Currencies & metals rally on Monday.
But give back most of their gains in the overnight markets.
Good Day… and a Tom Terrific Tuesday to you! And May The Fourth Be With You! HA! tried to sit outside yesterday afternoon, to allow the warm sun to dry me up from all the congestion in my sinuses… That worked as long as I remained in the sun, once I came inside…. I had to begin sucking on cough drops immediately! I watched the baseball game of which, the Cardinals, won 6-5 on the TV and the hockey game, which the Blues won 2-1, on my iPad. Yesterday, I told you I was going back to sleep, and I did, until 10:30 am… WOW! Sleeping the day away… But I always say, my body tells me when I need to sleep, and I don’t argue with it! You know, that is one thing that I’ve learned since I was diagnosed with Stage 4 cancer in June 2007, and that is… To listen to my body… I know when I need to back off something, etc. Midnight Oil greets me this morning with their song: Beds Are Burning…
Well, before I go on with anything else this morning, I have a quote from Charles Gave, from the John Mauldin letter that I think everyone needs to read and take to heart… here we go! “The idea that maintaining abnormally low interest rates helps economic growth is a fallacy, says Gavekal co-founder Charles Gave. It mainly helps the rich get richer while depressing working-class living standards. Such policies historically don't end well, yet the Federal Reserve and other central banks are pursuing them enthusiastically.”
Ok… so who’s in on keeping interest rates near zero? Just wondering…
So, I told you yesterday that the all clear horn had sounded and that the Big Bad Wolf had gone away, giving traders the freedom to sell dollars once again… And sell them they did! Gold had a phenomenal day rising $23.80, to close at $1,793.90. And the Dollar Index reflected the dollar selling by falling to 90.94 at the close, from 91.28 at the close on Friday… The currencies got back on the rally tracks, and took Gold & Silver along for the ride… Silver had an even better day than Gold, rising 98-cents! That’s a 3.60% gain on the day, to close at $27.00 WOW!
I guess those wage numbers that I reported to you yesterday, showing wages increasing 1.0% in the 1st QTR and 2.7% year on year, scared the bejeebers out of a few traders, eh? With those increased inflation fears running wild, you might think that the U.S. Treasury 10-year’s yield would have risen… But you would be wrong… Remember the Cartel implemented their Yield Curve Control (YCC) and they aren’t about to let yields rise to combat the inflation they’ve been starved for!
In the overnight markets… Apparently, the overnight markets didn't see things quite the same way as their U.S. partners last night... The dollar has rallied back and the Dollar Index sits at 91.30 this morning, up from the 91.94 it closed yesterday. Gold has given back $11 of its gains from yesterday, and Silver has given back 16-cents of its gains to, trade back below $27.... I've searched the hillside up and down and can't find anything that tells me why this reversal went on last night... So, it appears to me that it was some quick profit taking...
Ok, the GATA folks sent me a note yesterday notifying me that the State of Arkansas has now eliminated the sales tax on previous metals… Well, that’s another state to do this, and I don’t believe it will be the last to eliminate sales tax on precious metals! Here’s some further news on this story…
"Backed by the Sound Money Defense League, Money Metals Exchange, and grassroots activists and coin dealers in Arkansas, Senate Bill 336 will allow Arkansas investors, savers, and small businesses to acquire precious metals without being slapped with sales and use taxes.
The Arkansas sales tax exemption takes effect on July 1.
Meanwhile, similar bills are pending in Ohio, Maine, Tennessee, and New Jersey as the national backlash against taxing constitutional money continues."
Chuck again… Just keep peeling back the layers of resistance that individuals have against owning Gold & Silver…
OK… Well I think we’re going to have to root for a Turn Around Tuesday today, because things are looking like there’s some profit taking going on after yesterday’s big run up. In the currencies & metals.
Yesterday I talked briefly about the supply chain strains.. These are real folks, and from where I sit, in the cheap seats, there are still no signs of the strains ebbing. There are still delays and bottlenecks basically everywhere you look across supply chains. And the micro chips for Cars is just one of the things that have been affected... I find this to be somewhat embarrassing for the U.S. in that, these are cars made here in the U.S., but they need chips from China or wherever? Serves us right for not circling the wagons on the production of cars...
I’m doing a fun (for me) interview with good friend Dennis Miller for his letter… In it, I was asked to describe what it would look like in 5 years if the dollar lost its reserve currency status… Well, since I WAS the first to talk about this scenario back in 2010, at the Orlando Money Show, I should know a think or two about what things will look like…. Spoiler alert… They aren’t pretty!
The FWIW article today is a snippet from Dennis' letter last week... When reading the letter, I kept thinking to myself, that the U.S. house of cards, financial system is just waiting for something to topple it... I don't know what it is, could be a default, could be a bank problem, could be a whole list of things that would topple the house of cards... And I think it's important that investors keep that in the back of their minds.. Make sure your stop losses are updated, keep abreast of the news, and watch for signs of decay...
The U.S. Data Cupboard yesterday had the April ISM (manufacturing index), and it surprised, even me with its weakness. The April ISM fell from 65 to 60, and while 60 is still easily above the line in the sand that determines expansion or contraction (50), it didn't have a good month in April... Does that tell us that the stimmy check euphoria of March was all over by April? It could very well be telling us that... I'm just saying...
Today's Cupboard offerings include March Factory Orders, which in Feb were negative -0.8%... They are expected to get back on the positive side of the equation during the go-go days of March.. Circling back to yesterday, the total vehicle sales were supposed to print, and didn't... Makes you wonder if the number is so bad, that they are afraid to print it, doesn't it?
To recap... The currencies & metals had great days on Monday, erasing the memory of pain from late last week... But in the overnight markets, traders there didn't have the same opinion of what to do with dollars, and both asset classes are giving back big chunks of their gains yesterday... Chuck tells us that Arkansas has eliminated sales tax from previous metals sales... And we talk about supply chain strains... They're real folks...
Before I head to the Big Finish today, I have something I want to get off my chest... And that is the naysayers to inflation... I just don't get what they aren't seeing... Rising inflation is as evident as a man with a hatchet in his forehead! Shoot Rudy, even that wily codger, Warren Buffet is seeing rising inflation, let's listen to him, "We are seeing substantial inflation," Buffett said at the Berkshire Hathaway annual shareholder meeting broadcast exclusively by Yahoo Finance. "We are raising prices. People are raising prices to us, and it's being accepted."
I find it difficult to argue with him here... and still there are naysayers... Hmmm.... And while I write, the price of Oil is rising to trade with a $65 handle.... Oh well, you can lead a horse to water, right?
For What It’s Worth… Last week, Dennis Miller’s On The Money, letter was a question about how long can this house of cards last? And I like it so much that I put it on the docket for a FWIW article, and so here we are!
Here’s your snippet: “If we constantly borrowed and spent more than we earn while debts piled up; our house of cards will eventually collapse.
Over a decade ago, P.J. O’Rourke warned:
“Alarm bells should be ringing very loudly as the United States contemplates a deficit for 2010 of more than $1.5 trillion – about 11% of GDP….
…. Empires behave like all complex adaptive systems. They function in apparent equilibrium for some unknowable period. And then, quite abruptly, they collapse.”
The 2010 numbers now look tame. The Committee for a responsible Federal Budget predicts:
“In light of the enactment of the year-end spending and COVID relief deal, we estimate the deficit will total $2.3 trillion for Fiscal Year (FY) 2021. …. It would be higher than any other time in recorded history outside of World War I.”
The Wall Street Journal reports:
“The federal debt is projected to almost double to 202% of gross domestic product by 2051….”
Dr. Lacy hunt believes the historic debt levels cause economic activity and the standard of living to decline.
Governments worldwide believe they have a Magic Money Tree spending money they don’t have.”
Market Prices 5/4/2001: American Style: A$ .7717, kiwi .7136, C$ .8117, euro 1.2013, sterling 1.3884, Swiss $1.0931, European Style: rand 14.4526, krone 8.3248, SEK 8.4607, forint 299.65, zloty 3.7898, koruna 21.5039, RUB 75.15, yen 109.40, sing 1.3353, HKD 7.7673, INR 74.05, China 6.4727, peso 20.20, BRL 5.4285, Dollar Index 91.30, Oil $65.65, 10-year 1.62%, Silver $26.84, Platinum $1,245.00, Palladium $3,064.00, Copper $4.53, and Gold... $1,782.80
That’s it for today… It was a good night for both the Blues and Cardinals last night, as they both won very tight games… Unless the wheels fall off for the Blues, they appear to be in the driver’s seat for the last playoff spot in the Western Div. But there’s still 6 games in the regular season to go, so stranger things have happened to the Blues… they just need to keep winning! And get hot going into the playoffs… I’ve been having a lot of trouble with the shell on my prosthetic eye… So, I’ll go see the doctor that made the shell, and she’ll probably need to make me a new one… She asked me on the phone if I had lost weight… so, my socket could have changed… The appt. is not for a few weeks, so I have to put up with this shell that keeps giving me fits until then! Well, sitting out in the sun yesterday did help my sinuses, but as the night went on, they began to give me fits again… More sun today, please! May the 4th be with you today… I love that phrase! Tomorrow is Cinco de Mayo, of which we used to go out and party for… But not any longer, as we’ve become old stick-in-the-muds… I’ll share my annual 5th of May, story with you tomorrow… The Searchers take us to the finish line with their hit song: Love Potion #9… “I took my troubles down to madam Rue, you know that gypsy with the gold capped tooth.”… That song always reminds me of fun times back in the 60’s… I hope you have a Tom Terrific Tuesday today, and please Be Good To Yourself!