Metals Get Whacked Again!
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In This Issue.

* Draghi tries to sell accommodation to the markets.

* Wheeler disses kiwi once again.

* Hans & Franz will pump you up!

* A sad state of the finances of Americans .

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

Metals Get Whacked Again! .

Good day. And a Wonderful Wednesday to you! Well. I had a feeling that today would be a grand day, for I had smooth sailing into the office today, hitting each traffic light on green! WOW! That's a rarity, as I have so many traffic lights. However, my giddiness over the smooth sailing into the office was taken away in a heartbeat when I came in and turned on the screens, to see Gold & Silver getting the snot knocked out of them again.

So, I immediately began to search frantically to find out what the heck was going on with the metals, as the A$ was up. I had a sneaky feeling that it was a yield thing, with the dollar now having some yield with the 10-year Treasury above 2.55%, and as we all know, the metals have no yield. But most of the things I could find about the Nestea plunge that the metals were taking, was that the Economic data from yesterday was enough to tell the markets that Big Ben is going to see that the economy is strong enough to stand on its own without stimulus.

This just shows the markets' mentality folks, it's a "what have you done for me lately" mentality. Never mind that just last week we saw Capacity Utilization drop, Industrial Production print flat, Housing Starts down, and a host of other things showing weakness in the economy, yesterday's data showed a different story. So get your data journals out, and make these notations. Durable Goods Orders for May were up 3.6% VS April (but they were only up .7% when you remove the volatile aircraft orders, for it's not every month that airplanes are ordered! But don't let that little ditty get in the way of a feel good story) The S&P Case/Shiller Home Price Index for April was up 12.05% VS a year ago (remember, folks, the low values that homes had sunk to, so increases get a little skewered on the upside) And Consumer Confidence, which is not really a true economic fundamental, but something the markets follow, so therefore we have to follow it too, showed a huge spike upward this month VS May.

So. You're going to forget the rot that was exposed on the economy's vine the previous week, and go with this collection of haphazard data prints? I guess so, folks, because that's what's happening this morning. Gold is being spent by $50, and Silver by $1.05. But the A$ and kiwi are both stronger this morning, so something is playing out with yields folks. My spider sense in tingling.

I had a brief conversation with the trading desk for the bank down in Jacksonville yesterday. These guys are real nit-picky with data, and not shoot from the hip like the markets, and they believe that there's a chance yields will go higher to 3% in the 10-year. So, then I'm told that if the 10-year is trading with a 3% yield, then mortgage rates will be back to 5%... I then thought to myself that I would have to think that this move in mortgage rates would be the end of the recovery for housing.

Zillow is reporting that 30-year fixed mortgage rates jumped by 50 basis points in one week to 4.38% last week, the largest one week hike since 2011. Uh-Oh.

The news from Australia this morning is that current PM Gillard, was defeated by former PM Rudd for leadership in the Labor Party. But the Labor Party is thought to be in HUGE trouble at the September 14, 2013 elections, so it's really just a case of rearranging the deck chairs on the Titanic for the Labor Party. I would think that kicking the Labor Party out of office would be a good thing for the A$, folks. You see the Labor Party is seen as being responsible for killing the goose that laid the Golden Egg in the Aussie economy, and the public opinion is of them isn't good. So. it's time to go. Of course I'm not in Australia, so I just go by all the reports from readers in Australia send my way. It's sort of like this interview I heard with the Baltimore Orioles manager, Buck Showalter, as he talked about Mariano Rivera, the great closer for the N.Y. Yankees, a main rival of the Orioles. Buck said, "he's had a great career, but it's time for him to go!"

This morning in the Eurozone, the euro has drifted lower by ½-cent on some comments by European Central Bank (ECB) President, Mario Draghi. Apparently, Draghi thought the markets wanted to hear him say that "monetary policy will stay accommodative for as long as needed". But I guess we're finding other wise, as the euro gets sold this morning. You see what Draghi was attempting to do here, right? He was telling the markets, to read between the lines, but the ECB is going to remain accommodative while the Fed withdraws stimulus. He thought that the markets would like to hear that. Apparently not today, Mr Draghi, but I'll gladly pay you Tuesday for a hamburger today.

The Indian rupee hit a record low level of 60.60 this morning. And once again, the Reserve Bank of India (RBI) attempted to stop the plunging rupee by intervening and buying the currency, but to no avail. There has to be something missing here, given the call by the well respected analyst, Dr. Marc Faber that India was the best place to invest in Asia. I guess, now that it has fallen to a record low, eh? That's when I like to look at stuff, when everyone else wants to sell it.

When it's hated by everyone.

The New Zealand dollar / kiwi is stronger this morning by about 1/3-rd of a cent despite the comments overnight by Reserve Bank of New Zealand (RBNZ) Gov. Wheeler, who said, "The New Zealand economy has been growing more rapidly than many other advanced economies, but it also faces several challenges, including the high New Zealand dollar, the effects of drought, Government fiscal consolidation, the Christchurch rebuild, and the housing market. The Reserve Bank's people, processes and resources are committed to a vision of being a high-performing small central bank."

Notice how Wheeler never and I mean never, misses an opportunity to diss his currency... In this case he was complaining about kiwi's strength... Hmmm, I have to wonder just when he'll be happy? For kiwi has dropped from a high of 86-cents in April to the current level of 77-cents and change... that's a 10% drop... And yet he's still complaining! Quit your bitchin' Wheeler! Instead, you should be embracing the strong kiwi, and showing it off to your fellow Central Bankers and proudly exclaim that you have the best currency (even if that's not true, but you can say it Graeme, come on, I know you can say it!) and that they only wish they had your job and currency...

Today, here in the U.S., we'll see the final revision of 1st QTR GDP (as if it matters now, that we're finishing up on the 2nd QTR this week) For those of you at home keeping score, the last revision was downward to 2.4%... And if you go back in the archives you'll find that I said that I thought that in the final revision we would see 1st QTR GDP slip under 2%... I still think that will be the case, but in reality, I doubt it will happen for the book cookers can't have that happening right now...

The other piece of data today, is low on the totem pole of tiered data, but is interesting anyway, and that's mortgage applications, which last week fell -11.5%... You would have to think that this weakening of mortgage applications would continue given the rising yields, that we talked about earlier...

Last week, we had the stupid CPI (consumer inflation) print and tell us that inflation only rose 1.7% in the past year... Now, you, me, and everyone else that has a two-sided brain, knows that while there's no wage inflation that inflation is much higher than 1.7%... Long time readers know that I always tell you to gage inflation in how it affects you personally... For a rise in prices of fly fishing lures, doesn't mean the guy that doesn't fly fish will experience that increase.... So to him, inflation isn't a problem... So, to that end... I saw something last night that really hit home with me... Major League Baseball (MLB) said that tickets for non-premium seats in baseball stadiums this year is up 2.7% from last year... I don't think MLB wants to say what the increase in prices of premium seats are seeing. So, there you go...

Just because the Gov't and the book cookers want to believe that there's no inflation they can go right ahead... Now, don't get me wrong, we're seeing deflationary things all over, especially if you want to actually use the stupid CPI... wages are a good example... But as far as I'm personally concerned, the things I buy, use, etc, are seeing inflation of about 8%... John Williams at says that inflation is really around 6.5%, when you calculate it using pre-90's methodology, before the hedonic adjustments became the soup du jour for the book cookers...

It must really be storming outside, as our TV's have all lost their signals... Oh goody, more rain for our region, the streams, rivers, ponds and lakes are in dire need of more rain... NOT! The outside just lit up with a streak of lightening... when the lights that hand overhead, begin to sway back and forth, is when I begin to wonder what the heck I'm doing here!

In the U.K. this morning, and Bank of England (BOE) member, Miles, wanted everyone to hear him say once again that he believes that MORE monetary stimulus may be necessary, as he believes the recovery in demand remains pretty anaemic. These Central Bankers can't win for losing or lose for winning these days... You say one thing and the markets believe they heard you say something else... Recall, that I documented that going on with Big Ben Bernanke last week... And today we've had ECB President, Draghi, and now this BOE guy, all try a different approach and say that more stimulus is needed or they are ready to do anything, only to find out that's not what the markets wanted to hear...

I'm getting pumped up, like Hans and Franz, we're here to pump you up! You see, we're getting ready to announce and launch a new MarketSafe CD that's going to be issued soon, and when it does get issued, the underlying assets will have some very cheap prices to them... So the starting point is going to be very low, which is a good thing, right? Buy low.... sell high... OK... now use your best Austrian voice (like Arnold Schwarzenegger) "Hear me now and believe me later you little girly man, we will pump, you, up!"

Hey, don't ask me how I end up on those strange tangents... It's just that my mind recalls things like that, and then I have to share it, for I know that there are quite a few people out there that will get a laugh or a chuckle out of it...

For What It's Worth... I saw this on Yahoo and then I have an additional thing to add from "As of March of this year, 47.7 million Americans are now on some form of food stamps. Between 2000 and 2012, the number of Americans resorting to food stamps increased more than 171%. In 2000, there were just 17.1 million Americans on food stamps. (Source: U.S. Department of Agriculture, June 7, 2013.) There are more individuals on food stamps in the U.S. economy than the entire population of Spain-46.17 million. (Source: World Bank web site, last accessed June 21, 2013.) That costs the government money. The expenditure for food stamps in 2012 was $74.6 billion, almost 116% higher than what it paid in 2008. That's a cost that could pick up even more speed if, as all indicators show, inflation begins to rise.

The key stock indices in the U.S. economy have skyrocketed since the Great Recession, due in large part to money printing, but the average American Joe hasn't seen his living conditions improve-in fact, they have actually deteriorated.

And then the additional thing from "76% of Americans are living paycheck-to-paycheck"... and to go further into this... "Fewer than one in four Americans have enough money in their savings account to cover at least six months of expenses, enough to help cushion the blow of a job loss, medical emergency or some other unexpected event"

Chuck again... Now all that's scary folks... what happens if we have another Big Shock here in the U.S.? What, you say that won't or can't happen again? Hmmm... OK... Then don't worry about any of this, and go on with your life... But as far as I'm concerned, we have another Big Shock in our future... It may not be today, tomorrow or the next day, next week or next month or year, but... It's out there, and I just can't get past this thought, as the talk of a so-called unwinding of QE begin to grow louder... Oh... BTW, James Rickards, is in my corner as he has stated that he thinks that Big Ben's talk about tapering QE will prove to be just that... talk...

To recap... Gold & Silver are getting whacked again this morning, and this whacking is with a big stick, folks. The markets want to throw out last week's bad data, and only count this week's better than the average bear data, and that has the metals on the run this morning. Aussie and kiwi dollars are both stronger this morning, while the euro backs down after Draghi tried to appease the markets with talk of accommodation...

Currencies today 6/26/13... American Style: A$ .9275, kiwi .7780, C$. 9540, euro 1.3025, sterling 1.5355, Swiss $1.0625, ... European Style: rand 10.1370, krone 6.1020, SEK 6.7330, forint 228.30, zloty 3.3335, koruna 19.86, RUB 32.90, yen 97.80, sing 1.2750, HKD 7.7585, INR 60.61, China 6.1779, pesos 13.22, BRL 2.2130, Dollar Index 82.84, Oil $94.90, 10-year 2.58%, Silver $18.61, Gold $1,229.75, Platinum $1,327.60, and Palladium $648.40

That's it for today... Well, when I woke up from my afternoon nap yesterday, my beautiful bride was home! She's all relaxed and tan... and looked great! She had been gone for two weeks, having a grand time in the sun, while we dealt with rain nearly every day here! UGH! So, welcome home Kathy! My beloved Cardinals got back on the winning tracks last night in Houston. Lighthouse is singing their great rock classic, One Fine Morning... And that would have been very apropos given all my green lights, until I saw what happened to the metals this morning! I'm reminded of the funny Geico commercial when I think what day it is today... What's better than great savings? A camel on hump day! I hope you have a Wonderful Wednesday!

Chuck Butler
EverBank World Markets

Posted 06-26-2013 1:26 PM by Chuck Butler
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