Another New All-Time Record Gold Price!
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In This Issue..

* Currencies continue to gain on dollar...

* Gold nears $1,300...

* RBI hikes rates, boots rupee...

* More on TARP...

And Now... Today's Pfennig!

Another New All-Time Record Gold Price!

Good day... And a Happy Friday to one and all! If you are a holder of Gold or Silver, you'll be thinking this to be a Fantastico Friday! For the rest of the non precious metals holders, it can still be a Fantastico Friday, it all depends on what you put into it! Geez, that sounded like my mother! I've much to talk about today, so it's going to be a collection of things on my mind this morning, with an update, of course, of what's happening in the currencies, and metals...

Front and Center this morning, we have more upward movement in the currencies, and precious metals. Gold has reached, yet another, all-time record at $1,280 this morning... And Silver is $20.80... On their way to $1,300 and $21, eh? Sure looks like it to me, but then, that's just me, I could be wrong, right?

The euro is trading well over 1.31 this morning, and the Aussie dollar is nearing a 2-year high at .9455... Yes, it was July of 2008, the last time the Aussie dollar (A$) saw the other side of .9450, and then it was falling from its all-time high of 98-cents that it reached earlier in the summer of 2008.

Basically, I think what's really moving these risk assets these past few days is that the markets are not worrying about a double-dip for the U.S. economy any longer, and if that's not going to happen, investors are looking for something outside of the dollar, for there's no need for a so-called "safe haven"...

Personally, I think the markets are wrong, but I was taught many years ago, that the markets are never wrong, and when you go against them, you lose... So, I guess I'll have to put my call of a double-dip in my back pocket for now, and play ball with the markets, eh? I mean, I think there will still be a double-dip, but I doubt that it will feed a flight to safety again...

OK... No intervention from Japan overnight, so their entry into the "currency manipulation game" otherwise known as intervention, for now, is a one-and done... I don't think it will continue to be a one-and done, that is as long as traders still have the intestinal fortitude to fight a Central Bank!

Speaking of Japan's intervention... Remember when I used to ask the question about, why does the U.S. beat on China, but let Japan go Ollie, Ollie, Oxen free?

Well... now you've got Japan purposely weakening their currency, and the U.S.

Treasury Sec. Geithner is still beating on China!

Japan's economic status is far more mature than China's, and yet, Geithner is still beating on China?

Serenity now!

The Reserve Bank of India (RBI) raised interest rates in an effort to cool inflation, the RBI hiked its repo rate to 6.00% from 5.75% and reverse repo rate to 5.00% from 4.50%. The market consensus was for a 25 bps hike in both rates. In its statement, the central bank said that "inflation may remain high for some months". The rate hike boosted the rupee higher VS the dollar, in a move that we've not seen from the rupee in some time!

Yesterday, Spain saw a well received auction of Spanish Gov't debt, thus allowing Spain to kick the can further down the road...

Next week, on Tuesday, the FOMC will meet... And I can't being to tell you how many rumors are going around about how the FOMC will announce at this meeting, their new round of Quantitative Easing. And the thought of more Quantitative Easing is hanging over the dollar like the Sword of Damocles...

While, we're here in the U.S.... Did you see this story? Bank of America Corp., the biggest U.S. lender by assets, should repurchase as much as $20 billion in home loans that were based on wrong or missing information, said a trade group for bond insurers. More than half of the soured home-equity credit lines and residential mortgages created from 2005 through 2007 that insurers examined should be bought back, the Association of Financial Guaranty Insurers said in a Sept. 2 letter to Bank of America Chief Executive Officer Brian T. Moynihan.

I wonder of BOA budgeted a $20 Billion hickey?

And this from our Mortgage commentary guy, Andrew Murray... US home seizures have reached a record for the third time in 5 months in August as lender completed the foreclosure process for thousands of delinquent loans. Bank repos have also climbed 25% to 95,364 from a year earlier. Some estimate that foreclosures could add about 12 million homes to the US home stock over the next year which would basically crush any real estate recovery for some time to come. Florida and Nevada are still the twin epicenters of foreclosure activity with Florida filings at ratio of 1 to every 155 homes and Nevada at 1 to every 84 homes.

I saw a blip yesterday that 1 in 7 here in the U.S. live in poverty now... I have side bar thoughts on that subject, that I think I'll keep to myself...

So. the U.S. data on Tub Thumpin' Thursday, was interesting, not earth shattering, just interesting. PPI (wholesale inflation) printed higher at 3.1% year-on-year. The Initial Jobless Claims were lower by 3,000 from the week earlier, but still 450,000! The Current Account Deficit for the 2nd QTR was $123.3 Billion or $41.1 Billion per month. And the TIC flows were very strong at $61.2 Billion.

So. the naysayers will be on the shouting blocks exclaiming that the world is still buying enough Treasuries to finance our deficit, and therefore deficits don't matter!

I can't begin to tell you how visibly sick I became typing that last paragraph.

Today, on this Fantastico Friday, we'll see the color of the stupid CPI and the U. of Michigan Consumer Confidence, which for some strange reason is expected to inch up higher. Sure the U.S. stocks continue to defy gravity, but come on. Every day another economist climbs onboard the "recovery is not happening here" train.

Then there was this... Yesterday, I talked about banks that didn't take TARP, and how relived they are today because they did not take TARP... Then there was this story on MarketWatch that played nicely with my thoughts yesterday... The early change in TARP strategy from asset purchases to capital injections, followed by the rollout of numerous seemingly unconnected programs, combined with largely ineffective communication of the reasoning behind these actions, spread confusion in the public and undermined trust in the TARP," the Congressional Oversight Panel said.

Chuck again... Yes... TARP was a fiasco, and I will until the day I die believe in my heart of hearts that it should not have ever taken place, nor the $787 Billion stimulus... Yes, there would have been lots of heartaches and devastation, but it would have been over with, and the strong institutions would now be thriving, and our future generations wouldn't have to deal with the loss of freedoms and incur a heavy tax burden... But that's just me... If you don't agree, that's fine...

And right before I go to the Big Finish, I'm seeing selling happening in the currencies... Probably profit taking before the books close in London, eh?

To recap... The currencies are stronger this morning, with Aussie dollars nearing a 2-year high, and euro is back to 1.31... Gold is at another new all-time record high of $1,280, and Silver is $20.80. Then the rest of the letter today is a collection of things on Chuck's mind today...

Currencies today 9/17/10: American Style: A$ .9445, kiwi .73, C$ .9765, euro 1.31, sterling 1.5655, Swiss .9850, ... European Style: rand 7.1330, krone 6.0850, SEK 7.06, forint 215.85, zloty 3.0225, koruna 18.8610, RUB 30.98, yen 85.75, sing 1.3340, HKD 7.7650, INR 45.89, China 6.7250, pesos 12.77, BRL 1.7110 (see, the real rallied back like I said it would!) dollar index 81.15, Oil $75.15, 10-year 2.76%, Silver $20.91, and Gold.... $1,280

That's it for today... Glad it's Friday! It's been a long week for yours truly! And look at my beloved Cardinals... They got swept by the Cubs for the first time in 22 years, and then turn around and beat the 1st place Padres... This team plays to the level of their competition... UGH! My older kids are heading to Columbia this weekend for the Mizzou Tigers game... Wish I were going too! I'll watch it on TV... Our Suzy Q, is in the hospital, she suffered a mild stroke the other day... Get Well Suzy Q! Our guests from Jacksonville go home today. Bet they're glad! Being away from home is something that takes time getting used to... I've cut down on my travel by HUGE amounts in the past 3 years, and I still feel like I'm gone a lot! Oh well... Guess it's time to go, and get working on the making of Fantastico Friday! How about you? Bye!

Chuck Butler


EverBank World Markets



Posted 09-17-2010 10:28 AM by Chuck Butler