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News Of A New Trade Pact, Gives Sterling A Lift…

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A Pfennig For Your Thoughts November 17, 2020 * the dollar continues to weaken, albeit very slowly…  * What’s up with the 10-year Treasury’s yield?  Good Day… And a Tom Terrific Tuesday to you! I totally forgot to mention this yesterday.. Over the weekend we learned that youngest son, Alex, learned that his offer on a house, had been accepted (I told him that meant he offered too much! HA!) and he will soon be a Home Care person… He said, you mean home owner? I said, no the bank is the owner, you just take care of the home until the loan is paid off, then you become a home owner…  He was not pleased with that… I told him most people would call him a home owner, so just go with that! I opened Pandora’s Box of replies yesterday, when I said that the election hadn’t been officially

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A Pfennig For Your Thoughts
November 17, 2020
* the dollar continues to weaken, albeit very slowly… 
* What’s up with the 10-year Treasury’s yield? 
Good Day… And a Tom Terrific Tuesday to you! I totally forgot to mention this yesterday.. Over the weekend we learned that youngest son, Alex, learned that his offer on a house, had been accepted (I told him that meant he offered too much! HA!) and he will soon be a Home Care person… He said, you mean home owner? I said, no the bank is the owner, you just take care of the home until the loan is paid off, then you become a home owner…  He was not pleased with that… I told him most people would call him a home owner, so just go with that! I opened Pandora’s Box of replies yesterday, when I said that the election hadn’t been officially declared yet… Well, I now know who they voted for! America greets me this morning with their song: Sister Golden Hair… 
On a side note, on Saturday, when Evie and Braden were here, I noticed that Evie was finally beginning to grow some hair, and it looked blonde to me, so I called her Blondie… Braden then said, “do they call you nothing, because you have no hair? We laughed and laughed at that…
OK… Yesterday, I told you that Gold was down $12 in the early trading… But soon after hitting “send” the reversal began, and with each hour that passed, Gold gained a little more, and a little more, until by noon the shiny metal has recovered the $12 loss in early trading, and was flat for the day! Good Show! For the day, Gold ended down 60-cents, acting and trading much like its little brother, Silver, who gained 9-cents on the day… Gold closed at $1,889.60, and Silver at $24.84…  I would think that Gold’s recovery yesterday, saw a lot of people buying at a bargain price… And others? Well, they’re just now getting in on the best investment since 2000….
Speaking of Gold… The good folks at GATA sent me this quote from Egon Von Greyerz, so here goes: “The ETF market is primarily a paper market or at best a market which consists of gold leased from central banks. When there is major buying of the biggest gold ETF, GLD, the Swiss refiners seldom see an increase in sales. Instead the bullion banks are lending central bank gold to the ETF. For that reason, anyone who buys gold for wealth preservation should never buy a gold ETF but real physical gold.”
This is one of the reasons that I’ve always said that physical Gold is the way to own Gold… But if you just want to own the “price” like a commodity, then the ETF is for you… Just not for me! 
I’ve explained this many times in the past, but here I go again… In the East, Gold is bought as wealth preservation, or a storage of Wealth, if you will… In the west, Gold is bought & Sold as a commodity, and therefore you see swings in price… Until people in the U.S. mostly, begin to view Gold as a storage of wealth, you’ll continue to see swings in prices that get you all lathered up and make you want to sell… I’m just saying…
And the Dollar Index, which yesterday morning was 92.76 ended the day at 92.47, and you all know what that means, right? That the currencies, for the most part, rallied VS the dollar yesterday… The euro headed higher within the 1.18 handle, and the Aussie dollar (A$) climbed back above 73-cents! The price of Oil slid by about 50-cents on the day, and gave the Petrol Currencies no reason to rally… The reason I mentioned us keeping track of the Dollar Index this week, is that I firmly believe that we are going to see further rot on the dollar’s vine going forward… Sure, the PPT is always out there lurking, but as long as the downward move is slow, then I think the PPT will stay on the sidelines…
The dollar is like the frog in the pot of water… If you drop the frog into boiling water, he’ll jump out, but if you slowly turn the heat up to boiling, he’ll never notice until it’s too late…  So, currency traders who have had a yen to sell dollars for months now, will be prudent to keep the heat on the dollar slowing rising… 
And this morning, in our daily check-in on the Dollar Index, it has fallen further and sits at 92.34, this morning… Still weakening, albeit slowly… 
In the overnight and early trading markets we have the currencies maintaining their moves against the dollar, with a little more upward movement. Gold is down $1.90 and Silver is down 17-cents this morning, but yesterday’s price action tells us that those downward moves could turn positive at any time!  
OK, last week I pointed out how the 10-year treasury yield has risen to .96% from around .67%, and wondered what the bond boys were telling us… But since then the yield has dropped again, and this morning sits at .88%… You don’t think that the Fed decided that the yield was getting too high and decided they needed to buy in bulk to push the price higher, and lower the yield, do you? Nah… That can’t happen.. Ha! As If it couldn’t happen! 
Well, word going around the street yesterday, is that the European Union and U.K. are very close to having a Trade Deal worked out… This would be HUGE for both entities, since trade between the two have be tenuous since BREXIT… 
And that brings me to a request I had in the Pfennig Replies box, from a dear reader who wanted to know what my thoughts for the U.K. pound sterling, were going forward… Well… As I explained last week, sterling is one of the major currencies that get bought as an offset to the dollar… Euros first, then yen, francs and sterling… So, if the dollar is going to continue to weaken, it won’t matter that the U.K. had debt up to their eyeballs, and their Central Bank is considering negative rates, sterling will rally…by nature of being a major currency offset… 
You’ll have investors lining up to get out of the dollar, and buy “anything” that’s not the dollar… of course if we still used fundamentals to determine what currencies to buy, this is when we would use those fundamentals… But these days it’s all “trader sentiment”, and if the sentiment is to sell dollars, you’ll have to watch to see what, for the most part, traders use as the offset currency… But, like I said the major currencies get the most play here… Throw in the Aussie dollar, and that pretty much gives you the list of currencies to watch…
You might be somewhat leery of a call for a weaker dollar with the stock market still hitting new highs, but here’s something to think about… Yesterday, a new virus vaccine with an efficacy rate of 94%, was announced, and the dollar got sold on the day… Now, aren’t those that (with apologies to Grant Williams) make you go Hmmmm…. ?
I read yesterday, that in China it’s a punishable crime to talk in public about your thoughts on the U.S. election…  So, just in passing you say to your friend, “those election results are still questionable aren’t they?” And you’ll get thrown in jail and fined… No soup for you! I wonder when that civil liberty of free speech will be taken from us? It’s already been taken away on Facebook, and Twitter… Oh, by the way you can find me on Parler now… Not that I ever sent messages out very often to begin with, but I didn’t want the “free speech police” banning me!
One day they’ll come for the Pfennig… Or maybe I’m so small that it flies under the radar? That could good and bad… Good that they don’t notice me, and bad that I don’t have enough readers to warrant going after! UGH!  And that brings me to another subject… Readers of the Pfennig… I have about ¼ of the people that I send the Pfennig to each day, open and read it… What the heck is the other 3/4’s of the list doing? If they aren’t going to read it, why see it in your email box each day, and ignore it? I find this very strange… Very strange indeed…
Today’s U.S. Data Cupboard will be stretched to the limit with Rocktober prints of Retail Sales, Industrial Production, Capacity Utilization, and added to those three, will be Business Inventories, and Home Builders report… Ok, the BHI (Butler Household Index) tells me that Retail Sales will be down significantly in Rocktober from September, which saw back to school sales bloat its number. Who knows what Industrial Production will have for us today? September has IP at -.6%, and one would have thought it would be stronger… Rocktober is expected to be stronger at 1.9%, but that’s an expectation that has nothing behind it, folks… So, we’ll have to wait-n-see what IP did last month..
There will also be several Fed bank presidents speaking at Fed conference on racism and the economy. And New York Fed President John Williams interviews Mark Zandi of Moody’s Analytics Man would I love to be the one that NY Fed President John Williams interviewed… I don’t think he would like my answers, but it would be more entertaining that the softballs that he’s going to toss to Mark Zandi!
To Recap… Both the currencies and metals rallied on Monday, with Gold climbing back to flat from being down $12 early… The price of Oil slide 50-cents on the day, and the Dollar Index fell from 92.76 to 92.49… Thus not allowing the Petrol Currencies to rally on the day, along with euros, sterling A$’s, etc. it appears that the U.K. and E.U. will shake hands on a new Trade pact in the coming days, and Chuck thinks that’s a win-win for both entities. And Chuck also points out that the dollar got sold yesterday, on a day when a new virus vaccine was announced… Hmmmm….
For What it’s Worth… I hope you all had the opportunity to read yesterday’s article all the way through… Well today I have another rant from Charles Hugh Smith, of whom I’ve quoted a few times in the past. In this article he explains that the “Great Reset” has already happened, and it can be found here: https://www.blacklistednews.com/article/78557/the-great-reset-already.html
Or, here’s your snippet: “Put another way: the elites have cannibalized the system so thoroughly that there’s nothing left to steal, exploit or cannibalize.
The global elites’ techno-fantasy of a completely centralized future, The Great Reset, is addressed as a future project. Too bad it already happened in 2008-09. The lackeys and toadies tasked with spewing the PR are 12 years too late, and so are the critics listening to the PR with foreboding.
Simply put, events outran our understanding of them. The future already manifested while we were trying to cram the present arrangement into an obsolete conceptual framework.
In broad-brush, the post-World War II era ended around 1970. The legitimate prosperity of 1946-1970 was based on cheap oil controlled by the U.S. and the hegemony of the U.S. dollar. Everything else was merely decoration.
The Original Sin to hard-money advocates was America’s abandonment of the gold standard in 1971, but this was the only way to maintain hegemony. Maintaining the reserve currency is tricky, as the nation issuing the reserve currency has to supply the global economy with enough of the currency to grease commerce and stock central bank reserves around the world.
As the global economy expanded, the only way the U.S. could send enough dollars overseas was to run trade deficits, which in a gold standard meant the gold reserves would go to zero as trading partners holding dollars would exchange the currency for gold.
So the choice was: give up the reserve currency and the hegemony of the U.S. dollar by jacking up the dollar’s value so high that imports would collapse, or accept that hegemony was no longer compatible with the gold standard. It wasn’t a difficult decision: who would give up global hegemony, and for what?”
Chuck again… Yes, the article is much longer than the snippet, and once again I implore you to read it, please, pretty please with sugar on top? And I thank long time reader Bob for sending me the link above yesterday… 
Market Prices 11/17/20: American Style: A$ .7319, kiwi .6895, C$ .7639, euro 1.1878, sterling 1.3260, Swiss $1.0983, European Style: rand 15.3907, krone 9.0607, SEK 8.6151, forint 304.40, zloty 3.7827,  koruna 22.2950, RUB 76.69, yen 104.21, sing 1.3432, HKD 7.7526, INR 74.42, China 6.5837, peso 20.34, BRL 5.43.27, Dollar Index 92.34, Oil $41.25, 10-year .88%, Silver $24.67, Platinum $934.00, Palladium $2,345.00, and Gold… $1,887.70
That’s it for today… Well, I tried to explain to Alex last night that in the first few years of his home loan that he’ll only be paying interest, and not much principal, which might lead him to thinking of paying a little more on his home loan each month than the payment scheduled amount. A little fatherly advice that I doubt he’ll listen to, because my other two kids never listened to my fatherly advice! HA!  When I was a young man, and my dad talked to me, I was all ears… But these days kids think they know it all… I’m just saying…  Well the NHL announced that they are moving the start date of the season to January from December… More time for the Tampa Bay Lightening players to spend time with the Stanley Cup! Stevie Ray Vaughn takes us to the finish line this morning with his song: The Sky Is Crying…  It’s the live version and it’s a good one! I hope you have a Tom Terrific Tuesday and please remember to Be Good To Yourself!
Chuck Butler
Creator & Editor of:
A Pfennig For Your Thoughts

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