Is It Just Saber Rattling?

A Pfennig For Your Thoughts
 
July 21, 2022
 
* Currencies and metals remain in tight ranges on Wednesday
* Geopolitical problems have Gold rising in price today
 
Good Day.. And a Tub Thumpin’ Thursday to one and all! Cards and Cubs were rained out last night, and suddenly I was at a loss as to how to spend my evening! Would I go upstairs and attempt to have meaningful conversations with Kathy? I would I get a book out and read? Would I find something else on TV? Or, would I start reading a ton of emails that I have in the my email boxes? Well, didn’t choose any of those options, choosing instead to do research for the letter today… Now, what a great way to spend the evening, eh? A GREAT BIG HAPPY BIRTHDAY today to my darling granddaughter, Delaney Grace! And good luck to oldest son, Andrew, who will go under the knife today and have shoulder surgery… I always remind people going to surgery to say a prayer for the surgeon… The Foundations greet me this morning with their 60’s song: Baby, Now That I’ve Found You…
 
Well, yesterday I made a Big Ado about how I believed the Plunge Protection Team (PPT) had stepped in to save the dollar from further weakness on Tuesday. And to prove my point, yesterday, the dollar wallowed around in mud all day, and never made a move up or down on the day. So, without all the outside interference (price manipulation), the dollar was left to its own devices, and couldn’t get off the ground… I rest my case! The BBDXY gained only .09 on the day, and was trading in the same clothes at the close of the day that it had on at the beginning of the day…
 
Gold held onto to most of its early trading gain yesterday ending the day up $5.40, and closing at $1,766.60. Silver gained 9-cents to close at $20.15… Gold weathered the engineered take down on Tuesday, and is back to gaining VS the dollar… The price of Oil dropped to its lowest level since last February, when it was on the way up… Oil ended the day yesterday trading with a 91 handle… The recession fears really have Oil traders worried about lack of demand… And well they should be worried, but it still the summer driving season, so that should keep demand strong for now…
 
The Russian ruble continues to defy odds, and remain strong in the face of all this dollar strength that’s dominated the currencies for a couple of months now. The ruble trades this morning with a 60 handle, which is a far cry from the lofty levels it traded following the Russian invasion into Ukraine. I told you a long time ago that the sanctions that the West have put on Russia will only harden their want to meet growth expectations in lieu of the sanctions. I don’t like the sanctions, never have, never will… And to talk a bit about that is the Guardian.com
 
“ Western sanctions against Russia are the most ill-conceived and counterproductive policy in recent international history. Military aid to Ukraine is justified, but the economic war is ineffective against the regime in Moscow, and devastating for its unintended targets. World energy prices are rocketing, inflation is soaring, supply chains are chaotic and millions are being starved of gas, grain and fertiliser. Yet Vladimir Putin’s barbarity only escalates – as does his hold over his own people.
 
To criticise western sanctions is close to anathema. Defence analysts are dumb on the subject. Strategy thinktanks are silent. Britain’s putative leaders, Liz Truss and Rishi Sunak, compete in belligerent rhetoric, promising ever tougher sanctions without a word of purpose. Yet, hint at scepticism on the subject and you will be excoriated as “pro-Putin” and anti-Ukraine. Sanctions are the war cry of the west’s crusade.”
 
Chuck again… alrighty then, I guess we know who agrees with Chuck on this…
 
In the overnight markets last night: The dollar got bought by not by much, as the BBDXY has gained about 2/3rds of an index point at this point in the morning. So the currencies, for the most part, are trading in the same clothes this morning as they were yesterday morning. 
 
Silver has gained 15-cents in the early morning trading, and Gold has gained $17! Wanna know why Gold is pushing the envelope this morning? Well, it has to do with the FWIW article today, so when you get there, you’ll do the V-8 head slap and say, “Know i see why!” Spoiler alert, it has to do with China and Taiwan…  The price of Oil has slipped another buck overnight, and Bonds are getting bought again after a day of selling… 
 
Well, one of the things I researched last night, was the dwindling inventories of physical Silver at the exchanges… Here’s a note from the good folks at GATA on just that: “One trend in the precious metals markets that has yet to get widespread coverage but deserves more attention is the plummeting inventories of physical silver in the London vaults of the London Bullion Market Association.
 
These LBMA vaults comprise vaults in and around London run by the bullion banks JP Morgan, HSBC, and ICBC Standard Bank, as well as the London vaults of three security operators, Brinks, Malca-Amit, and Loomis, the London sub-Billion Market Association.
 
Quietly and almost under the radar, the quantity of silver held in the LBMA vaults has been consistently hemorrhaging for seven months now. Latest data from the LBMA as of the end of June 2022 shows that the LBMA vaults now hold only 997.4 million ounces of silver (31,023 tonnes).
 
Compares to t he end of June 2021 when LBMA silver inventories stood at 1.18 billion ounces (36,706 tonnes), the LBMA vaults’ June 2022 month-end silver inventories are now 182.7 million ozs (5,683 tonnes) lower than a year ago — a whopping 15.48% lower compared to June 2021. “
 
Chuck Again… We’ve been hearing about a shortage of Silver for months now, and it now appears to be unfolding right before my eye! There are all kinds of bad things that can come from this lack of physical Silver inventory, with the only good thing being a forced rise of the price of Silver!
 
OK, getting back to what Chuck thinks… Can anyone out there recall when Chuck first began carping about the Debt in the U.S. ? Well, it was a long time ago, and back then the debt would be considered today, to be small! But Debt is a problem, and I so took Dick Cheney to the carpet for his saying that “Deficits don’t matter”, back in the day… It was simple to see where it was going, for me at least… If you print a $1 Trillion Deficit one year, and the markets don’t react, then you know that you can do that every year, and add even more in down years, and the markets won’t rebel… And that’s where we are today, with nearly $31 Trillion in Gov’t Debt, Corporate debt is more than $23 Trillion, and Consumer Debt is $16 Trillion…
 
In my last appearance at the Vancouver Investment Symposium in 2015, I made a big deal out of the fact that total debt in the U.S. had hit $50 Trillion… Well, today 7 years later, the total is $70 Trillion… And that debt is not going down one iota, folks… It’s almost like Sisyphus who Zeus dealt him the eternal punishment of forever rolling a boulder up a hill in the depths of Hades…
 
Now, I’m not saying that all debt is bad, for there are times a Corp, a Consumer need to go into debt for a short period of time… But that should be the only good kind of debt…
 
There’s been quite a bit of talk about a “Debt Jubilee”, where all debts are forgiven… I hope to never see that happen while I’m alive… For it would mean that everyone got off Scott Free! And set a very bad precedence going forward.
 
So barring a Debt Jubilee, the only way to pay down these debts is to adopt austere budgets… But since that seems to be a thing of the past, with no appetite for doing so now, because it would mean their ability to get reelected would diminish, I say we’re in deep dookie as a country…
 
The Gov’t sets the table for everyone else… If the Gov’t goes deep into debt, then Corporations do the same, and if those two do it, then consumers follow…
 
The U.S. Data Cupboard had two real economic reports for us yesterday, and they seem to defy the rash of recent economic prints that were awful… June Factory Orders increased from 1.8% in May to 2.0%, and Corporate Equipment Orders gained in June too, from .5% in May to .7%.. If you were only looking at these two prints you would be a naysayer to the recession talk… But it takes more than two prints to make an economy folks…
 
Today’s Data Cupboard has the usual Tub Thumpin’ Thursday Fare of Weekly Initial Jobless Claims, and it will also have the June Trade Deficit…
 
To recap… Chuck’s thought that Tuesday’s dollar gains were PPT driven sure did give him fuel for the fire yesterday, as the dollar wallowed in the mud all day, not moving up or down, without any interference… Gold gained $5 and Silver gained 9-cent yesterday… Somebody agrees with Chuck’s thoughts on the sanctions placed on the Russian economy by the West. The ruble continues to be the best performing currency this year, despite those sanctions! Debt is everywhere, and should be the biggest concern everyone has with regards to this country’s future…
 
For What It’s Worth… Well, here we go… Let’s hope this is all a show, to express to the world and the U.S. that they are not kidding. But my spider sense is tingling and I’m thinking of really bad things that come from this, display of strength, by China. The article can be found here: China fires missiles into waters off Taiwan in largest ever drills | Reuters
 
Or, here’s your snippet: “China fired multiple missiles around Taiwan on Thursday, launching unprecedented military drills a day after a visit by U.S. House of Representatives Speaker Nancy Pelosi to the self-ruled island that Beijing regards as its sovereign territory.
 
The exercises, China’s largest ever in the Taiwan Strait, began as scheduled at midday and included live-firing in the waters to the north, south and east of Taiwan, bringing tensions in the area to their highest in a quarter century.
 
China’s Eastern Theatre Command said at around 3:30 p.m. (0730 GMT) it had completed multiple firings of conventional missiles in waters off the eastern coast of Taiwan as part of planned exercises in six different zones that Beijing has said will run until noon on Sunday.
 
Taiwan’s defense ministry said 11 Chinese Dongfeng ballistic missiles had been fired in waters around the island. The last time China fired missiles into waters around Taiwan was in 1996.”
 
Chuck Again… Well, know you see why Gold is much stronger this morning.. Geopolitical problems are always good for Gold.. And these goings on in S. Asia, are a poster child for Geopolitical problems! 
 
Market Prices 8/4/2022: American Style: A$ .6978, kiwi .6306, C$ .7790, euro 1.0169, sterling 1.2084, Swiss $1.0410, European Style: rand 16.7336, krone 9.7234, SEK 10.1847, forint 389.24, zloty 4.6398, koruna 24.2485, RUB 60.81, yen 133.85, sing 1.3792, HKD 7.8499, INR 79.47, China 6.7568, peso 20.42, BRL 5.2831, BBDXY 1,272.96, Dollar Index 106.24, Oil $90.97, 10-year 2.72%, Silver $20.30, Platinum $907.00, Palladium $2,056.00, Copper $3.50, and Gold… $1,783.17
 
That’s it for today… My thoughts and prayers are with son Andrew this morning… I know he’ll come through just fine… So, if I know that, why am I so concerned this morning? And another BIG HAPPY BIRTHDAY to my little d… Delaney Grace is 15 today! I’ll always know how old she is, because she was born the year I was diagnosed with Stage 4 metastatic renal cell carcinoma… and had the first two of my major cancer surgeries… Cards and Cubs play a double header today… Somewhere in heaven Ernie Banks is liking the sound of playing 2! I’m going to the regular scheduled game tonight, on the tickets I won in the writing contest… I don’t enjoy going to night games downtown in St. Louis… But, I’ll make the exception when I have free tickets! I’m a day baseball fan… which is why I enjoy Spring Training games so much! The Rascals takes us to the finish line today with their song: It’s A Beautiful Morning… I think I’ll go outside for a while, and just smile, just take in some clean fresh air… Yeah that song… I hope you have a Tub Thumpin’ Thursday today, and a great weekend ahead, and please remember To Be Good To Yourself!
 
Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts