The Stimulus Deadline Comes & Goes…

A Pfennig For Your Thoughts

October 21, 2020

* Currencies & metals are rallying this morning… 
* The Bond Boys don’t like the no stimulus decision… 

Good Day… And a Wonderful Wednesday to you! Well, my former colleague at Mark Twain Bank had to point out something to me yesterday… I did have an “I Voted” sticker on the back of the instructions card that, of course I failed to read completely! So, Thanks, Neil for pointing that out to me! I peeled the sticker off the card and slapped it on my shirt! It made me feel good! And now I can track my ballot, on line to make sure it gets there and is counted! YAHOO! The World Series began last night with the Dodgers & Rays playing… An interesting matchup of the highest paid team VS the 3rd lowest paid team… I’ll be rooting for the underdog, here… So Go Rays! Heartsfield greets me this morning with their song: The Wonder Of It All… 

I think about that a lot, folks… I think about how things were as a kid… and how much they’ve changed through the years. So, if you ever think that today is boring… I heard Adam Carolla talk about this… get yourself a time machine, and set it for 1972, and then go back there for one day, to see what life was like, and then return to today, and about the time you’re feeling bored with today again, you go back to 1972… Rotary phones, screwed to the wall…. No video games… no ipad… no ipod… sure gas was just 23-cents, but… the car you had probably was a beater, and so on… And since time machines don’t exist, you’ll have to use your mind… Go ahead, it’s a great exercise for your gray matter! 

The other day, I said, “Alexa, play smooth jazz” and suddenly throughout the house we had Stan Getz blowing away on his sax… The Wonder of it all….

Ok, sorry I beat around the bush a little this morning, before giving a recap on what happened in the markets that I cover…. So, with no further ado…. It was another “meh day” for the currencies and metals yesterday, as the euro climbed further into the 1.18 handle throughout the day, and Gold gained $2.80 to close at $1,906.80, and Silver gained 24-cents to close at $24.69… Both Gold & Silver were higher than their closing numbers during the day, and once again, I don’t see Gold & Silver owners selling for profits on a day like yesterday, so I’ll chalk this backing off from the highs of the day, as case of price manipulators showing up at the COMEX with arms full of short trades once again…

I could be wrong about that, but it just seems silly to me to take a profit on something that should be held as a piece of wealth, when the metal is only up $8 or whatever, during a day… But then I would never sell my Gold & Silver unless the man was at the door to take away my house…

No wait, I own my house they couldn’t do that! But you get my drift…

I read a piece by Silver guru, Ted Butler, no relation that I know of, and he is of the opinion that these daily forays by the price manipulators to bring down the price of Gold & Silver, are beginning to see an end to them… Geez, I sure hope so… Wouldn’t it be nice if we could wake up, no wait! UGH!, I don’t know why my fat fingers start to do that, but your brains does tell your fingers what to type, right? Anyhoo… Wouldn’t it be nice if we could see Gold & Silver trade on fundamentals?  With no interference?  I would think so!

In the overnight markets, the dollar bugs really went into hiding, and the currencies and metals have both put on some rallies. The euro is trading at 1.11850 as I write, and Gold is up $12 this morning, with Silver up 36-cents, to bring Silver back above $25!….  

And though it’s not a real indication of what the currencies are doing, The Dollar Index has dropped from 93.55 last week to 92.81 today… Things are looking like they could go the wrong say for the dollar once again, but we’ve seen these moves by the dollar to edge near the cliff, only to see the PPT come in, buy dollars, and save the day…  

Well, the Tuesday deadline for a stimulus came and went… You know me, right? I would love for people to have money to do the things they want to do, but… I don’t believe that waiting for checks from the Gov’t is the way to get that done… I also don’t believe the Gov’t should be in the business of spending even more money that they don’t have and won’t ever have… So, to me, I’m glad that nothing was done… 

The bond boys didn’t like it that nothing was done, and the 10-year Treasury lost ground on the day. Yesterday the 10-year’s yield was .77%, and today it’s .81%… Now before you start harping at me that there’s only 4 basis points of a move there… Let me remind you that bonds trade in large amounts… very large amounts… And 4 basis points of yield will move the price of the bond enough to cause a loss, and that’s what I’m talking about here… 

And then speaking of the euro…. I said yesterday that I thought that the dollar bugs had drawn a line in the sand at 1.18… But, one of these days, the euro will treat that line in the sand like the U.S. treated Saddam’s infamous line in the sand…. (In case you’re too young to recall, the U.S. military went through Saddam’s line in the sand like Grant took Richmond)… I’ve always refrained from using that phrase. It was one of my dad’s favorite phrases, but I always refrained from using it in fear that my Southern readers would take offense… So, if It offended you, I apologize, but for emphasis to what I was saying I just couldn’t think of another phrase… .

I haven’t talked about the Chinese renminbi since I told you about how the Chinese Gov’t had announced that they were going to put the kyboshes on further appreciation of the renminbi… The renminbi is still stronger than it was a couple of months ago, but the daily appreciations have seemed to have stopped…. That’s one thing that I’ve always liked about the Chinese… They don’t say something unless they mean it… So, when they said that they are attempting to remove the dollar from their lives…. They meant it! Think about that for a minute…

The Japanese yen has turned into the Hong Kong Dollar… Not technically it hasn’t! But, what I’m talking about is how the yen barely moves from its daily figure of 105 ish, and the honker stays steady Eddie at 7.75-ish…. (the honker is pegged to the dollar)  You know, when I first began my career in the foreign markets, as the foreign bond trader, in 1992, the yen was 133, and I thought it was pegged to the dollar because it barely moved from day to day. Of course I was incorrect, about that, but still it didn’t tell me the story of why the yen remained to steady, and other currencies were kicking the dollar’s tail and taking names later… Well, you have to take things into perspective… In 1985 at the time of the Plaza Accord, the yen was at 251…. And in 1971 when currencies were set free to float, the yen was 357… So, owning yen from that time to now would have been a great trade, no?

And of course as I write that, I see that the yen moved to 104.85 this morning… UGH! Oh well, that’s still near 105-ish… 

Sort of like owning Gold since 2000… In 2000, Gold traded around $280 per oz.  And today it’s $1,900-ish…. And then imagine, it is isn’t hard to do, that Gold’s price is reset at $10,000 oz… I can envision it, now it just need to become reality…

And just when you thought you wouldn’t hear me talk about the collapse of the financial system so much… Craig Hemke of TF Metals, sounds as if he’s been reading the Pfennig… The GATA folks sent this to me yesterday, and here’s Craig Hemke: “”Just about anyone can see that we stand at the doorstep of an epochal change in the global monetary system. The Great Keynesian Experiment is failing, as the monetary growth needed to service the existing global debt is finally exceeding the capacity of the system to provide for itself. Put another way, the global central banks are now permanently in a mode where only the continual and rapid creation of additional fiat currency can feed The Beast of exponential debt.”

I watched a video from Mike Maloney the other day that a reader sent me to watch, (see I did my homework, aren’t you proud of me?) and he explained the history of monetary regimes… In essence the average of each lasted about 40 years…. And we’re currently near 50 years (1971-?), so our system is long in the tooth, so to say…. And I know when I first told you that I thought the weight of the debt would cause the financial system to collapse, you were shocked… How could I say that, our system has been in place for 49 years, and it hasn’t collapsed yet?, I can here you saying…. Well, hopefully, you’ve come around to my way of thinking…..  

Got Gold?

I heard a funny the other day, that I’ll share with you… At Thanksgiving this year, bring up your view of politics, it will definitely reduce the number of Christmas gifts you need to buy this year! HA! Speaking of politics, we had a lively discussion last night about the two parties…. I’m so proud of my youngest son Alex for a number of reasons, but last night, he proved that he was well read, and well versed on the politics of today, and…. We agreed on everything!  My wife, well… she had to play devil’s advocate on everything we talked about…

OK… Man, am I full of good news and cheer this morning! NOT! I shared a cartoon with my watering hole buddies yesterday… A traffic cop that is a lighting bug, pulls over a lighting bug on a motorcycle, and tells him, “Your tail light is out”…. I laughed and laughed and laughed at that…. And reminded me of a joke I used to tell the kids to use on Halloween, but they never did…. What did one fly say to the other fly? You’re man is open!  HAHAHAHAHAHA!

So, there did I even out the tone of the letter this morning?

Well, as I said yesterday housing sure is hitting on all eight cylinders these days… And why not, with mortgage rates in the 2’s…. Housing Starts and Building Permits both for Sept. beat expectations, and showed that even in a pandemic, if the price is right (servicing cost) houses will sell!  Speaking of the pandemic, I see where people are buying cars online now…. Wait What? Don’t you have to test drive a car to see how it feels, and you sit in it, kick the tires, etc.? Well, I guess not… And think pretty soon you’ll be able to ask the car salesmen, “Just how many digits is this car selling for?”  HA! The Wonder of it all…. 

Today’s Data Cupboard is reserved strictly for the Cartel’s, I mean the Fed’s Beige Book… Cartel, I mean Fed heads, Brainard, Mester and Kaplan will all speak somewhere today… Who’s going to let the cat out of the bag regarding the new digital currency the Fed is working on?

Maybe none of them, maybe they’ve been sworn to secrecy… But knowing out Fed Heads like I do, They are all primed and pumped to be the first to tell you… But maybe the timing isn’t right, just yet… We’ll see…

To recap… Another “meh day” in both the currencies and metals… They gained ground, mind you, but not so much that you would notice… The only thing different from Monday’s Meh day, was that the little dogs finally got off the porch to chase the dollar bugs down the street… (the other currencies not named euro,)

For What It’s Worth…. Ok, I know I’ve run on long this morning, so I’ll try to make this a short FWIW… I found this on Ed Steer’s letter (www.edsteergoldsilver.com) and it’s a foreigner’s view point on the U.S. and it can be found here: https://internationalman.com/articles/is-there-hope-for-the-us/

Or, here’s your snippet: “For the entire lives of anyone under the age of seventy-five, the U.S. has been at the top of the heap in almost every way. For decades, it had greater freedom, greater prosperity and higher production than any other country in the world.

America was a cornucopia – the centre for innovation and trends in technology, the arts and social development. And today, many Americans, even if they complain about changes for the worse in their country, come back quickly to say, “This is still the greatest country in the world.” Or, “Everybody is still trying to come here.”

Well, truth be told, neither of these knee-jerk comments is accurate any longer. But even those who have come to that realisation tend to resort to the inevitable fall-back comment: “Well, whattaya gonna do? It’s just as bad everyplace else.”

And yet, this is also inaccurate. Throughout the history of the world, whenever a country had entered its decline stage, others were in the process of rising up.

And this is just as true today. There are countries where prosperity and production are far greater than in the U.S. and, increasingly, countries where the key ingredient that made America great – Liberty – is present to a far greater degree.”

Chuck again… As usual the actual article is much longer and gets into much more than I can print here, so take a look by clicking the link above, that is, if you’re interested! 

Market Prices 10/21/20: American Style: A$ .7085, kiwi .6631, C$ .7625, euro 1.1850, sterling 1.3057, Swiss $1.1061, European Style: rand 16.3864, krone 9.2147, SEK 8.7407, forint 307.05, zloty 3.8595,  koruna 22.9360, RUB 77.58, yen 104.84, sing 1.3555, HKD 7.7498, INR 73.64, China 6.6758, peso 21.08, BRL 5.5959, Dollar Index 92.81, Oil $41.00,  10-year .81%, Silver $25.04, Platinum $884.00, Palladium $2,429.00, and Gold.. $1,918.70

That’s it for today… Well, the Dodgers won Game 1 last night… C’mon Rays you can do it! My beloved Mizzou Tigers finally will get back on the gridiron this Saturday, with their redone schedule, they’ll play Kentucky… Go Tigers! The Band Styx, takes us to the finish line today with their song: Lorelei…  And that reminds me of my former assistant, little Christine, she once said that she wanted to be called Lorelei… And it stuck only with a guy on the brokerage desk, who always called her Lorelei… good memories, for sure! I hope you have a Wonderful Wednesday, and please Be Good To Yourself!

Chuck Butler

Creator & Editor of:

A Pfennig For Your Thoughts