Gold Trades Above Its 200-Day Moving Avg.

A Pfennig For Your Thoughts
 
May 18, 2021
 
*currencies and metals have strong rallied on Monday
* When will they ever learn? 
 
Good Day…. And a Tom Terrific Tuesday to you! Well… another day, and another day with the pain in my stomach waning… I must have really done major damage inside me because the discoloration, and swelling doesn’t seem to want to go away, just yet…  Last night, the Butlers met Grace’s dad. A couple of weeks ago, we met her mom, but her dad, had not arrived from Dubai yet… I just love spending time with Grace’s mom, Lori… She, as I described previously, is a real southern belle… Now for those of you trying to figure out who Grace is… (where have you been?) Grace is Alex’s steady girlfriend for over 3 years now… Little Evie was there, along with darling Delaney, so I got to get hugs and kisses from my two favorite girls! Los Bravos greet me this morning with their song: Black is Black…
 
As I said yesterday, with little to no real economic data this week, traders will be searching far and wide to anything that would give them direction on where to take the currencies and metals. And so while the dollar lost more ground yesterday, the currencies didn’t move much… Gold & Silver though, did see some major moves upward on the day, so, let’s grab a cup of coffee, sit down, and review the moves yesterday.
 
The old Dollar Index moved downward from 90.16 to 90.07, and BBDXY moved downward too from 1,121.04, to 1,119.31… So, both indexes confirmed what I just said, that the dollar moved further downward, but not by much… Gold did move upward by a lot, or the dollar moved downward by a lot to Gold, either way you look at it, Gold was up $22.50 yesterday to close at $1,867.40, and Silver rose by 71-cents to close at $28.25… 
 
Ok, I hate to be bearer of potential bad news, but we have to always keep aware of the wolf that’s at the door, with the anti-dollar assets…
 
Previously, when things were looking like the dollar was headed on a ride on the slippery slope, the PPT (Plunge Protection Team) with the ESF (exchange Stabilization Fund) stepped in and made sure that the dollar did not take one more step toward the slippery slope. There has to be a slow, steady downward move in the dollar, and not a steep dive downward, that leads to another steep slide down…
 
The Fed has stated that they want inflation to rise, and one of the easy ways to insure inflation rises is to allow your country’s currency to weaken by a large amount, this is called allowing inflation to be imported… If we could ever have a few weeks of the dollar getting weaker by the day, it would confirm that the dollar was in a new weak dollar trend, and when that happens, we’ll no longer see the PPT stepping in to protect the dollar, for if they did it would akin to “catching a falling knife”…
 
In the overnight markets…. there seemed to be nothing stopping traders from selling dollars, and sell them they did… The euro has breached the 1.22 figure, and the rest of the currencies are starting the day here in the U.S. with some lofty figures. The Petrol Currencies all have extra oomph behind them this morning, as the price of Oil has risen to a $66 handle… The Canadian dollar/ loonie, is trading above 83-cents, the Norwegian krone is looking spiffy, along with the Brazilian real and Russian ruble this morning… 
 
Ed Steer tells me this morning that Gold has moved past its 200 day moving average with that runup yesterday. Gold is flat this morning, but Silver is up 23-cents as they start their days respectively… I read a blurb this morning on Kitco.com that talked about how the metals bulls are back and pushing the metals higher, with the next stop $1,900… 
 
In my opinion, this move higher in Gold these past few trading days, is long overdue, as inflation has been rising, and I don’t care if it’s only transitory, it’s still rising, and that calls for Gold to respond… And to date it has been having the reins pulled on it way too often… Time to let loose and let ‘r rip! And I’m ready for that! 
 
When will they ever learn? When will they ever learn… Those famous song lyrics by Pete Seeger, are always on my mind, because it seems investors, Governments, Treasuries, Central Banks never remember the past. What got them in their situations, and so they are resigned to having to deal with what comes their way, simply because they failed to learn from the past… 
 
And that would be sort of OK, if it only affected them, and not taxpayers like you and me… We foot the bills for their ignorance, and inability to learn lessons… You know me I’m a Constitution, Bill of Rights, kind of guy, and in those precious documents I can’t find it written anywhere that the U.S. Gov’t would be immorally running up debt, or leaving taxpayers in the red… You know… one of these days, it’s all going to come crashing down on them, and they’ll look at each other and say it wasn’t their fault, it was Capitalism’s fault… And they would be more wrong!  
 
Ok, let’s go onto something else as this discussion has me really full of you know what and vinegar, and I could end up saying something stupid… 
 
Remember a few weeks ago, when I told you about how there was talk that the cryptocurrencies were going to see some regulation in the future, and I wondered if this would be a problem for these cryptocurrencies? I don’t know, because I don’t really follow these digi-currencies, but it sure seems to me that this is what has caused some investors to take profits… Since then Bitcoin has fallen from $58,000 to just below $45,000… And that’s all I have to say about these digitals…
 
Longtime friend, best selling author, and publishing guru, Bill Bonner, has some thoughts in his Daily Economics letter yesterday on cryptos… Here’s Bill: “And so… whether we look at the private sector or the public sector… at cryptos or at federal deficits (already headed for an 8-month record over $2 trillion)… at Elon, or at Janet, Joe, or Jerome…
 
…well, everyone is nuts.
 
Or else we’re just too “out of it” to appreciate what is going on.
 
Maybe this is just one of those times in history when you have to be young… or brain damaged… to understand it. No one over 50 can be trusted to “get it.”
 
But we’re not sure if that “50” refers to age or I.Q.”
 
Chuck again… I sure do love reading his thoughts every day…
 
Well, all you families out there with young kids, you can expect to begin to receive your monthly checks from the Gov’t for child credits starting in July… Now that’s all fine and good, but once again, where does this money come from? Should the Gov’t be sending out money they don’t have? Well, we all know that anything that makes sense doesn’t get implemented in Washington D.C. I truly believe that our current debt will be $30 Trillion at the end of this year…
 
But I may as well go yell at the walls, at least I would probably get a better response out of a piece of drywall than a Congressman… I’m just saying…
 
In addition, a few times in the past year, I’ve highlighted a state that passes the no sales tax on Gold & Silver sales law… The number of those states bringing those bills to a vote are growing… And once everyone in the States, doesn’t charge sales tax on Gold & Silver we’ll see these two take steps toward new record levels… Are you ready?
 
There are no changes to the U.S. Data Cupboard offerings today, as Building Permits for April, will print… nothing more, nothing less… Tomorrow, the big print will be the Fed’s Meeting Minutes, but since nothing happened at the meeting, I doubt the minutes will hold anything new for the markets.
 
To recap… the currencies continued to push the dollar down yesterday, but the downward move was small on the day… Gold & Silver had great days, and that brought Chuck to remind everyone that the last time we were here, the PPT came in to defend the dollar. In the overnight markets the dollar has gotten sold down, with the old Dollar Index at 89.84 this morning. Chuck explains how the Fed needs a weaker dollar to help import inflation, and he also questions the gov’t’s checks they plan to send out on a monthly basis in July…
 
For What It’s Worth… Well, for the past 10 years I’ve chronicled Russia’s amassing of Gold in their reserves… And then added in Russia’s desire to dedollarize… And what you have now is this report on Bloomberg.com that Russia now holds more in gold than in dollars, and it can be found here: Russia’s $583 Billion Reserves Now Hold More Gold Than Dollars – Bloomberg
 
Or, here’s your snippet: “A multi-year drive to reduce exposure to U.S. assets has pushed the share of gold in Russia’s $583 billion international reserves above dollars for the first time on record.
 
Gold made up 23% of the central bank’s stockpile as of the end of June 2020, the latest date for which data on the breakdown is available, according to a report published late Monday. The share of dollar assets dropped to 22%, down from more than 40% in 2018.
 
The shift is part of a broader strategy outlined by President Vladimir Putin to “de-dollarize” the Russian economy and lower its vulnerability to U.S. sanctions amid deteriorating relations with Washington. Gold is now the second-biggest component of the central bank’s reserves after the euro, which makes up about of a third of total assets. About 12% of the stash is in yuan.
 
The increase in Russia’s gold reserves was aided by a 26% surge in prices between June 2019 and June 2020. The central bank also bought $4.3 billion worth of the precious metal over the period, according to the report.
 
Russia has been growing its international reserves in recent years
Russia spent more than $40 billion building a war chest of gold over the past five years, making it the world’s biggest buyer. The central bank said it stopped buying gold in the first half of last year to encourage miners and banks to export more and bring in foreign currency into Russia after oil prices crashed.”
 
Chuck again… And China is doing this too, folks… And all that was confirmed by the news I gave you previously that the total % of dollars held by Central Banks in reserves has hit an all-time low… And the other thing that I saw in this report was that the data was from a year ago, I would think in the past year, Russia has gotten rid of scores of more dollars… I’m just saying… 
 
Market Prices 5/18/2021: American Style: A$ .7796, kiwi .7252, C$ .8309, euro 1.2209, sterling 1.4185, Swiss $1.1130, European Style: rand 13.9981, krone 8.2292, SEK 8.3043, forint 287.30, zloty 3.7065,  koruna 20.8164, RUB 73.91, yen 109.04, sing 1.3299, HKD 7.7655, INR 73.08, China 6.4381, peso 19.74, BRL 5.2709, Dollar Index 89.84, BBDXY 1,115.74, Oil $66.56, 10-year 1.64%, Silver $28.48, Platinum $1,227.00, Palladium $2,976.00, Copper $4.70, and Gold… $1.867.20
 
That’s it for today  Well, our Blues had to start out their playoffs without one of their best players, who was ruled out for Covid Protocol… And after playing 2 good periods and being tied 1-1, they ran out of gas in the 3rd period, and lost 4-1.. That was Game one of their best of 7 series with Colorado… Dinner last night was great, and the company was even greater! We’ve been in a rainy period that supposed to begin to end tomorrow.. I sure hope so, because I didn’t remember moving to Seattle…. Hamilton, Joe Frank, and Reynolds takes us to the finish line today with their song from the 70’s: Fallin’ In Love… This song reminds me of when I was traveling the country with the band, and it kept playing on the radio… I hope you have a Tom Terrific Tuesday, and Please Be Good To Yourself!
Chuck Butler
 
Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts