Gold Rallies In The Face Of Headwinds!

In This Issue.

* Dollar is weaker today.
* Gold rallies after 1 down day.
* Dollar Index falls below 100 again.
* How to pay off debt.

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

Good Day. And a Wonderful Wednesday to you! I’m late again today, and this time I don’t have a real excuse. This time, I just couldn’t answer the bell when it rang the first time, as I was up later than usual last night, intrigued by my beloved Cardinals trying to give a game away, but in the end they couldn’t and won. I need to get back to my old nightly routine of going to be while they are winning and not worrying about how it ends. Big Head Todd and the Monsters greet me this morning with their song: Tomorrow Never Comes.

It was a quiet night in the overnight markets, and the it’s pretty quiet in the European morning session. The euro bumped over 1.07 overnight, but the best performing currency the past two days is the British pound sterling / pound. Apparently currency traders, investors, and what-have-you, like the idea of the snap election that PM May called yesterday for June. I said yesterday, and still believe it today, despite all this euphoria by the currency traders, that this is a big risk for PM May, that voters might have changed their minds regarding BREXIT. But for those of you keeping score, the pound is trading over 1.28 this morning, and since Monday when the pound was 1.2544, that’s a nice move.

I had to laugh when I said that. At Last Thursday’s gathering, my good friend, Mike Kettler, was telling someone that he doesn’t understand why I get all excited about a currency moving 1-cent. I explained that with up to $5 Trillion in currencies traded each day, that to someone out there, a 1-cent move is a BIG DEAL! And besides you can’t get to a 100% currency gain without a 1-cent move first! Going back to the beginning of the last weak dollar trend, that began in 2002, the Aussie dollar (A$) and New Zealand dollar / kiwi, both saw 100% currency gains during the weak US. dollar trend.

Alrighty then. The Dollar Index fell back below the 100 mark overnight, and the price of Oil firmed a bit on the news that an OPEC official confirmed that the members are committed to the production cuts through 2017. Gold added $5.80 to its price yesterday. Recall that yesterday morning I commented on Gold’s small loss on Monday, and said that I didn’t think it was something that was going to continue.

The A$ is still scrambling to get to its feet again after getting knocked down by the weak Investors Sentiment report Monday night. And kiwi saw a good Global Dairy Trade report yesterday (the price index increased 3.1% year on year) and so kiwi was able to inch higher. New Zealand 1st QTR CPI will print tonight (tomorrow morning for them) and I expect inflation to have inched higher VS the previous quarter. The core readings will probably remain unchanged, but the key here is that there won’t be anything here to move the Reserve Bank of New Zealand (RBNZ) to hike rates just yet.

The Russian ruble sits bang on 56 this morning. Yesterday I told you that it was within spittin’ distance of a 55 handle, and today, well, it couldn’t get any closer! With the price of Oil firming a bit overnight, and the comments from OPEC, we could very well see the ruble gain that 55 handle today..

I’ll let you in on a little thing that I do that tells me if the dollar is really weaker. Sure the dollar’s weakness is reflected in the euro’s strength, but that’s not the only thing I look for. And Gold is also a good indicator that the dollar is weaker, but not always, so you can’t just hang your hat on that one. No, what I’m talking about is what I used to call the “Euro Wannabes” the Czech Rep. koruna, the Hungarian forint, and the Polish zloty. You see, when the dollar is really showing weakness, these three get on the rally tracks and start dancing. But volatile. These three can be quite volatile, and they are still considered Emerging Markets, which means you should only look at them as something you might add to the “speculative” portion of your investment portfolio.

These three have been pushing the currency appreciation envelope lately, but still not on the rally tracks firmly to begin dancing. I’ll let you know when that happens. But for now, they are stronger, and looking like they want to put their dancing shoes on. Of course, the dollar will determine if they get that chance!

I told you above that Gold gained $5.80 yesterday, and closed at $1,289.20. Well, Gold had a relatively nice move much yesterday, but it sure has done much better since the election! In yesterday’s 5 Minute Forecast ( ) Dave Gonigam, who puts the letter together each day, was talking about how Gold had made a round trip since election day. And then James Rickards added some comments that sounded like me in the Pfennig recently. He said that Gold’s performance was impressive because it came with “strong headwinds, that included 2 Fed Rate Hikes and one on the way in June”.

I also liked what Rickards had to say about Gold going forward. Let’s listen in. “Higher interest rates with borderline recessionary growth and deflation is not the kind of environment one thinks of as positive for gold. In fact, it’s quite the opposite. Gold’s rally nonetheless tells us that hidden forces are driving gold prices higher despite the head winds.”

Alrighty then. Enough from James Rickards, he gets enough “air time” around the newsletter junket!

The U.S. Data Cupboard left a lot be desired, as Housing Starts hit the skids, and not even meeting the expectations in March. the Building Permits were better than the average bear, but, most of those permits were for multi-family housing, not single family units. That doesn’t give me a warm and fuzzy how about you? Then the two pieces of real economic data, Industrial Production grew at 0.5%, but was expected to grow at 0.7%, and the real downer here was the Manufacturing piece which fell -0.4%, the first negative month in several prints. And Capacity Utilization also fell short of expectations.

So, overall, the data was soft folks.. And you have to ask yourself this question , if you were a Fed member, and you saw economic report after economic report print weak or soft at best, would you vote to hike rates? I know I wouldn’t.. not now.. A couple of years ago, yes.. but not now.

To recap. The dollar is weaker this morning, but the downward move isn’t huge, and the overnight and morning sessions have been quite quiet. The Dollar Index has fallen below 100 again, and the euro is pushing higher, but the best performer overnight is the pound, which has benefitted from traders, and investors getting all giddy about the call for a snap election by PM May.. I still believe that this is chock-full-o-risks for May and the U.K. but then that’s just me, being me. Gold gained $5.80 on the day, and continues to impress with its move against the “headwinds”. The price of Oil firmed a bit, and the Russian ruble sits bang on 56 ready to take on the 55 handle any time now!

For What It’s Worth. yesterday, I went all bananas on the U.S. debt, as I rightly should, I do believe! And then I came across this article on MarketWatch about how consumers should pay off debt, and thought it to be FWIW worth. You can see the whole article here:

Or, here’s your snippet: “The U.S. Federal Reserve hiked its short-term interest rate Wednesday by a quarter percentage point and, experts say, credit-card holders are among those who will feel it first. Now is the time to minimize your exposure to expensive debt, they say.

When people sense that they’re in a financial squeeze, they start putting Band-Aids on the problem, economists say. Debt settlement and bankruptcy should only be considered when you’ve run out of all other options. And some accepted norms for paying off debt, such as paying off the biggest debt first, may not always be the best way to go, according to a study published this month in the “Journal of Marketing Research.” Debt-laden consumers can be burned out trying to pay off larger amounts with higher interest rates – even though such a strategy makes more financial sense on paper. “American consumers de-leveraged after the financial crisis, but they’re taking on more debt again,” says Ben Woolsey, president of credit-card advice website

Consumers who are mired in debt often make rookie mistakes, especially as many panic, says Kathryn Davis, president and CEO of BALANCE, a subsidiary of the non-profit Consumer Credit Counseling Service of San Francisco. Some no-no’s: Taking out a payday loan or title loans; transferring a balance to a new zero-interest credit card, but failing to pay off the balance when the higher interest rate kicks in; and borrowing from a 401(k) retirement account, especially if it involves paying a penalty. Putting creditors on rotation – paying one creditor while failing to make payments on other debt – is another bad idea: After six months, no one will be happy.”

Chuck again. the article then gives 6 smarter (and faster) ways to pay off debt. Good for them.. now if only the younger folks will read them and pay attention!

Currencies today 4/19/17. American Style: A$ .7525, kiwi .7020, C$ .7452, euro 1.0730, sterling 1.2845, Swiss $.9964, . European Style: rand 13.3108, krone 8.5262, SEK 8.9567, forint 291.85, zloty 3.9493, koruna 24.9670, RUB 56, yen 108.95, sing 1.3971, HKD 7.7754, INR 64.58, China 6.8765, peso 18.60, BRL 3.0995, Dollar Index 99.62, Oil $52.59, 10yr 2.21%, Silver $18.63, Platinum $979.45, Palladium $799.45, Gold $1,289.75, and SGE Gold. $1,290.48

That’s it for today. Well, I see the sun coming up outside, and that’s a good thing, as I’m going to the ballgame today! Maybe the Cardinals can get a sweep! Our Blues go for the sweep tonight. They need to have the “killer instinct” and not think they have this series won, just yet. the game doesn’t start until 8:30 here in St. Louis, which is ridiculous! There’s no way that game should start that late! So, I won’t know the outcome until morning. And I don’t always get those scores straight! HA! I bet my good friend Rick will be attending both the ballgame and the hockey game. He’s a real trooper when it comes to that stuff! The Neon Trees take us to the finish line today with their song: Everybody Talks. And with that, it’s time to go.. 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