The Erosion Of The Dollar Continues…

A Pfennig For Your Thoughts
 
May 26, 2021
 
*Currencies are sloth-like in their moves VS the dollar
* Gold finally moves back above $1,900! 
 
Good Day… And a Wonderful Wednesday to you! Thank you, thank you, thank you (in my best Gomer Pyle voice) for all the get well wishes sent to me this week… I didn’t mean to scare anyone with a Sunday Pfennig, just wanted to get the word out about no Monday Pfennig while I was still awake… I did lose about 2 bags of blood, which has made me very tired, and weak for a few days… I’m hoping today is better… A rectus hematoma is what I have, and now they tell me it could take months before the blood disperses and the swelling in my side goes down… I’ve taken to wearing Hawaiian shirts because they fit real loose, and I can hide the big bump on my side! What the heck is going on with my beloved Cardinals? Errors on top of errors last night, was not what the pitcher needed but received! A day game today on the south side of Chicago… I’m greeted this morning by Alan Parsons Project, with their song, that I imagine a lot of you would be singing out loud to me if you could: I Wouldn’t Want To Be Like You…
 
Well… It’s been a week since I last talked to you, other than the Sunday notice…. And when I signed off last week the euro had moved past the 1.22 level, and the Euro Wannabes, (zloty, forint & korunas) were all posting daily gains VS the dollar, while the other currencies were lolly gagging along… Gold was inching toward $1,900, and Silver kept going past $28 only to see it brought back below the figure… The old time Dollar Index was 89.88, the new Bloomberg Dollar Index was 1,117.69, and the data in the U.S. just kept printing very uneven…
 
Skip forward to yesterday, and the euro finished the day 1.2250, the Euro Wannabes are still applying pressure to the dollar, Gold hit $1,901.20 yesterday, and Silver is back above $28.00 with the old time Dollar Index closing yesterday at 89.84, and the Bloomberg Index ending the day at 1,115.74…  So, from all that I guess you can tell that Gold & Silver have been the main movers VS the dollar in the past week, while the currencies, while bid ok, seem to be an afterthought… for the moment that is…
 
In the overnight markets last night… The erosion of the dollar continued, albeit at a very slow pace, which to me, is exactly what the Fed Heads, Treasury and White House need for the dollar. Gold has added to its $1899.80 figure yesterday to start the day today at $1,907.40. And the BBDXY is 1,115.20, thus confirming the slow erosion of the dollar, which means your buying power is being slowly eroded away… 
 
The stock market hasn’t been a haven for investors lately, along with the cryptocurrencies… And all that worrying is pushing investors toward Gold, in my humble opinion… Inflation worries are really building, and once again, that’s good for Gold, but bad for anyone that doesn’t have an inflation hedge.. 
 
Well, just for fun this morning, I’ll tell you that the current National Debt is $30.3 Trillion, which means that each citizen’s portion of the debt is $85,000, and to take it further, if we only counted taxpayers, their portion would rise to $225,310….  I thought you might like to know what your elected leaders have done for you all these years, since Gold was removed as the anchor for the dollar, in August 1971… Oh, by the way… having the dollar removed was only supposed to Temporary, according to Richard Nixon… Ahhh, that old saying that, ‘There’s nothing more permanent as a temporary government program.” – Milton Friedman
 
OK… now that I’ve established the our main problem is debt, and that it was all caused by elected officials who never passed up a deficit spending plan that helped his reelection. And they got the wind in their sail by the removal of Gold from the dollar… So, this August it will be 50 years, that our temporary removal of Gold has been around… 50 years! 50 years ago, I was the only sophomore starter on the Roosevelt High School Football Team that won the Public High League! Nowadays I can’t even get down in a stance because my mid section hurts so bad! That’s how long ago that all happened… In the whole scheme of things, 50 years isn’t really that long…
 
I mean when Kathy and I traveled to London in 1989, and we were tourists, and went to every historic landmark in London, we even took a train ride out to the country to see a castle… I remember thinking when looking at dates of things there, that they had happened long before the U.S. was a country! Now… THAT was a long time ago! 
 
Well, each and every day, I read more and more writers, economists, analysts, pundits, and hacks like me talking about rising inflation… Pork is up by a large margin, which means bacon is up by a large margin, we all know about Lumber, but did you know that concrete is now in short supply? I got that little ditty from Dave Gonigam’s 5 Minute Forecast yesterday… And yesterday the Case/ Shiller Home Price Index for March rose 13.2%!!!!!  That’s greater than any monthly rise during the last Housing Bubble… Just pointing that out now, so there’s no confusion over who told you that another Housing Bubble is having air blown in to it…. Low mortgage rates, my mortgage expert according to himself on TV, Ryan Kelley, tells me there are still mortgage rates in the 2’s….
 
Exploding costs to build a home with price leaps in lumber, steel and concrete, Builders now having a clause that allows them to raise the price in the contract on the home if building supplies increase, all these things are causing a perfect storm for yet another housing bubble…
Remember the losses and how close we came to collapsing in 2007/08? This one will be even worse because the casino banks now have more derivatives on their books than ever before, and there’s no one guarding the hen house…. 
 
Now, I have to say that I may be a bit early in this call, just like I was with the Housing Bubble of 2007/08, when I wrote in the White Paper, The Decline of the Dollar, about how I was seeing early signs of a housing bubble building… That was 2003…
 
OK… enough of all that! The good folks at GATA send me a link to an article in the U.K.’s Telegraph, well you have to have a subscription to read it all, so I’ll give you a snippet from the article that can be found here : Bitcoin fever is the primrose path to digital servitude (telegraph.co.uk)
 
“Bitcoin is already a barbarous relic in fintech time. It has failed to make the grade as a daily means of exchange after 12 years of agitation, bar money laundering, cyber extortion, and Iranian sanctions-busting.
 
It has not progressed beyond the stage of a speculative asset. It is captivating but is not what the evangelists promised.”
 
Chuck again… Well, it’s a good read, from Ambrose Evans Pritchard, one of my fave writers…
 
The U.S. Data Cupboard has the aforementioned Price Index yesterday, and the stupid Consumer Confidence report for this month, which remained very high at 117…  There is no data on the docket to print today, and that usually means it will be a rough day for the dollar… I guess we’ll have to wait-n-see…
 
It appears that we will end the week with a boat load of data… And it all begins to show up tomorrow morning… The pieces of data that I’m looking to is Friday’s print of Personal Income and Spending… You may recall that March’s Personal Income was up 21%, and I told you then that it was a result of the stimmy checks being received and spent in March. And I’m sure we’ll see confirmation of that thought on Friday… And without currency to spend, because the stimmy check was wasted already, Consumer Spending should also take a big slide downward in April… 
 
To recap: It’s been a week since Chuck last talked to you, and in that time, not much has happened in the currencies, they remained well bid, just not moving higher at this time. Gold touched $1,901 yesterday before falling back to $1,899.40… Silver is over $28 at $28.25, Oil was up over $66 before falling back, and all the building commodities are exploding in price…
 
For What It’s Worth: Longtime readers know of my adoration for John Williams of Shadowstats.com , and while I don’t subscribe to his newsletter (I should) I love it when I can get snippets of what he’s talking about other places… And in this case I was able to pull this from the Burning Platform website, where they printed John Williams talking about hyperinflation! And it can be found here: “The Fed Has Lost Control” – John Williams Warns Of Hyperinflation In 2022 – The Burning Platform
 
Or, here’s your snippet: “Economist John Williams, founder of ShadowStats.com, says the Federal Reserve has painted itself into such a tight corner with the economy it really has only two choices. Williams says it comes down to “Inflation or Implosion.”
 
What would happen to the financial system if the Fed stopped printing massive amounts of money for stimulus and debt service? Williams explains,
 
“You could see financial implosion by preventing liquidity being put into the system. The system needs liquidity (freshly created dollars) to function. Without that liquidity, you would see more of an economic implosion than you have already seen. In fact, I will contend that the headline pandemic numbers have actually been a lot worse than they have been reporting. It also means we are not recovering quite as quickly. The Fed needs to keep the banking system afloat. They want to keep the economy afloat. All that requires a tremendous influx of liquidity in these difficult times.”
 
So, is the choice inflation or implosion? Williams says, “That’s the choice, and I think we are going to have a combination of both of them…”
 
Chuck again… once again a very good article that I strongly suggest you read in its entirety… This man knows what he’s talking about folks…
 
Market Prices 5/26/2021: American Style: A$ .7777, kiwi .7306, C$ .8276, euro 1.2231, sterling 1.4164, Swiss $1.1168, European Style: rand 13.8108, krone 8.3220, SEK 8.3025, forint 287.03, zloty 3.6727, koruna 20.8156, RUB 73.41, yen 108.89, sing 1.3233, HKD 7.7620, INR 72.67, China 6.4086, peso 19.83, BRL 5.3192, BBDXY 1,115.20, Dollar Index 89.77,  Oil $65.91, 10-year 1.56%, Silver $28.15, Platinum $1,208.00, Palladium $2,842.00, Copper $4.50, and Gold… $1,907.40
 
That’s it for today… Good to be back in the saddle, although, I am still quite weak… I got tired yesterday walking out to the back yard to my tiki hut… I go to the eye prosthesis doctor today, and I believe it’s time for a new shell to be made, I’ve been having some problems with the one I’ve had for 6 years now… The one before that lasted 5 years… So, I do believe it’s time… Thinking back to when I first got the eye shell, I was at Panera’s and ordered, started to walk away from the counter, and felt and itch in my eye, I instinctively went up to rub it and rubbed the wrong way, the shell popped out and fell to the floor, the girl at the counter turned white! And Gasped, Oh My! I bent over, picked it up put in my pocket and went to pick up my lunch! Funny story.. I’ve never done that again! OK.. I’ll be back tomorrow, as long as God is willing and the Creek don’t rise… David Crosby and Graham Nash take us to the finish line today with their song: Wind On The Water… It’s a song about the overfishing of whales… I hope you have a Wonderful Wednesday, and please Be Good To Yourself!
 
 
Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts