It’s Tax Day…

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

April 17, 2018

* Chuck goes down a rabbit hole…
* HKMA spends $1.7 Billion with a B to defend honkers…

Good Day… And a Tom Terrific Tuesday to you! Cold, blowing snow, and it was April 16th! What gives, Mother Nature? Crazy weather, eh? Oh well, eventually it will get warmer here and stay that way. But I’m not sticking around until “eventually”, I’m heading back to S. Florida tomorrow and wont’ return until May Day! Well, it’s Tax Day. I sure hope you haven’t procrastinated! The Beatles take us to the finish line today, with one of my all-time favorite Beatles songs: In My Life…

With today being Tax Day, pfennig tradition calls for some lyrics to lighten the day… Let me tell you how it will be
There’s one for you, nineteen for me
‘Cause I’m the taxman, yeah, I’m the taxman – The Beatles…

I read an article yesterday about taxing social security, and how to avoid such, and one of the statements in the article sounded as if I were writing it… It went something like this… Consumer taxes are only going to go up in the future, and if I were writing it I would have added, as the Government attempts to find ways to drain the turnip and pay for their deficit spending… Since dipped our toe in this rabbit hole we might as well go all-in it, so come on, come with me, or see you on the other side…

First off, how many of you recall me saying through the years, when I was warning readers about the U.S. debt picture, and that China held a good portion of those debts, represented by U.S. Treasury holdings, that one day we would rue the day we allowed “people that ran this country into the ground, debt accumulation wise, for once China has a floating currency, they would be able to demand the U.S. did this and that, and direct the value of the dollar.

I truly believe that this is what the Chinese renminbi denominated Oil Futures Contract is all about… The dollar gets a majority of its support from the fact that it is THE petrol currency that Central Banks around the world need to hold to pay for their Oil imports (unless of course they themselves produce enough Oil for their respective country’s needs)… So, if you take away the need to hold dollars to pay for Oil, what’s going to support the dollar then? I’m going to borrow a statement from Grant Williams’ Things That Make You Go Hmm…. Let’s listen in…

“A successful CNY oil contract gives the PBOC (and by extension, the world) the ability to completely neutralize the weaponized USD that has become Washington’s weapon of choice in the ongoing global “currency wars.” In plain English, if CNY is convertible under the contract, the PBOC can control the international trade value of the USD through the ratio of CNY gold & oil contracts.” – from Things That Make You Go Hmmm….

I don’t need to tell you what a disastrous scene this would be for the dollar, inflation in this country, and our loss of purchasing power… But I will nonetheless, because, well, I’m that way! No wait, I just did that yesterday! Oh well, see what getting older does to one’s memory? Anyway… This is not a good thing that’s happening right before your eyes, folks… And the media? They don’t have their eye on the ball on this one, they would rather cover stories that have nothing to do with our economy, the dollar, Gold, etc.

So, aren’t glad that you subscribe to the Pfennig? And unlike Cable charges, The Pfennig doesn’t cost you a dime!

Another thing to not let this go too far astray, and we’re down the deficit will hurt the economy and dollar rabbit hole, is that now that the U.S. is energy independent, China has become the world’s largest Oil importer…

And with that, they can demand that the Arab countries price their Oil in renminbi, because, well, they are the largest importer! What? Did you think that the Arabs would honor their agreement with the U.S. back in the early 70’s to price Oil in dollars, and tick off their biggest customer? Well, if you do, you’re living in a paper doll world, living ain’t easy, loving’s twice as tough… No Wait! Why, Chuck, oh why, do you always have to slip into a song when your talking about something so serious?
Well, it’s my way of keeping things in perspective. If you’re done your homework and read the Pfennig through the years, and have diversified your investment portfolio using currencies and metals (mainly Gold or Silver) then none of this trashing of the dollar that China will cause will come as something to panic about. But if you haven’t done your homework, you had better get to work on it, because, this Chinese renminbi Oil Futures contract is here to stay… And soon China will be demanding that the countries it buys Oil from, denominate the contract in renminbi…

You know… part of the deal that the Nixon administration made with the Saudis back in the early 70’s to price their Oil in dollars, and then in turn use those dollars to buy Treasuries (Yes, the Saudis have been the enabler to deficit spending… Think about that) has another side of the coin that a lot of people forget about… And that is… with this new found reserve currency status, the U.S. promised to maintain a strong dollar… how’s that working for you Arab countries? And that in a nut shell is the main reason that China has decided that the world needs another currency to step up and become the reserve currency of the world.

WOW! I’ve gone pretty deep down this rabbit hole, and I’m at 950+ words and haven’t mentioned the currencies and metals performance yesterday and in the overnight markets!

Well, there’s not much to talk about here… The currencies saw minor gains, sort of like the one Gold had yesterday that when the 252,000 contracts were booked, Gold had a one thin dime gain on the day. That’s right 10-cents! Big Whoop, eh? The currencies did no better, as the Dollar Index went from 89.57 to 89.51…

I mentioned the other day about the problems the Hong Kong dollar or honker has been experiencing, and how it was at the bottom of the range the Monetary Authority of Hong Kong (HKMAA) uses. I read this morning that the HKMA has spent $1.7 Billion to defend the honker… That’s some amount of bread, eh? And they didn’t get any traction out of their stolen money, I mean hard earned money… Governments don’t make money, the take it from the people of the country that work hard for their money… So I say that they “steal it”… You know what I mean… right?

The price of Oil remains steady Eddie through all of these fires that are going on around the world, and the Steady Eddie price of Oil has allowed the Petrol Currencies some breathing room. Petrol Currencies like the Russian ruble has gained back a small portion of the ground they lost in the past two weeks, when first it was a dip in the price of Oil, and then came the news that the U.S. was adding sanctions on the Russians…

Well, I read this morning that U.S. President Trump, has pulled back those additional sanctions, for now… Maybe someone with an ounce of gray matter, stepped in and persuaded the President to not go forth with his additional sanctions. Any way that it happened, it did bring a sigh of relief from the Russian Traders, and the ruble has gained some of its lost ground…

Like I said above, Gold gained one thin dime yesterday, and not a pre-1965 dime that at least had 80% silver content… But have you noticed the HUGH jump in the price of Palladium this week? OK, here’s the skinny on that, in my opinion…

The U.S. Data Calendar had the March Retain Sales data for us yesterday, and the print showed that Retail Sales had gained 0.6%, but only 0.2% minus car sales.. So, car sales in March must have been tremendous, (I hear that truck and SUV sales have skyrocketed) and with those car sales, the car makers see nothing but seashells and balloons for the future, and ramp up car production, which means the demand for Palladium goes higher, and does the price of the metal!

See, how I can pull al that together for less than one thin dime? HA!

To Recap… It’s Tax Day! And it’s a sad day for me, as I had to once again write checks… UGH! Oh well, I guess it’s better to have to pay than to have no income to tax! The currencies and metals traded in a very tight range yesterday, so thin was the range that it almost appear that these two assets are trading in the same clothes as yesterday… And Chuck goes down a deep rabbit hole, did you go with him?

For What it’s Worth… Here’s a novel idea… that countries repay their debts in Gold… Well that’s the idea of the President of Turkey, and it can be found here: https://ahvalnews.com/imf-turkey/imf-loans-should-be-paid-gold-not-dollars-erdogan

Or, here’s your snippet: “Turkish President Recep Tayyip Erdo?an on Monday suggested that IMF loans should be paid in gold instead of dollars.

“What I’m saying is that these debts should be in gold. Because at this point the karat of gold is unlike anything else. The world is continually putting us under currency pressure with the dollar,” the Turkish president was quoted as saying by business news site patronlardunyasi.com in a speech in Istanbul. “We need to save states and nations from this currency pressure.”

The president said Turkey had attracted $180 billion of international investment between 2006 and 2017.

“This despite the 2008 global financial crisis, events unfolding in Iraq and Syria, the uninterrupted attacks we have been subjected to since 2013 and the July 15 coup attempt,” Erdo?an said, referring to the 2016 failed military bid to topple his government.”

Chuck Again… as they say, out of the mouth of babies… Or in this case…out of the mouth of dictators, we might get a good idea… I’m just saying..

Currencies today 4/17/18… American Style: A$ .7774, kiwi .7340, C$ .7960, euro 1.2370, sterling 1.4350, Swiss $1.0395, … European Style: rand 12.03, krone 7.7650, SEK 8.4164, forint 251.33, zloty 3.3616, koruna 20.4162, RUB 62.03, yen 107.05, sing 1.3080, HKD 7.85, INR 65.67, China 6.2786, peso 18, BRL 3.4216, Dollar Index 89.51, Oil $66.29, 10-year 2.84%, Silver $16.61, Platinum $926.33, Palladium $992.45, and Gold… $1,344.70

That’s it for today… I mentioned yesterday that my beloved Cardinals were heading to Chicago and wondered if they would play at all, given the weather up north (for me)… Well, the game was postponed to July, last night, and there are questions about tonight’s game… All the plans of mice and men, eh? The MLB wanted to start the season earlier to have more days off during the summer, and instead the game will be made up on those scheduled “off days”… Yes, takes us to the finish line today with their song: It Can Happen… I hope you have a Tom Terrific Tuesday, and that you remember to Be Good To Yourself!

Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts

 

 

) The Daily Pfennig is no longer published by EverBank and it is now published by Aden Research Group.

Chuck Butler recently joined the Aden Research Group, a research center led by writers and market analysts Pamela and Mary Anne Aden. The Aden Research Group publishes three newsletters:
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