Powell throws a cat among the pigeons

Good Day... And a Super Sunday to you! Yes, this is coming to you on Sunday, as you might recall me telling you last Thursday that there wouldn't be a Pfennig on Monday. But, there was so much that went on Friday, and this couldn't wait until Tuesday to tell you... This won't be like the Sunday Pfennigs that I used to write, decades ago, so don't freak out, as this will be short-n-sweet... I watched our City STL soccer club's game last night... What a joke the referring is in the MSL! The Penalty shot called on the STL club was a ghost penalty! Oh well... Maroon 5 greets me this morning with their song: This Love

Well, he said the magic words last Friday... Jerome Powell, chairman of the Fed/ Cabal/ Cartel decided that he's taken enough of the guff from the POTUS, and told the crowd at Jackson Hole that "interest rates will be cut soon" according to the markets... What he actually said was that "conditions may warrant rate cuts"... That's not exactly what the markets took him to say, but that's nit-picking isn't it? 

So much for reading the tea leaves in the FOMC Meeting Minutes last week, that pretty much said, "no, we're waiting to cut rates"... And that thought had the dollar bugs dancing in the street, and the BBDXY rose to 1,210... And then Powell, pulled the punchbowl back from the crowd, and the dollar bugs were dancing no longer...

The dollar began immediately to get sold, and by 11 a.m. The BBDXY had given back 9 index points! And Gold had turned around a negative start to its morning, and was punishing the dollar and taking names later... Gold gained $33 on Friday, and ended the week at $3,373... Silver was also into punishing the dollar and taking names later as it gained $69-cents, and closed the week at $38.95...

The BBDXY ended up Friday, down 9 index points to 1,201, so after the initial knee-jerk reaction to sell dollars, there was no follow-through on Friday... I think the dollar traders thought that they had done enough for one day and so they closed their books and handed them over to Asia for the follow-through...  

The Oil traders were oblivious to the goings on with the Jackson Hole shindig and kept the price of oil trading with a $63 handle to end the week. And, as you can imagine, the bond boys began to buy bonds once again, and the yield on the 10-year Treasury's yield came down to end the week at 4.26%... 

Well, that was some kind of reaction to the words, " conditions may warrant rate cuts", eh?  I mean he could have given us more, like when it's going to warrant the rate cuts, because in his heart of hearts, he knows! The markets, and rightly so in my mind, took his words to mean at the very next FOMC meeting on Sept 17th... And with inflation rising... This all spells disaster in my mind... And I know that history doesn't exactly repeat itself, but history always does seem to be at the scene of the crime, eh?

In the early 1970's Arthur Burns was the Fed/ Cabal/Cartel chairman, and he decided to cut rates, with the inflation rate on the rise, thinking that inflation would come back down... But, with the Oil embargo causing the price of Oil to spike, and other things going on, inflation didn't come back, and instead it started rising, and didn't stop rising until Paul Volcker put an end to it in 1980-81... Almost a decade of high inflation really took its toll on Middle America... And Gold went to the moon, at that time that is. Should we expect the same kind of reaction in Gold this time? I would bet your bottom dollar it would! 

I bet that most of you couldn't tell who the Fed Heads Chairman was in the early 70's... That's because before Big Al Greenspan The Fed Heads were unknown to most of Americans, because they weren't that important... I'm just saying... I only know because my longtime good friend and former boss, Frank Trotter told me that story years ago! 

Circling back to Gold for a minute... It was quite apparent that the short paper traders weren't going to let Gold & Silver have a long runway... The SPT's were in the markets doing damage control all day, and that kept Gold & Silver from gaining more on Friday...

The total of shorts that Ed Steer posts in his Saturday letter each and every week, show that the shorts in Silver are going down. Gold a little less, but still, that's progress... Still not of the numbers that make sense but progress nonetheless... 

No Data Cupboard today, it's Sunday! But, I can tell you that on Tuesday we'll see the color of the latest Durable Goods... And then on Thursday we'll see the first revision to the 2nd QTR GDP, and on Friday we'll see Personal Income and Spending for July, along with the July PCE (supposedly the Fed Head's favorite inflation calculator... And could very well be the key indicator of when the next rate cut will come... I suspect the PCE will be benign and leave us with more questions than we had going into the print... 

Or, here's your snippet: "London metals trader Andrew Maguire, speaking on this week's edition of Kinesis Money's "Live from the Vault" program at YouTube, says major participants in the gold market no longer consider the New York Commodities Exchange and the London Bullion Market Association dependable for delivering real metal and are taking their business to Asian exchanges where delivery is quick.

Maguire adds that governments have begun to consider treating silver as a sovereign reserve asset like gold.

He believes that "paper" gold will be finished when the December gold futures contract closes at the end of November and U.S. bullion banks become obliged to comply with Basel III rules and stop selling metal they don't have."

Chuck Again... I guess this will depend on whether the Bullion Banks follow the rules, or if they find a way around them... 

Friday's major markets prices: Gold $3,373, Silver $38.95, BBDXY 1.201, Oil $63.66 and the 10-year 4.26%