Gold Gets Whacked Courtesy Of….

A Pfennig For Your Thoughts
June 14, 2022
* The dollar got bought by the bushel full on Monday
* A potential bank run going on in China… 
Good Day… And a Tom Terrific Tuesday to you! Well, it’s a hot one, like 7 inches from the midday sun… My beloved Cardinals came from being down 0-5, to win last night! They GET to play 2 today, in the 100+ temps… All I’ll say about that, is the current players should be happy as can be, that they don’t wear the old wool uniforms that players wore years ago… I wore wool unis, and they were hot… I recall one year while I was playing catcher, the temps were 100+, and I would come to the bench soaked with sweat, and the moms would put cold wet towels over my head. They were like manna from heaven! I was named the best player on the team that year, and afterward, my baseball career had peaked! But I continued playing until I was 18… College baseball wasn’t as big a deal as it is nowadays, and I had no pro scouts, looking at me, so, I hung up my cleats, and went to play music instead! The Grassroots greet me this morning with their song: Let’s Live For Today…
Well… yesterday was just plain ugly in the markets… Stocks got sold, Bonds got sold, Gold & Silver really got sold, and I’m sure the cryptos were rocked on the news that one of the cryptos had announced they were not allowing withdrawals… Uh-Oh! The only thing that went up was the dollar… The BBDXY rose 5 more index points yesterday to close at 1,266… Like I said last week, this trading in the dollar has gotten out of control, and reminds me a dying star, that burns its brightest right before it goes out… The dollar certainly is burning bright right now…
I don’t want to talk about the Gold & Silver action yesterday, but I guess I’ll have to… Gold lost $53 on the day to close at $1,818.70, and Silver lost 88-cents to close at $21.03… No need to double check those numbers, they are correct! Gold spent the day being subjected to arms full of short Gold contracts showing up at the COMEX… My good friend, Dennis Miller, will be sending out a letter on Thursday this week regarding dollar cost averaging… To me, I’ve always been someone that as far as stocks are concerned, I never dollar cost averaged my trades… But I have with Gold & Silver, taking the opportunity to buy at cheaper levels when they were presented to me…
My longtime friend, and former colleague, Ty Keough, used to tell clients, when their currencies lost value to the dollar, “This is the time you get to buy more of the currency that you like”… Now that’s dollar cost averaging for you! And I’ve always written that there are times to batten down the hatches, and only look to buy if the opportunity presents itself…
So, these are some very cheap levels for Gold & Silver, what will you do about that? I’m fully allocated with the amount of Gold & Silver that I own, and so I’ll have to sit this opportunity to buy cheaper on the sidelines…
The price of Oil rebounded yesterday and ended the day trading with a $121 handle… And bonds? Oh My! The 10-year Treasury’s yield rose to 3.37% after starting the day at 3.25%! The bond boys are making sure that they will see yields rise, now that the Fed Heads are out of the bond buying business…
In the overnight markets last night… There was little to no movement in the dollar, so the markets took a breather last night, and backed off from buying more dollars. But they didn’t sell the dollar either, so it was a nothing night… Gold & Silver are basically flat this morning. Could the markets already be prepping their books ahead of the FOMC rate announcement tomorrow? It sure does look that way to me. The price of Oil is trading with a $121 handle this morning, and Bonds, too have taken a breather in the overnight markets. 
I had a dear reader write me this past weekend, and ask me to write about ways the Federal Gov’t could reduce inflation… Well, I think I have done that in bits and pieces, but here goes… The Gov’t needs to stop deficit spending… The deficit spending requires that more dollars are printed, and bring about more inflation… They could really, truly, come to the inflation fight with the proper weapons… Large rate hikes would also help to fight inflation, but would make paying our bond servicing requirements an absolute hell… The thing I would like for our Gov’t to do, is to stop deficit spending, stop bailing out zombie companies, and see the Fed Heads tobelie hike rates like they really mean to stop inflation, and worry about the bond payments later, because if you did these things, the economy would come around, and tax receipts would increase and with the economy moving forward, they could begin to cut rates again… But never, as low as they were, near zero, more like normal interest rates…
There’s not one thing on that list, that would be difficult to achieve… But, most likely, none of them will be achieved… Cut deficit spending? Yeah, when pigs fly!, stop bailing out zombie companies? Yeah, when all the rivers run dry! Hike rates like they really mean to stop inflation? Yeah, this I would really like to see!
I told you yesterday, that there are rumors going around, someone’s underground, no wait! I told you yesterday that the rumors are that the Fed Heads will hike rates 75 Basis Points tomorrow… Now that would be a step in the right direction, if it were to be followed by like rate hikes in the coming months, but, I’m afraid that the Fed Heads are going to believe that they had done enough to calm inflation, and will not follow up with like rate hikes in the coming months….
My longtime friend, Bill Bonner, had this to say about that: “If the Fed halts inflation and lets things return to normal, it will mean a crash on Wall Street… business failures… defaults… unemployment… depression and bankruptcies. But the misery will probably be over in a couple years.
If the Fed lets inflation continue, on the other hand, the consequences will be ambiguous at first… and then catastrophic, stretched out over many years of war, revolution, hunger, poverty, destitution and chaos.” – Bill Bonner in his Bonner Private Research letter dated 6/13/2022
I don’t recall a time in my past, working in the bond dept, that I saw yields rise so quickly… It’s as if there was all that pent up frustration of wanting to move higher, but being held back by the Fed Heads and their Treasury purchases, and then finally the pressure valve was released! No backstopping by the Fed Heads has released the Kraken! I began working in the bond dept back in 1979, at the First National Bank of St. Louis… In 1992, I switched to currencies and foreign bonds, and then in 1999, just currencies, and metals… So, I’ve been around the block a time or two, and have seen just about every kind of movement in bonds that exist… And this upward movement that’s happened so quickly, is new to me!
U.S. two-year Treasury yields rose above 10-year borrowing costs on Monday – the so-called curve inversion that often heralds economic recession – on expectations interest rates may rise faster and further than anticipated.
Fears the U.S. Federal Reserve could opt for an even larger rate hike than anticipated this week to contain inflation sent two-year yields to their highest levels since 2007. – Reuters
Ah… the 2-year Treasury… nobody follows that bond! Except when it can indicate a recession! The 10-year Treasury’s yield has gained 33 basis Points since last Thursday…
OK, the U.S. Data Cupboard yesterday told us the Fed NY’s inflation forecast out one year is 6.6%, so still high… And today’s Cupboard has the PPI (wholesale inflation) for May, and the expectations for the data is to show a decrease in final demand… Hmmm… I wonder what these guys were smoking when they made that forecast? I’m just saying…
To recap… It was an very ugly day yesterday, with only the dollar surviving, if you will… The BBDXY gained 5 index points yesterday, stocks were sold, bonds were sold, and Gold & Silver really got sold, while the dollar flourished… Chuck believes the dollar is acting like a star that’s getting ready to burn out… The Fed Heads meet tomorrow and after their FOMC meeting they will announce their rate hike decision… Right now the markets are expected 75 Basis Points to be announced… We’ll see tomorrow… The Cryptos saw their ability to withdraw removed…. Uh-Oh… And the Treasury bond market is indicating that a recession is coming…
For What It’s Worth… OK…. this article is about a potential bank run going on in China… of all places! The article can be found here: There’s a run on Chinese banks and it’s being ignored by the world | Asia Markets
Or, here’s your snippet: “In the anatomy of an economic crisis, a bank run is the point of no return.
Bank runs occur when people scramble to withdraw cash from banks in fear of collapse. In the worst cases, banks’ liquid cash reserves are exhausted, not everyone gets their money and the bank defaults.
It’s a grim scenario which, fortunately, has occurred rarely in history.
The most significant bank runs in the United States took place during the 1930’s Great Depression. More recently, there were runs on numerous U.S. banks during the Financial Crisis in 2008.
In Asia, bank runs have also been rare. A run on Japanese banks in 1927 led to the collapse of dozens of institutions across the country. There was a banking crisis in Myanmar in 2003 which the country has never really fully recovered from.
But perhaps since the Great Depression, none has been as significant compared to what is seemingly unfolding in China right now.
In recent years it has become clear the Chinese people are losing faith in their financial institutions. There’s been anger over harsh COVID lock-downs in Shanghai recently, while the collapse of China Evergrande saw rare public demonstrations as residents faced the prospect of losing their life savings used as deposits for housing.
“Return our money” the Evergrande protestors chanted at Evergrande headquarters in Shenzhen in 2021.
The song book is eerily similar at bank branches in a number of China’s rural provinces right now.
Multiple sources contacted by Asia Markets, have confirmed deposits at the following six banks have been frozen since mid-April.”
Chuck again… Cyptos are falling, the stock market is in bear market territory, Gold keeps getting sold, Bond yields are soaring, and now this, in China? YIKES…. I’m going to go put away all the sharp objects that could be used to maim, now… Excuse me… 
Market prices 6/14/2022: American Style: A$.6892, kiwi .6243, C$ .7732, euro 1.0451, sterling 1.2093, Swiss $1.0065, European Style: rand 16.0682, krone 9.9400, SEK 10.1499, forint 381.13, zloty 4.4555, koruna 23.6801, RUB 57.07, yen 134.45, sing 1.3916, HKD 7.8500, INR 77.98, China 6.7345, peso 20.53, BRL 5.1158, BBDXY 1,266.18, Dollar Index 105.03, Oil $121.64, 10-year 3.34%, Silver $21.07, Platinum $932.00, Palladium $1,807.00, Copper $4.21, and Gold… $1,817.62
That’s it for today, except to say, Happy Flag Day! I remember longtime friend, and former Big Boss, Frank Trotter, always would go on vacation around Flag Day! I wonder if he still does that? A nice comeback win for my beloved Cardinals last night, and they widen their 1st place lead to 1 game… They’ll play their rivals, the Brewers 4 games next week, those will be HUGE games! Congrats to new Cardinals Hall of Famer, Matt Holiday… Once again I was bummed by the fans vote, that Matt Morris didn’t get enough votes… People forget that Matt Morris was once the best pitcher on the team for a multiple of years! Cardinal great, 2nd baseman, Julian Javier, was also named to the Cardinals Hall of Fame… I have no problems with the 2 inductees, I just wished that there was room for Matt Morris! A day-night double header today at Busch Stadium in the heat… Those that play the first game in the sun, will most likely be given the night off… My fave Van Morrison song takes us to the finish line today with his song: Into The Mystic… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!
Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts