Chuck's Back, So Currency Rally Ends.
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In This Issue.

* Chinese data lifts global growth outlook.

* Gold likes the Chinese data..

* Eurozone to exit recession?.

* Indian rupee gets some long-awaited love.

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

Chuck's Back, So Currency Rally Ends.

Good day. And a Marvelous Monday to you! Yes, I'm back, even if for only one day, before I head out again! I know, my timing on all this hasn't been the best, and I don't know what I was thinking booking travel for tomorrow, when I don't really need to be in San Francisco until Wednesday, but oh well, maybe I can use the time to work my way through the nearly 1,300 emails that now sit in my in-box. I did monitor my email box while I was on the beach, and people kept trying to roll me back in the water, but I'm sure I missed a few that need to be addressed, so, I'll get to that as soon as I can.

Thanks to Chris and Mike for their great contributions to the Daily Pfennig the past 3 weeks. I'll be leaning on them again this week, but then I think I'm good to go here at home until my annual Christmas vacation. Chris was on top of the goings on last week, with his daily comments about the dollar drifting lower, and lower. And sure as dookie, I come back, and the dollar rebounds! There seems to be a daily battle for ground between the markets and the economists. The markets want to believe that the Fed won't taper QE, and the economists continue to see the economy growing just enough to allow the Fed to taper.

After all this time away, I remain steadfast in my opinion that the Fed is being overly optimistic about the economy, for this economy is so stimulus dependent, and the Fed just can't see the forest from the trees here. But, I also continue to say, let them taper, and then they will find out in a couple of months that it was a horrible experiment. And again, don't get me wrong, this is not what I want to see, it's what I believe the Fed Heads will see, and react to in the coming months. In my latest edition of the monthly customer letter called the Review & Focus, I highlight these thoughts and said, "But before we go on any further, how many times in the past 5 years have we heard the Fed talk with optimism about the economy only to implement QE or maintain their zero interest policy (ZIRP) because their forecast proved too optimistic? Remember all the talk about "green shoots"? Or remember the talk of a strong economy after round one of QE, or after round two of QE? I think you get the picture."

Last week the data cupboard was not exactly the kind of stuff that fills economists' dreams at night, but this week we get Retail Sales for July tomorrow, and that will get everyone lathered up. I have a new way of calculating the BHI (Butler Household Index) since I don't get to see all the packages that come to the front door, I simply check out our credit card statement. No, I don't look at every single thing, I simply check the total for that month, since each month it gets cleaned out, and last month's bill wasn't that bad, especially when I take out my traveling expenses. So, I'll say that the BHI indicates that Retail Sales for July will be OK. nothing great, and nothing to indicate that back to school sales were included, if there were any to speak of.

While I was in Vancouver, I had the chance to listen to James Rickards talk. He doesn't paint any pretty pictures for the dollar folks. And While I'm 50/50 on the total collapse thing for the dollar, with the other 50% still stuck on trends, Rickards is 100% all-in on the total collapse thing for the dollar, and he's not of the thought that this collapse is going to take some time to work its way through. So, while I continue to believe that the dollar will lose its reserve status by the end of this decade, I guess that plays well with his collapse of the dollar, for if it's collapsing it certainly won't be the reserve currency of the world any longer!

And that brings us to China, the likely replacement for the dollar as the reserve currency. Yes, China has seen some chinks in their economy's armor exposed this year, but that's the great thing about having a strong economy that grows at 10% clips, when you slow down, you slow down to 7%... But when you have an economy that's barely hanging on to positive growth by the skin of their teeth, and they slow down even more, Uh-Oh! That's when you go back to the table and come up with new ways to calculate GDP, so that things don't look that bad. Oh wait! That's what the U.S. I almost forgot about that!

Anyway, the slowdown in China may be short-lived, as July trade data and industrial output that printed last Friday, were stronger -than-expected. These reports should be good for the renminbi /yuan, as the currency had slowed the appreciation due to the slowdown, but that all looks like it could be getting reversed, at least for now.

As I said above, the dollar is rebounding this morning, and the lofty figures that the Aussie dollar (A$) and euro had last Friday, have been backed off from. The best performing currency overnight is Gold. The shiny metal is up $13 this morning, and after spending a day below $1,300 last week, it has picked itself up by the bootstraps and looks good again. Gold's move higher can be attributed to the stronger-than-expected economic reports in China last Friday, as the global growth campers are pretty excited and that usually spells good results for Gold.

The A$ is done 1/2-cent this morning, falling back below the 92-cents figure. Last week, the markets dealt with the RBA's rate cut, but didn't seem to let it get in the way of moving the A$ higher. Remember me telling you that the rate cut had already been priced into the A$'s value, so the actual cut may not be that big of a thing? Well, that's exactly what happened. and. I say to myself, "I love it when a plan comes together!" HA!

The euro is hanging by a thread to 1.33 this morning, but even if it falls below the figure, I would have to say that this has been a good summer for the euro. The relative calm that I first talked about a year ago, or maybe even longer, I don't recall at this point, continues throughout the Eurozone. Yes, there are fires here and there, but they are contained, and we move on. And all the while the euro stands at the top of G-10 currencies for the past 12 months with an 8.24% return. Oh, and the Eurozone will most likely exit their recession when GDP for the 2nd QTR is printed on Wednesday. That will go a long way toward underpinning the euro, folks. And no, their GDP isn't going to be through the roof, and will be nascent at .2%, but. the euro won't have that nametag stuck to it every time someone mentions it. "Recession".

So. Have you heard about our new MarketSafe CD? It will officially have the details released on Thursday 8/15, this week... So I guess I can't really get into it yet. If you were one of the 50 people that attended my workshop in Vancouver, you were given a sneak preview. I was up against Doug Casey, James Rickards, and Frank Holmes that day. You had to really want to hear what I had to say VS those Heavyweight speakers. But if you did, you got the skinny on this CD before anyone else! Our marketing partners are already hitting the streets with info on the CD, so that's where you might have heard about it. We'll have a website and everything ready on the 15th. be there or be square!

One of the other best performing G-10 currencies in the past 12 months is the Swiss franc, which you would have to think would be the case given it's tie to the euro. I found the recent comments by the Swiss National Bank (SNB) President, Jordan, very interesting in that he said that he had no intention of scrapping the ceiling that was placed on the franc VS the euro at 1.20 almost 2 years ago, anytime soon. It was interesting that another SNB member, Danthine, said over the weekend that the moment the SNB raises interest rates, the ceiling will come to an end. Why was that interesting? Because interest rates in Switzerland are going nowhere this year, or next year, so why talk about it now? That's the SNB, they like to confuse the markets when they can.

Chris talked a bit about the Canadian dollar / loonie last week, and how it had lagged the other commodity currencies. I was about to write to him and remind him what I told everyone when the Bank of Canada (BOC) announced their new Gov. that he came from the "Trade" side of the room, and we all know what the Trade sector is always stammering for. a weaker currency. But the new BOC Gov, Poloz, is going to have a difficult time keeping his agenda hidden, folks, for the news last Friday from China was enough to light a fire under the loonie at least for the time being.

While on vacation, I heard that the President is going to announce a new Fed chairman soon. I get a kick out of my friend, Bill Bonner, throwing his hat in the ring for Fed Chairman, and then following up with letters saying that he has yet to receive a call regarding his nomination. To me, it will take someone like Bill Bonner to turn this thing around, but seriously, I doubt he would want the pain of that job! Especially if he would do what was needed! But, we'll get the same regurgitated two-handed economist that gets named, you can bet your sweet bippie on that. For the applecart can't get upset now!

The beaten and beleaguered Indian rupee is finally seeing some love, after July Trade data was the first piece of good news that would help the rupee in a month of Sundays. The Indian Trade Deficit remained flat in July from June with exports improving significantly, rising 11.6%, but with the weak rupee, helping exports, imports were obviously more expensive, and thus the 6.2% decline in imports in July. You see, this weak currency to help exports isn't everything to all people. Unintended consequences always rise up and slap you in the face. At least for India, the Trade Deficit was flat in July, and that has helped the rupee today.

Did you hear what the Cleveland baseball fans were chanting to the Detroit ballplayers last week when the Detroit Tigers visited Cleveland? The Cleveland fans were chanting, "De-Troit's bank-rupt, De-troit's bank-rupt". Man, I thought. that's cruel. But given that probably none of the Detroit baseball team was actually from Detroit, I'm sure it didn't mean dookie to them.

I wrote out a long story about all that chanting, but decided against adding it, for I was pretty tough on the Beaver, and even though I'm full of you-know-what and vinegar this morning, it's better that I not ruffle the feathers on my only appearance in 3-weeks!

For What It's Worth. I found this on the King World site, and it's another rant from former U.S. Treasury Official, Paul Craig Roberts that I liked. So. here's Mr. Roberts, with his thoughts on the Gold Manipulators that he has previous called out.

"What this shows is the consequence of repealing the position limits on speculation, because you now have a situation where derivatives drive the actual physical market. This is the exact opposite of what sound economics would have.

In previous times, the actual markets drove things and derivatives were the tail of the dog. Now the derivatives are the dog. Now stocks, bonds, gold and the commodities, they are the tail that gets wagged by the derivatives....

This is a completely unstable situation, and I don't understand why it's permitted or why it's tolerated. I suppose it's simply because the authorities are so corrupt that they've allowed the financial system to rig everything in their behalf.

But I don't think you can have this go on forever. You can't, forever, have more claims on assets than there are assets, and a financial system that's in that condition is in a very serious situation. And it's true across the board, it's not just in the gold market.

If you look in the wider derivatives market, the total sum is huge! It's many multiples of all the wealth in the world added up together. When you get a situation like that it's got to have some (type of) fantastic explosion."

Dr. Roberts also added: "Paper claims have exceeded the actual amount of gold ever since they took the limits off of speculators' positions. And this is what we've been seeing, isn't it?

We've been seeing the demand for physical gold rising, and it's being exported (from the West) to Asia very rapidly, and yet the paper price, the derivative price, has been driven down (laughter ensues). It's nonsensical. Why this doesn't result in an enormous investigation with arrests and indictments, it just shows that the system is corrupt. Wherever you look it's corrupt."

Chuck again. Yes, I say throw them all in jail! Problem is simply that this is what the powers to be want, for once again let me remind you that if your job was to maintain the value of the dollar, and you saw the dollar on the slippery slope against Gold, what would you do to save your job?

To recap. The drifting of the dollar has been put on hold today, as the dollar rebounds from the calls this weekend by economists, that they see just enough growth to allow the Fed to taper. China saw some stronger than expected data last Friday, which has Gold moving higher again this morning, and Chuck thinks the Eurozone is going to exit its recession on Wednesday when 2nd QTR GDP prints.

Currencies today 8/12/13. American Style: A$ .9165, kiwi .8010, C$ .9705, euro 1.33, sterling 1.5495, Swiss $1.0785, . European Style: rand 9.8815, krone 5.8730, SEK 6.5260, forint 223.60, zloty 3.1520, koruna 19.47, RUB 32.97, yen 96.70, sing 1.2620, HKD 7.7555, INR 61.27, China 6.1665, pesos 12.63, BRL 2.2715, Dollar Index 81.40, Oil $105.99, 10-year 2.58%, Silver $20.95, Platinum $1,498.50, Palladium $739.75, and Gold. $1,326.37

That's it for today. While I was gone, my granddaughter, Delaney Grace turned 6! Can you believe that? I say she's 6 going on 16. But she'll start kindergarten in a few days. I say good luck to that kindergarten teacher! Delaney will be running that school in no time! HA! I talked to a Dow Jones reporter while on vacation, and did a video in Delray Beach, so I got to visit with my good friend, Erika Nolan. So, it wasn't all "beach time" for me while I was gone. My beloved Cardinals have run into a real tough stretch, but I think they have the players to get out of it, hopefully before they give up all the good they accumulated in the 1st half of the season! I won't even start on the drugs thing going on right now, it makes me sick what's going on in NY with that player I won't name. I'll be at the Money Show this week in San Francisco, a city that I do enjoy visiting. My memory always flashes back to the time I was playing with the band, and we performed at the Cannery in S.F. that was on our way to L.A. where we auditioned for Dick Clark people. That was 40 years ago. YIKES! Oh well if you're in the area of the Marriott Marquis this week, stop by to say hi! Until next Monday. I hope you have a Marvelous Monday and Wonderful Week!

Chuck Butler
EverBank World Markets

Posted 08-12-2013 4:43 PM by Chuck Butler