A Return To The So-Called Safe-Havens!
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In This Issue.

* Currencies get sold on flight to safety.

* Gold & Silver move higher on fear.

* German IFO highest in 16 months!

* Richard Russell on a TTT! .

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

A Return To The So-Called Safe-Havens!

Good day. And a Tom Terrific Tuesday to you! It doesn't appear to be a TTT (Tom Terrific Tuesday) with the currencies. But Gold is up $9 and is trading over $1,400 once again, so not all is lost on this TTT! I have a few things to talk about today, that's really "thought stuff", you know things to make you think, in hopes that it spurs action! I only received a couple of responses to my challenge yesterday, so that was depressing. I recall a time I would put out a challenge and my email box would be inundated with responses. Have I lost my audience? Have I cried wolf too many times, and no one listens any longer? I fear these things to be true.

When you consider the lack of attendees at the last two shows, Las Vegas and San Francisco, the lack of response to a challenge, and some other things, I would have to believe that my fears are becoming a reality. But that's not going to stop me from writing about all this stuff! It may stop me from traveling to speak to small crowds, but it won't stop me from writing. So, tell all your friends and neighbors and even family members, to sign up for the Pfennig, because, the best is yet to come!

OK. So this morning the currencies are seeing a flight from risk, except Gold. (& Silver, Pl & Pal) I guess the September Tapering Campers are winning the tug-o-war this morning. I say that because the safe havens of yen, francs, dollars and Gold are all stronger this morning. Of those so-called safe havens, I personally would throw out two of them. yen and dollars, and only resort to using francs when I had more than enough Gold. For those fiat currencies of yen, dollars and francs are no "safe havens" as far as I'm concerned!

The euro used to be considered a safe haven, but then the Eurozone leaders decided to shoot themselves in the foot, and throw away their grandkids' futures by running up debts they had no business even dreaming about, but now have to deal with them. But I'll say this about the euro, and once again I saw that my friend, John Mauldin, who still believes the euro to fall to parity, wrote a piece this past weekend that didn't spell a recovery for the euro, I'll say that at least the Eurozone leaders are attempting to do something about their accumulated debt. What are we doing here in the U.S.? Or what are they doing about it in Japan?

Maybe what the Eurozone finds out is that what they attempted didn't work as they thought, and they have to go back to the drawing board, AT LEAST THEY TRIED! I ask you one again, What are the U.S. and Japan doing about their accumulated debt? The euro should be trading stronger this morning on the news that German Business Confidence, as measured by the think tank, IFO, rose to the highest level in 16 months, thus reinforcing the thought that the largest economy in the Eurozone has an economy that's gathering pace.. But the flight to safe havens is the cat's meow today.

I have to think that this rush to the so-called safe havens is tied to the fears that the U.S. is going to get involved in the Syrian conflict. I told you about the calls yesterday that the U.S. was going to look into getting more involved in Syria. That just creeps me out folks. I know that many of you know your fall of the Roman Empire stuff.

Well.. In the category of "this is not the kind of economic data that should spell tapering". U.S. Durable Goods Orders fell -7.3% in July! OUCH! I do believe that's going to leave a mark! Now, this data set can tend to be volatile early in quarters because defense spending, etc. doesn't happen. But, we do need to take notice that Core Capital Goods Orders fell -3.3% and core shipments fell -1.5%... That's not a good sign. And the sign said everybody welcome come in kneel down and pray, then they passed around a plate at the end of it all, and I didn't have a penny to pay.. No wait! I didn't mean to go there, but when I mentioned, signs. signs, signs everywhere a sign! I lost it!

So. I would have to think that this awful print would do some damage to 3rd QTR GDP. Right now, the "experts" believe that 2nd QTR GDP will be around 2.2%... But I'm saying that it will be below 2%... And once the tapering begins. I think the economy begins to tank. So, we'll have to wait-n-see, eh?

So, Gold was stronger yesterday and again overnight on the fears of more war. Let's talk about fear a bit.. Fear. Fear can play hell with markets. It always has, and always will. It will punish asset classes that have rosy outlooks, and reward asset classes that protect wealth in times of fear. And so it was last Friday with U.S. stocks, and Gold. One punished, one rewarded. In the Rude Awakening yesterday, I read where that the largest outflow of U.S. equity funds in more than 5 years occurred last week. And the biggest gains in Gold funds in a month of Sundays, while Gold added $33 during the week.

What are the stock investors fearful of? Ahhh grasshopper, they're fearful of Fed tapering, and what that will begin to do with stock values. They want to get out the exit door before everyone else heads for the exit door and it gets all jammed up. These things can turn ugly quickly, and maybe they shouldn't. But they do. remember 1987? The October stock market crash, all started on a Friday, when the stock market sold off what was considered to be a big time move at that time. But it put the fear in everyone's minds that things were going to get bad, and on Monday morning. all hell broke loose. At least that's how I remember it going down.

I'm of the belief that herdball, which used to be the term confined to 5&6 year olds playing soccer, but is now what I'll call stock investors, is not the right way to go about investing. Sure, if the Easy Money from the Fed goes away, we will see the economy slow down, but should that negatively affect the equity asset class altogether? Any way. I can't talk that much about stocks without getting into trouble, and I haven't talked about specific stocks, so I'm still golden. And the thing I'm just trying to illustrate here is how fear can drive the price of Gold higher, at other asset class's expense.

The dollars in the South Pacific of Australia and New Zealand, are not dollars, yen and francs, so they too are on the selling blocks this morning. So, too is the Canadian dollar / loonie. It's the herdball effect here too folks. The investors and traders that bought these currencies a week ago, because they had a positive yield difference to yen, francs, and even some dollars, are getting sold in a barrel this week, because they are not considered to be "safe havens".

These are the types of trading moves that usually are short-lived, and people forget, why they were selling to begin with. So, one could view this as an opportunity to buy cheaper, or they can get scared, and join the herdball going down the field.

I did have a reader ask me to mention the Canadian dollar / loonie's recent drop. I don't see this as anything new given the thought that I've expressed for a couple of months now, that the new Bank of Canada (BOC) Gov. Poloz was from the "Trade" side of the Government, and you know what the "Trade" side is always clamoring for don't you? Yes, a cheaper currency to promote "trade". So. I don't think Poloz will outright do things to get the loonie cheaper, I do think that he won't exactly go out of his way to protect it either! And the markets are beginning to get that drift. and with that drift, so goes the loonie.

But remember, the loonie has the underpin of raw materials, and Oil. And with the price of Oil hanging around $106, one would think the "drift" in loonies could be nearing an end.

The Emerging Markets Currencies, which were already teetering with the tapering talk, really took a ride on the slippery slope with this flight to the so-called "safe-havens". The Indian rupee plunged 2% to a new record all-time low, and the other Emerging Markets Currencies (EMC's) followed rupees down the slippery slope. I saw a guy on the Bloomberg TV station this morning from a big investment company saying that they were still buying Emerging Markets, so the EMC's have that going for them!

Did you see that the Bitcoin founders were meeting with U.S. regulators and law enforcement leaders yesterday? I told you all when the fever was high about Bitcoin, that I feared regulation would stop it in its tracks. And the decision by FinCen last spring that a digital currency is considered money-services business subject to regulations and anti-money laundering controls. So, this "meeting" was a "kick-off" to seeing how the folks at Bitcoin are meeting their new requirements. I would also think that after hearing the folks from Bitcoin describe their business, that new requirements will come about for them and their business.

OK. Yesterday, I wrote about what IMF head, Christine Lagarde, had said about central banks removing their stimulus measures, and how she thought it was too soon. And since the Fed Reserve is the only central bank that's currently thinking of removing their bond buying stimulus, then she must have been directing her comments at the Fed. I then said I had a thought as to what cryptic message she was sending, and asked you dear readers to fill in the blanks and send me your thoughts with the winner's thoughts being printed here. Well, I only received a couple of responses, so I'll just give you my thoughts.

First of all, she could have been telling Big Ben Bernanke, "if you stop buying bonds, we're all going to be in deep dookie". Or. She could have been reminding him that the "one world government" that we seem to be heading to won't like it. And that brought me to think of Queen. (I know I have a strange mind, but bear with me here, and you'll see the tie-in)

One Hope, One Vision

Ahhh, the music of Queen. I saw Queen live many years ago, got to go backstage, but didn't get to meet Freddie Mercury, but did get to see all the "groupies" hanging around! Anyway, the reason I'm talking about Queen, is their song One Vision. In it one of the verses goes like this: One vision, So give me your hands, Give me your hearts, I'm ready, There's only one direction, ONE WORLD ONE NATION, yeah one vision.

Make of my reference to One World with how many grains of salt that you wish to. But appearances go a long way toward attitude. And it appears to me that this is the direction we're heading. I have a long time reader (Carol) that has told me this is the direction we're headed for many years.

And one more thought before we head to the Big Finish! Over the years, many people have asked me about the Silver / Gold ratio, and if I thought it would every return to 15-1. I would say that I didn't think the ratio was relevant any longer. I do though, like to watch the ratio to see what kind of moves Silver makes, because as I've explained to you, Silver has outperformed Gold in percentage terms 7 of the last 10 years. Well, at the start of this month the ratio stood at 67/1. but today, 27 days later, the ratio has fallen to 58/1. That just means Silver is outperforming Gold on a percentage basis once again. I have a group of dear readers that always say that I short-change Silver, because I only talk about Gold. Well, here you go!

It's also important to remember that NewsMax magazine did a feature article that I did for them titled: Is Silver The New Gold? Back in January of 2010. So, I'm no Johnny come-lately to Silver.

For What It's Worth. I'm always excited when I get a chance to share something that the godfather of newsletter writers says. I have something from Richard Russell today from the King World website, and Mr. Russell is talking about Gold & Silver, so let's listen in.

"don't have to tell you that this is a "spooky" stock market. It's nervous and spooky because it isn't a normal supply-and-demand market, it's a market that's trying to psychoanalyze Ben Bernanke and the Federal Reserve. Will they or won't they "taper?" (Ugh, that disgusting word). And if they taper or not, will it be Summers or Yellen or someone else as the new head of the Federal Reserve? In all my years dealing with the stock market, I can't remember anything this ridiculous and annoying.

Here below we have a P&F chart of gold, up-to-date as of Friday's close. Some may call this a "cup and handle" formation and others may call it a modified head-and-shoulders formation. I just call it a catapult formation with a P&F price target of 1620. Of course, gold doesn't have to surge straight up to 1620, but by hook or crook, one way or another, I believe we'll see 1620 gold this year -- in 2013.

The housing starts figures were released, and they were surprisingly lousy. On this basis, I believe the Fed will continue to buy US debt (nobody else wants it), and I believe QE will continue until the Fed's balance sheet passes four trillion and keeps on going. So what's Bernanke's "exit strategy?" I think Bernanke's exit strategy is that he's going to exit Washington as soon as he can -- that will be his real exit strategy."

Chuck again. WOW! Telling it like he sees it! This is the newsletter writer that I've patterned a lot of what I do after. He's never been afraid to say what's on his mind to his subscribers.. Shoot Rudy that's what they pay him to do! And you, dear reader, get my thoughts for free! Well, not all of them, those are saved for the Butler patio.

To recap. The news yesterday that the U.S. is going to look into involvement in Syria, sent the currencies on a ride down the slippery slope, as there was a flight to the so-called "safe- havens" of yen, dollars, francs and Gold. Of course Chuck thinks that only Gold is the true "safe-haven" German Business Confidence reached the highest level in 16 months as the recovery in the Eurozone's largest economy is picking up the pace. The Emerging Markets, which already were teetering from the tapering talk, got smashed overnight. And Richard Russell talks about how he sees Gold gaining $220 before year-end.

Currencies today 8/27/13. American Style: A$ .8955, kiwi .7775, C$ .9495, euro 1.3345, sterling 1.5520, Swiss $1.0850, . European Style: rand 10.4080, krone 6.0385, SEK 6.5195, forint 224.80, zloty 3.1840, koruna 19.2770, RUB 33.18, yen 97.80, sing 1.2840, HKD 7.7570, INR 65.82, China 6.1688, pesos 13.33, BRL 2.3782, Dollar Index 81.46, Oil $106.84, 10-year 2.77%, Silver $24.35, Platinum $1,549.60, Palladium $748.53, and Gold.. $1,414.30

That's it for today. I was surprised this morning that I was able to answer the bell, as I left the office yesterday with a high fever, and feeling like death warmed over. But it's all good this morning, so I have that going for me! A great come-from-behind win last night for my beloved Cardinals, as they got a grand slam from Allen Craig to defeat the team behind them and move into first place alone. Keep it going! I saw this morning that 36 million Americans play fantasy football. WOW! That's probably more people than exercise regularly! HA! I'm part of one group and not the other, and I'm sure you can guess which! HA! My fave TV news person is Robin Meade. And I keep one of our TV's on HLN every morning so I can see Robin. She always seems to be having fun, and I love that! So. good morning Robin! My oldest friend in the world, (we met in kindergarten) is named Robin. But this Robin is a guy. and so, I carry on about the two Robins. on that, I had better quit! I hope you have a Tom Terrific Tuesday!

Chuck Butler
EverBank World Markets

Posted 08-27-2013 5:05 PM by Chuck Butler
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