Riksbank Changes Horses.
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In This Issue.

* Risk Assets see some healing.

* Central Bank meetings today.

* China plays games with G-20.

* U.S. data not so good.

And, Now, Today's Pfennig For Your Thoughts!

Riksbank Changes Horses.

Good day. And a Wonderful Wednesday to you! A cold, wet, soggy day here yesterday. We are expecting more of the same today, except it is supposed to warm up a bit. April showers bring May flowers, right? What do May flowers bring?... Pilgrims! HA! Gotcha! Dusty Springfield is singing to me this morning, so I've got that going for me!

Well. I asked the question yesterday. "Will the healing continue?" And, the answer was. yes, although at one point in the day, it appeared that the NY Boys would get Gold back on the slippery slope, but that was not to be, and we ended the day up nicely. This morning, Gold is up another $16, so. the healing has continued, but for how long? Was the selling overdone? Hey, is the Pope Catholic? Of course the selling was overdone, but, when the paper trades are flying around, who knows when the roulette wheel is going to stop.

Trader Tim, (is what our little Christine calls Tim Smith) our metals trader, tells me that he sold a truck load of physical Gold on Monday. So, it just confirms what I've been saying, and that is the Boys with the wink and nod from the Fed / Gov't, started the selling in Gold with huge paper trades, in an effort to cause the moms and pops to panic and sell their physical Gold. I didn't check with Trader Tim on my way out yesterday, so I don't know his mix yesterday, but with the price of Gold soaring yesterday, I doubt the panic at the Gold disco is over, just yet.

Boy. Paul Craig Roberts, the former U.S. Treasury Sec. is doing his best Aaron Neville impression and telling it like it is, with regards to Gold manipulation. I sent this note to the Big Boss, Frank Trotter, and Chris Gaffney yesterday, but I'm not sure they really want to participate with me on this Gold Manipulation quest I'm on. But I'm sure some of you are willing to participate, and for you, I give you this link to an interview with Paul Craig Roberts about the Gold takedown. After reading it, you'll probably say to yourself, "self, this is the same scenario that Chuck explained to us last summer, and now this guy is saying that what Chuck has been talking about is actually how it happened". click here: http://www.paulcraigroberts.org/2013/04/13/assault-on-gold-update-paul-craig-roberts/

Ok. glad you're back! Well, Gold wasn't the only thing healing yesterday. The euro was on a nice move higher, and was pushing the 1.32 envelope as I left the building yesterday. The euro has slipped back a bit, but was still looking pretty resilient yesterday. What I keep telling people as they ask me how the euro, with all the negativity it has received for over two years, is still trading at a greater value by 1/3-rd cent than the dollar. I ask them. "what does that tell you about the dollar? "

Yes, with all the negative things that have happened in the Eurozone, and all the economists and writers screaming from the rooftops that Eurozone would collapse, and the euro was do the same, we still have the euro trading at a greater value than the dollar. I tell audiences all the time that while the euro's makeup of countries may well change in the next 3-5 years, the single unit is not going to get broken up, as many think it will. In fact, I think that in 3-5 years, that the euro will be far better off, having lived through the pain of austerity, but when you come out of the austerity gauntlet in 3-5 years, your balance sheet will look healthier, your economy ready to take off, if not already, and the euro will be the cat's meow of currencies once again.

You might not agree with that. but that's my story, and I'm sticking to it! I saw the daily quote on the Bloomberg this morning, and it said, "it you aren't annoying someone, what good is it to write"? HA! I'm sure I annoy people every day!

Well. one of our fave currencies over the years, the Swedish krona, is feeling the strain of a central bank that has changed horses in the middle of the stream. Sweden's Riksbank, met this morning (for us) and while keeping current rates unchanged, made material downward revisions to their rate outlook. The Riksbank had led the markets to believe they would begin their tightening cycle this year. But that has now been put off until the 2nd half of 2014. So, the krona saw some unwinding of positions that had been recently taken on, in hopes of benefitting from a rate hike soon.

I find it interesting that the Riksbank put the blame on this delay to its tightening cycle on the strength of the krona. And the markets reacted very unwisely, with their knee-jerk reaction selling of the currency. I say that because, it makes more sense to me for a Central Bank to use the currency's strength or weakness to help them fight inflation and keep the economy running smooth. Like Singapore does. But the markets have a myopic view of these things, and only see rates not changing now, so sell the currency. If I ran the world, these guys and girls would have to go to school and learn these things before they are allowed to trade! HA!

Speaking of Central Bank meetings today. The Bank of Canada (BOC) will have its last meeting that's run by outgoing Gov. Mark Carney today. I'm sure Canada's interest rates are going nowhere, as I've explained before. Canada can't let interest rates get too far out of whack with its neighbor to the south, even with a housing bubble going on in Toronto and Vancouver. But I think Canada's economic slowdown this year, has proved Carney's insistence on keeping rates from going higher to be correct. As opposed to Chuck's view that the housing bubble was in need of higher interest rates. Carney has guided the Canadian economy and balanced these things. I know why the Bank of England wanted him so badly.

But none of this "guiding the economy" has helped the Canadian dollar / loonie, but it hasn't hurt it either! The loonie's drop from parity to the current level of .9750 was a result of the economic slowdown I mentioned above. But as I say all the time when I mention that Canada and the loonie is a currency that investors should look to add to their diversified portfolio, that a steady, strong currency is a good thing. And 97-cents is a far cry from the 65-cents that the loonie traded at about 11 years ago!

OK. earlier this week, I told you how China's fixing had the renminbi / yuan at a 19-year high VS the dollar. And the currency has continued gaining VS the dollar this week at each fixing. It took me a couple of days to see this, but of course the renminbi / yuan is gaining this week. G-20 will meet at the end of the week! The Chinese play this game ahead of every G-20 meeting, so that when the G-20 members bring up the weak renminbi, the Chinese can say, "what are you talking about, our currency just hit a 19-year high!" But when the G-20 members go to their respective homes, the Chinese put the brakes on the daily gains of the renminbi / yuan.

Why would this week's G-20 meeting be any different? The good news is that the renminbi / yuan is stronger. I don't care the semantics of how it got stronger, or why it got stronger, only that it got stronger VS the dollar!

Another Central Bank meeting scheduled today. The Brazilian Central Bank (BCB), just might pull a rabbit out of their hat, and hike rates! Yes, after all the rate cuts and the throwing everything, including the kitchen sink at investors in real, the BCB is faced with an accelerating inflation rate. Yes, after 15 months of cutting rates by 525 basis points (5.25%) , the BCB just might be looking to hike rates today.

I hope the BCB learned a lesson with what happens when you aggressively cut rates while inflation is still strong in your economy, lie it was in Brazil when they began the rate cuts in August of 2011. They did the rate cuts, they claim but we know better why they did them, to promote growth. Well, that did little to promote growth, as GDP was only .9% last year! So. we might see a rate hike today. and then we might not see one. My guess is that we will see a rate hike, and that will be a good thing for the real.

The Aussie dollar ($) and New Zealand dollar / kiwi, which just last week were pushing the currency gains envelope, saw some healing yesterday, as the fears of a complete meltdown dissipated, and the need for yield differentials returned to investors minds. As I keep hearing readers say to me. "Chuck, don't get so upset, this price drop in everything gives us opportunities to buy cheaper". And yes, that's true. but the drop was so violent, that I'm still having difficulty turning my head, as the my neck was whipsawed so badly!

Well respected analyst, Dennis Gartman, said in his daily letter that the trading we saw in Gold on Monday won't ever be seen again in our lifetimes. I sure hope he's right! I never want to see that again! Mr Gartman goes on to talk about "standard deviations" and other stuff that makes no sense to me. So, let's just say that you get a day like that every 4,776 years, so we can expect to see that again on May 17, 6789.

The economic data from the U.S. yesterday was not so good. Industrial Production grew by .4% in March, but that's down from 1.1% in Feb. And Capacity Utilization, one of the few forward looking data prints, remained about the same as the downward revised Feb print of 78.3%... Housing Starts kicked tail and took names later in March.. So that was good. but manufacturing production fell -.1% down from Feb's .9% gain. March is turning out to have been a very weak month, except in housing. And then the stupid CPI. consumer inflation in the U.S. as reported by the Gov't fell -.2% in March. So there! You didn't experience any inflation! Forget about the increases in every day stuff, like insurance, tuitions, food, gas, clothes, baseball game tickets, etc. the government said you didn't experience any inflation so that's that!

Then There Was This. A Dear Pfennig Reader that lives in Australia, sent me a note last night, that made me sit down in my thinking chair and think. (HA! That's for my grandson Everett!) The Dear Reader, said that Australian mining companies are having difficulties and he wouldn't be surprised to see one or two close down soon, which would put pressure on Gold / Silver supplies.

Then there's the story going around that physical demand is going crazy wild. The Perth Mint reports that demand is, "Same, retail demand is crazy." The Indians are lining up to buy at these cheaper prices. and so on. So. what to do? Should we now look to buy at these levels? Or will we see more takedowns? That's the question that's driving me crazy, folks. I had a brief conversation with investment sage, Joe Losos, yesterday, and he told me that he was thinking of buying more Gold at these levels. Hmmm.

To recap. The healing continued throughout the day on Tuesday. And this morning is carrying through also. The healing looked shaky at one point yesterday, but the buyers prevailed in not only Gold, but the currencies too, with the euro flirting with 1.32 most of the day. Lots of Central Bank meetings today. Maybe the Brazil Central Bank will hike rates today. now that would be fun!

Currencies today 4/17/13. American Style: A$ $1.0345, kiwi .8475, C$ .9750, euro 1.3125, sterling 1.5240, Swiss $1.0805, . European Style: rand 9.1630, krone 5.7560, SEK 6.4565, forint 224.20, zloty 3.1345, koruna 19.6850, RUB 31.44, yen 97.80, sing 1.2350, HKD 7.7625, INR 54.20, China 6.2342, pesos 12.20, BRL 1.9905, Dollar Index 82.17, Oil $88.05, 10-year 1.70%, Silver $23.10, and Gold. $1,374.10

That's it for today.,.. Cardinals and Pirates got rained out in the second inning last night, good thing too, because our starting pitcher couldn't get anyone out! Our Blues won in a shootout, but where have all the goal scorers gone? Long time passing. No baseball, the hockey game was boring, what to do last night? I had to read! UGH! If I had known when I was younger that I would do all the reading I do now, I would have taken an Evelyn Woods class! HA! I was in the office for a very long day yesterday, and felt it when I got home! But no worries, I should be back on schedule today! My oldest son, Andrew, teaches high school students, and several years ago, he began showing them the documentary that my friend, Addison Wiggin, produced, I.O.U.S.A. Andrew was looking for an update. But, there's not one to be had. So I directed him to the U.S. Debt Clock, and he told me he already used that! WOW! Talk about a proud dad! The good news is that Andrew tells me that his students get pretty upset with the direction of the debt in the U.S. so. maybe there's hope. And with that, I hope you have a Wonderful Wednesday!

Chuck Butler
EverBank World Markets

Posted 04-17-2013 11:06 AM by Chuck Butler
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