All Three Anti-Dollar Assets On The Rise.
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In This Issue.

* U.K. 1st QTR GDP beats estimates!.

* Merkel wishes for higher rates for Germany.

* Riksbank gets on Chuck's bad list.

* Gold physical demand continues to soar..

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

All Three Anti-Dollar Assets On The Rise.

Good day. And a Tub Thumpin' Thursday to you! My beloved Cardinals got their brooms out yesterday and swept the Nationals in Washington D.C. The Cardinals have to be persona non gratis in Washington D.C. given the 9th inning rally last year to knock the Nationals out of the playoffs, and now this sweep. A better day for me yesterday, but today has started out on the wrong foot, with me oversleeping by an hour this morning! UGH! So. no time to dawdle. Let's go to the tape!

Well, the dollar seems to have exhausted its bias that it held earlier this week, and the green/peachback looks very iffy this morning. The currencies, led by pound sterling, (when was the last time I said that!?) are taking liberties with the dollar, along with the Commodities led by Gold and Oil, the two anti-dollar commodities. There was more rot that was exposed on the U.S. economy's vine yesterday, and a record low fixing in the Chinese renminbi. All this has ganged up on the dollar this morning, and the bias the dollar held earlier this week to buy, has gone bye-bye.

OK. so what lit the fire under the pound sterling? Well, grasshopper, I'm glad you asked! 1st QTR GDP for the U.K. printed stronger than expected, thus showing the markets and the world that austerity can be implemented and some growth eked out after all. U.K. 1st QTR GDP printed at a whopping (NOT!) +.3%, but the forecasts were for a .1% rise, so it came in stronger than expected, and would put annual growth above 1%, which doesn't sound like anything to write home about, but in this day and age in the U.K. a greater than 1% GDP for 2013, will be celebrated, for sure!

But, I'm not here waving a flag for pound sterling folks. The U.K. has far too many problems to sort through, before the currency can be added to my roster of currencies that have strong fundamentals. But it's nice to see "cable" have its day in the sun.

The Aussie dollar (A$) has climbed back above $1.03 once again. I told you the other day that the recent history saw the A$ bounce higher every time it slipped. And here we go once again! I think that this rebound in the A$ is coming about over the fact that the Chinese, after a couple of days allowing the renminbi / yuan to weaken, have pushed the trading band envelope pretty aggressively since. As I said above, the renminbi has been pushed to record level VS the dollar. I know that waiting for renminbi gains is like watching paint dry. but they are there folks. The renminbi has gained 1% so far this year, and over 2% in the past 12 months. Slow and Steady.

Yesterday in the U.S., Durable Goods Orders printed a very weak number for March's report. Durable Goods Orders (DGO) dropped sharply in March, falling -5.7%, thus adding to the economic reports we've already seen for March that have really shown that a spring swoon for the economy is going on right now. There were some components of the DGO report that the perma-bulls in the U.S. will point to and walk around like 20-game winners. But to me, you can always find something that spins the story your way. Shoot Rudy, I guess I do that myself, so there!

The point I'm attempting to get to here is this. The U.S. economy is slowing down just when the Fed Heads are talking about removing stimulus. But, I believe that "talk" will all fade away soon, and replacing the talk about removing stimulus, will be talk about extending it. Now, that's what I thought all along would happen, but when the Fed Heads began to gain numbers of fellow Fed Heads that agreed with the tapering of the stimulus, I began to squirm in my seat. But, now things are heading back to "way Chuck sees them".

The price of Gold is up about $15 this morning, pushing toward $1,450. I had a reader send me a note, and asked me to explain in the Pfennig, why paper gold if it is not backed by physical gold holds more pricing weight than the actual physical supply/ demand of Gold. I the market being deceived? Ahhh. grasshoppers, yes it is. And the reason the paper trades pushed the price of Gold downward so viciously, was because of the size of the paper trades. When you can write a naked short ticket without fear of regulators throwing you in jail, you go for the gusto! So, that's how that happened.

But Gold has been picking up the pieces folks. and this morning sits at a 10-day high. as physical demand has taken over, for how long before the paper shorts return no one knows, but physical demand is very strong right now. For example, the U.S. Mint is reporting that through the first 23 days of April, they have sold more Gold Coins than in any month since December 2009! And April's figure so far of 196,500 ounces of Gold sold, is triple the number in March.

Here's a cool chart that I found on one of my fave web-sights, You'll have to go to the Pfennig blog site to view it though, as the text letter doesn't carry the ability to post charts, etc. simply go to: to see it.

Did you hear what German Chancellor Angela Merkel had to say yesterday? I found it to be very interesting. She commented that "higher ECB rates would be better for Germany". Don't for one minute think that those comments weren't intended to send a message. Ok, let me set this up. recall last week, I told you about Bundesbank (Germany's central bank) President, Weidmann, jawboning rates lower? Well, Merkel decided that he needed to be corrected, and so she made the comments about higher rates being better for Germany. And like last week when Weidmann made his comments and the euro got sold, Merkel's comments have boosted the euro by 1/2-cent this morning. Good for her!

And then something I saw come across the screens this morning really bothered me. Sweden's Riksbank issued a statement and in the statement they predicted that the currency's recent gains are coming to an end. What? What the heck are you doing Riksbank? I guess the exporters got to you too. sadness here. as I always liked the Riksbank. but no longer if they are going to willy nilly make statements like that!

Well, I told you at the top that the price of Oil was higher. The price of Oil has steadily moved higher all week from $88, to $89, and now this morning to nearly $92. Remember. Oil, along with Gold, and euros, are the anti-dollar trades. So, when all three of these are rising at once, you know the bias to buy dollars has gone bye-bye. at least for now.

The markets all change so swiftly these days, as trader and investor sentiment is the driving force, and not fundamentals. The one-day swings in currencies, and Gold are something that never used to be seen, as the moves were driven by fundamentals only. now sentiment that reacts, most times with a knee-jerk, to news, that's so readily available from all corners of the world, drives the near-term prices. Of course fundamentals will eventually prevail. but day-to-day, sentiment that has reacted to news stories, is what drives prices so crazy.

Then There Was This. I saw this on Ed Steer's newsletter this morning, of which he pulled from, and I just had to use it in the TTWT section. It's an interview with Robert Shiller. "The 32-year decline of interest rates and inflation may soon end with a thud, says Yale economist Robert Shiller.

Interest rates have been declining for decades now," he writes in The New York Times. "Clearly, that cannot continue on the same track for another 10 years, because rates would have to turn negative."

As for inflation, it can rise. It's easy to imagine that both [inflation] and interest rates will rise substantially, creating a bonanza for homebuyers who have already locked in low rates. And because rates are so low now, they could climb a lot once they turn."

As I said in January of me in 2013 and I'll let you know if the bottom is in for the U.S. real estate market. Yes, it is...but with the country on the edge, it's the last thing I would be spending my money on, as I would be looking for a way to get that money out of the country. So the next 10 years might replicate the 1960's and 1970's, when inflation and interest rates kept rising."

Chuck again. I think Mr. Shiller hits the nail on the head with his thoughts on inflation and interest rates.

To recap. The bias to buy dollars has faded, and the anti dollar assets of Oil, Gold and euros are all stronger this morning. The U.S. economic spring swoon continued to show more rot on the vine with a -5.7% plunge of Durable Goods Orders in March. That news, and the news that China had fixed the renminbi / yuan at 19 -year highs VS the dollar, really has the currencies and commodities pushing the dollar down today.

Currencies today 4/25/13. American Style: A$ $1.0325, kiwi .8545, C$ .9780, euro 1.3075, sterling 1.5445, Swiss $1.0605, . European Style: rand 9.0815, krone 5.8515, SEK 6.5740, forint 230.30, zloty 3.1750, koruna 19.8070, RUB 31.18, yen 99.15, sing 1.2375, HKD 7.7640, INR 54.22, China 6.23, pesos 12.14, BRL 2.001, Dollar Index 82.50, Oil $91.86, 10-year 1.70%, Silver $23.30, and Gold. $1,445.41

That's it for today. There was something I was saving for the Big Finish and now I've forgotten what I was going to say! UGH! If I dawdle here long enough it will come back to me. but, since I overslept this morning, I don't have time to dawdle! Andrew and Alex's water polo team pulled an upset last night, scoring two late goals to beat DeSmet, a team they haven't beaten in eons! They were very happy afterwards. I leave Alex little notes every morning while his mom is gone, I'm sure he finds them to be dumb, but I don't care. But one thing I tell him in each note is the same thing I say to you.. Have a Great Day! I hope you have a Tub Thumpin' Thursday!

Chuck Butler


EverBank World Markets



Posted 04-25-2013 10:29 PM by Chuck Butler
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