, you’ll have to go to the site to see the graph, or be satisfied with what I tell you about it. The graph shows the Gold price throughout the 70’s. And then lays on top of it the Gold price from the year 2000. It is so amazing to me that the price movements are nearly identical, and we all know how the 70’s ended with Gold soaring. So, is history repeating itself here? Well, as Mark Twain was credited with saying years ago, “history doesn’t repeat itself but it does rhyme” We can cross our fingers, and hope it does, right?

Oh, and Gold is up $300 so far this year, I guess we can deal with a $20 drop for a day, eh?

And don’t look now, but Silver is outperforming Gold this year so far! (I’m talking percentage gains, not dollar for dollar!) At the end of 2014, I wrote in the monthly newsletter The Review & Focus, which is now an online piece, that can be found here:, that there was a building pressure on the mining of Silver, and that in 2015 we could see shortages in Silver, which should push the price of Silver higher. Well, 2015 came and went, without that “push”. But now it’s pushing, it’s pushing, it’s pushing! Timing has always been my bugaboo, I see things happening, and think they will come to fruition immediately, only to be burned over and over again, on the delay. UGH! But the important thing here is that Silver is pushing higher, and outperforming Gold, which is saying a lot, given the $300 gain in Gold this year.

The U.S. Data Cupboard was empty yesterday except for the JOLTS data, which didn’t amount to a hill of beans, and Fed members, Kashkari and Bullard, didn’t throw any cats among the pigeons, so the dollar drifted throughout the day yesterday. Today, the data cupboard is pretty empty again, with only the Import and Export prices, and EIA Petroleum Status on the docket to print today. this week is void of any real data, until Friday, when Retail Sales for June will print. I told you on Monday that the BHI indicates to me that this print will be disappointing. But what else is new?

To recap. The dollar takes the conn back VS the currencies today, but it’s not an all-out assault, and the moves are small at this point of the morning. Gold got whacked yesterday, losing nearly $22 but Chuck isn’t worried. telling people to picture Alfred E. Newman! Global growth is heading for a Big Problem, and Chuck tells us what will happen when that comes to fruition. The great writer Grant Williams shares some thoughts with us this morning, and the price of Oil rebounds again in the past 24 hours. Bond yields are on the rise, uh-oh.

For What It’s Worth. Yesterday, I told you about how the International Tribunal had ruled against China regarding their desire to own the islands in the South China Sea. Ambrose-Evans Pritchard had a piece in the U.K. Telegraph regarding this so let’s listen to what Mr. Pritchard had to say about this. you can find the whole article here:

Or Here’s your Snippet: “The South China Sea has become the most dangerous fault-line in the world. Beijing and Washington are on a collision course over these contested waters, the shipping lane for 60pc of global trade.

As expected, the International Court of Justice in The Hague has ruled that China has no “historic title” to areas of this sea stretching all the way to the ‘nine dash line’ – deep into the territorial waters of a ring of South East Asian states.

Equally expected, Beijing has dismissed the verdict with scorn, accusing the tribunal of “shamelessly abusing its authority”. The state media said the country “must be prepared for any military confrontation” with the US, and must not flinch from war if provoked.

It is the latest in a series ominous developments in Asia and Europe that are rapidly subverting the Western international system and setting off a global rearmament race with strong echoes of the late-1930s.

Tensions are flaring up across so many spots in East Asia that global investment funds are actively betting on defense stocks and technology companies linked to military expansion. Nomura has launched an “Asian Arms Race Basket” as a hedge against potential conflicts in the East China Sea, the Straits of Taiwan, and the South China Sea.”

Chuck again. Well, let’s hope it doesn’t come to an armed resolution. I don’t think the world is ready for that.

Currencies today 7/13/16. American Style: A$ .7625, kiwi .7295, C$ .7670, euro 1.1080, sterling 1.3285, Swiss $1.0155, . European Style: rand 14.3227, krone 8.4040, SEK 8.5215, forint 283.09, zloty 3.9780, koruna 24.39, RUB 63.91, yen 104.65, sing 1.3458, HKD 7.7575, INR 67.06, China 6.69, peso 18.32, BRL 3.2955, Dollar Index 96.38, Oil $46.15, 10-year 1.49%, Silver $20.42, Platinum $1,092.50, Palladium $640.29, and Gold. $1,339.60

That’s it for today. Well, my telepathic message to our Little Christine, worked! And sitting on my desk right now are two iced caked donuts! And yes, I know sugar isn’t a good thing for me, but, I limit my sugar intake, so no worries! Telepathic, texts, whatever. HA! Now, paying her is always a fight, but the deal has always been I buy, if she flies. Doucette takes us to the finish line today with their song: Mama Let Him Play. I may have talked about this song before, so if I did I’m sorry, but some great guitar work is a part of this song. I’m running late again. UGH! I hope you have a Wonderful Wednesday. Be Good To Yourself!

Chuck Butler
Managing Director
EverBank Global Markets
Editor of A Pfennig For Your Thoughts