Demand For Physical Gold Soars!.
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In This Issue.

* Gold continues to heal.

* Currencies go flat.

* Yen back on slippery slope.

* Renminbi has best week in 6 months.

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

Demand For Physical Gold Soars!.

Good day. And a Marvelous Monday to you! Well, that was good news late Friday night, eh? Switching between the Blues hockey game, and the Cardinals baseball game, and the cable news was the order of business, after I got home from another water polo game! 6 games last week, and 6 more this week. I think the chlorine is seeping into my skin! HA! At least those natatoriums are warm!

Well. Front and Center this morning, is the price action in Gold. The shiny metal is up another $30 this morning to $1,435, as I write. I have to say that this bounce has been quite impressive for the shiny metal, and one that I didn't expect to see, right away, that is. I had a good friend, as me if the low $1,300 range was a buying opportunity. I said, that it certainly was a cheaper level, but that we had better wait-n-see, if the "boys" wanted to take it lower. Well, the "boys" might have wanted to take it lower, but the physical demand was just too much. I really liked the Big Boss, Frank Trotter's take on the Gold & Silver takedown in the Sunday Pfennig & Pfriends. Good job Boss!

Well. While Gold & Silver are on the rally tracks this morning, the currencies are not feeling so boisterous. I told you Friday, that G-20 had not chastised Japan for their attack on the yen's value, and that the yen was back on the slippery slope headed to 100. Well, The Bank of Japan (BOJ) Gov. Kuroda, came out and pounding his chest, decided to rub the markets nose in his plan to devalue the yen, in hopes that it will help revive the Japanese economy. Kuroda said that "the G-20 understood Japan's policies to revive the economy." And then turned on the green light for traders and anyone else to sell yen..

The Aussie dollar (A$) got taken to the woodshed after Aussie Treasurer, Swan, deep sixed the thoughts of a strong A$, by blaming the strong currency for the Aussie budget problems. Swan said that the budget had taken an A$ 7.5 Billion sledgehammer hit, blaming the strong A$ for the falling terms of trade. You know, we've seen these attempts by Aussie leaders to deep six the A$ in the past, and the damage has only been short-lived. Not that knowing that gives you any indication that it will be short-lived this time. Just that "in the past" that's been the trading pattern.

Across the Tasman, the New Zealand dollar is flat on the day, which is a better performance than its kissin' cousin the A$ is putting in this morning. This week brings us a Reserve Bank of New Zealand (RBNZ) meeting, at which they'll most likely leave rates unchanged, and some grumbling by the RBNZ about the strength of kiwi. Which they hope to parlay into jawboning kiwi lower. But I doubt it works. The markets have heard all of it before, and many times, from the RBNZ. remember RBNZ Gov. Bollard? Mr. I love to diss kiwi whenever I get the chance.

Lots of Central Bank activity this week. The BOJ will also meet later this week, but after their announcement last month of their new bond buying program, I doubt they'll have anything to add, other than some more chest pounding that G-20 agreed with their plan.

One currency not seeing the weakness this morning, albeit just a smidgen of strength, is the Swedish krona. Apparently, Sweden's Riksbank board member, Svensson, announced that he will step down at the end of May. So, how this all ties together is like this, stay with me on this.. Svensson is known as one of the two doves on the Riksbank board, and the markets are projecting that his replacement won't be so dovish. Which gives the Riksbank a better chance of higher rates in the future!

OK. had to stop and sing along with Van Morrison's great song, Into the Mystic. But I'm back now. See. You didn't even miss me!

I was doing some reading this past weekend, between water polo games, and came across a story on the U.S. economic outlook. In the story, the writer, painted a picture of the current slowdown as a "spring swoon", but one that would soon go away and the U.S. economy would be back on the rebound tracks, due to the housing recovery. Well, he may be correct. but let me remind him and you that the housing recovery is based on zero interest rates, easy credit, and most importantly, lack of supply. Well, that lack of supply could be wiped out in a heartbeat, should the "shadow inventory" be released on the market place. And it will be released some day, folks. probably not today, or tomorrow, but it will. and then what?

For those of you that don't know what I'm talking about when I talk about Shadow Inventory, here's your chance to learn. for those of you who already know, you can skip ahead! But the Shadow Inventory refers to the unprecedented number of foreclosures stemming from the subprime mortgage meltdown of 2007-2008 and the overall housing market collapse during that crisis, lenders were left with significant real estate holdings.

OK. And here's another thing the writer didn't mention. What if the Fed Heads go ahead with their talk of ending the current bond buying program (Quantitative Easing) after June? Funny thing. the writer didn't mention at all how the Fed's stimulus was keeping the pulse going for the economy now.

Alrighty then. The IMM Futures Position Report last week, showed that the increase in the U.S dollar long positions was modest at best, increasing by 9,000 contracts. Could this be a sign that the dollar's run is about to end? The other currencies to gain long positions were the New Zealand dollar, and the Mexican peso. Aussie, yen, and euros led the reductions of long positions. By the way, the kiwi and peso long positions reached record high levels! For whatever that's worth.

And, G-20 is over, and guess what the Chinese did last night? Ahhh grasshopper, you've been paying attention! That's right, they stopped the overnight gains in the fixing price of the renminbi/ yuan. Last week was the best week of gains in the renminbi / yuan is over 6 months! But now, G-20 members have gone home, and the Chinese don't have to play this game again for another 6 months!

Speaking of Homes here in the U.S.. The U.S. data cupboard returns today, with Existing Home Sales for March, which will probably be pretty strong. The data cupboard doesn't have a lot for us this week, mostly all 2nd and 3rd tier data reports. so, the markets will have to look somewhere else for direction.

Then There Was This. I had a reader send me a note on Friday, and say that he thought my TTWT article that day was "dead on". Now that's the kind of stuff I like to see! Because, I'm sure that if he felt that way, the article made him think.

OK. I found this on the Bloomberg. "The U.S. Mint in April has sold 153,000 ounces of American Eagle gold coins, the highest in almost three years, after futures prices started the week by plunging the most since 1980.

Sales have more than doubled from March and surged sevenfold from a year earlier, data on the Mint's website showed. The amount for all of May 2010 was 190,000 ounce.

The China Gold Association said that retail sales soared on April 15 and April 16, and the All India Gems & Jewelry Trade Federation said that demand climbed to the highest this year. Sales surged from Australia's Perth Mint, which refines almost all of the nation's bullion, Treasurer Nigel Moffatt said. He didn't provide precise figures."

Chuck.. just shows to go you that what I've been saying all along was bang on. and that is, that if there was enough physical demand, / buying, that the paper trades wouldn't be able to keep up. and they couldn't! So. keep it going!

To recap. Gold is up another $30 this morning, as physical demand is outstripping the paper trades. Currencies are flat to weak this morning. The A$ got taken to the woodshed by some dissing of the currency's strength by the Treasurer, Swan. Yen is weaker, as Kuroda beats his chest as to how smart he is, and that G-20 agrees! Central Bank meetings in New Zealand and Japan this week, and there's little market moving economic data in the U.S. this week, so the markets will have to look for direction someplace else!

Currencies today 4/22/13. American Style: A$ $1.0265, kiwi .8425, C$ .9745, euro 1.3050, sterling 1.5225, Swiss $1.0705, . European Style: rand 9.2725, krone 5.8290, SEK 6.5225, forint 229.65, zloty 3.1465, koruna 19.8750, RUB 31.60, yen 99.75, sing 1.2395, HKD 7.7640, INR 54.14, China 6.2415, pesos 12.27, BRL 2.0105, Dollar Index 82.80, Oil $88.61, 10-year 1.72%, Silver $23.63, and Gold. $1,436.26

That's it for today. The last full week of April, and the weather still hasn't warmed up. UGH! I love to spend my weekends outside, so hopefully, when the water polo season is over, the weather will have turned warm to stay, and I can get back outside! Little Braden Charles spent the night with us Saturday night. He loves to sit at the piano, and bang away at the keys. I play some for him, and he tries to immolate what I'm doing. So cute! OK. it hasn't even been a month since I was on vacation, and I'm already itching to go again! Is that an indication that I'm ready for retirement? I hope not. because I've still got a high school aged son to get through college! And with that. I hope you have a Marvelous Monday, and a warmer week!

Chuck Butler
EverBank World Markets

Posted 04-22-2013 4:33 PM by Chuck Butler
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