Throwing yen off a cliff

• Currencies turnaround their overnight gains on Tuesday.

• Gold gets capped at $1,800.

Good day.. And a Wonderful Wednesday to you! OUCH! Now that’s going to leave a mark! That’s what the Cardinals pitchers had to think last night as they got spanked by the Rockies. The game was so ugly that I turned the TV to the little league World Series… The sun finally came out yesterday, and it was very nice out, so much so, that I even took a short stroll down the street! I often don’t feel up to going out for a stroll, and when it’s in the 90’s I just forget about it! The great sultry voice of Dionne Warwick greets me this morning with her song: Walk On By… Now that’s a voice I would wake up to any old day!

As I hit send yesterday morning, I noticed that Gold was pulling back from its early morning gain of $12… The price manipulators must have gotten well fast and returned to work! Gold ended the day up $4.70, yo close at $1,79470. Silver gave back some of its 73-cent gain on Monday, to the tune of 14-cents, and close the day at $20.61… The BBDXY, which reflected that the dollar had been sold in the overnight markets recovered a bit and ended the day up 4 index points… I keep saying this over and over again, sounding like a broken record, but to me, I believe that currency traders want to sell dollars, for they know the U.S. in a mess, but with the PPT having their pockets bulging with Exchange Stabilization Funds propping up the dollar, I believe traders think it’s like “fighting city hall”…

The euro remained above 1.02 on the day Tuesday, but could not muster enough interest in traders to bid it higher on the day. The Aussie dollar (A$) traded ever-so-briefly at 70-cents yesterday, before falling back… Sort of like the command that the red coats used to use “fire and fall back”… A longtime reader, sent me a note yesterday, asking why the Mexican peso seemed to be stuck in the mud… I fired off an article from my friends at FXStreeet, for his viewing pleasure, but to give you the Reader’s Digest version, Mexican interest rates still aren’t strong enough to give investors a “risk premium”, but with the price of Oil still strong, these two things are fighting each other, and that leaves the peso stuck in the mud…

I wish the dollar’s strength was more easily explained! Sure the Fed Heads are raising interest rates, but, they are still so far behind the inflation 8 ball that they can’t be seen! I’ve explained this before, but for those of you who missed class that day, with inflation at 16% (per shadowstats.com) and our official Fed Funds Rate at 2.5%... That’s a real negative rate of -13.5%... Oh, sir, may I have another? NOT.

The price of oil slipped by a buck yesterday, and ended the day trading with a $90 handle, and Bonds remained steady, with no movement…

In The overnight markets last night… the dollar got sold again in the overnight markets and were right back to the same level this morning as the BBDXY was yesterday morning, 1,269... So the BBDXY is down 4 index points to start the day today. The euro is holding above 1.02, and the rest of the currencies fall into line behind the Big Dog euro... All of the currencies except the Czech koruna, which is the outlier this morning, having rallied to trade below the 24 handle for the first time in a month of Sundays. 

Gold has given back the $4 it gained yesterday in the early trading today, and it starts the day at $1,790. Silver has lost 18-cents to start the day, and trades this morning at $20.43...  The price of Oil has dropped again to an $88 handle this morning, and bonds are still stuck in the mud. 

I mentioned above that the price manipulators apparently got back to work yesterday... Gold was capped at $1,800 yesterday, and it was so brazenly done that even a blind man could see it! "Once again there was obvious interference in precious metals prices on Tuesday -- and it was most egregious in gold, where its price was capped and smacked lower the moment it broke through $1,800 spot. Silver, platinum and palladium had their comeuppance in COMEX trading in New York as well.

Gold, silver and platinum are now above their respective 50-day moving averages by a bit -- and with the low volumes we've seen in the first two precious metals over the last few days, there's not much sign of panic short covering by the Managed Money traders as of yet."

Chuck again... one of these days, and I hope it's soon, but know in my heart of hearts it won't be, that these dastardly price manipulators are all lined up along a wall and given their last cigarette...  The good folks at GATA, Ed Steer, me, and others have laid out the ponzi scheme of price manipulators for all to see, but to date, most people turn a blind eye toward our attempts to bring this to light... 

Speaking of things that seem to be stuck in the mud… Let’s visit the Hong Kong Dollar or honker if you will… I read a piece over the weekend that talked about how much the Hong Kong Central Bank was having to spend to keep the peg of the currency to the dollar… Then I found this on Blooomberg.com, for your edification… “The Hong Kong Monetary Authority, the de-facto central bank, has a mandate to keep the currency trading at HK$7.75 to HK$7.85 per US dollar. The current band was set in 2005 and has never been broken. When it gets too close to one end or the other, the HKMA intervenes, either by buying or selling the city’s dollars. When HKMA uses its foreign exchange reserves to buy Hong Kong dollars from the commercial banks, the aggregate balance of Hong Kong dollars in the banking system -- interbank liquidity -- goes down accordingly. From May 11 through late July, the HKMA bought a total of HK$172 billion ($22 billion), shrinking the balance by more than half. That tighter liquidity pushes up local borrowing costs.”

Chuck again… So, you see it’s the peg that keeps it so range bound, and tight in the range. Remember when the U.K. turned over the country of Hong Kong to the Chinese? I wrote then that it was my belief that the Chinese would allow the honker to begin to float, so they could get their feet wet, so to speak, and learn about having a floating currency. They would allow this to go on for a couple of years, before then allowing their renminbi to float, and folding the honker into the renminbi…

I had no inside information that had me believing that, it’s just how I would do it if I was just given a country that had a different currency than mine, and that it was pegged to the dollar… But, as you all know, none of that happened, and the peg to the dollar still exists…

I was also technically wrong when I said at the Orlando Money Show in 2003, that by the end of the decade the renminbi would be the reserve currency… I say technically because while it wasn’t “THE” Reserve currency it did become “A” reserve currency as it was included in the Special Drawing Rights (SDRs).

But you won’t see me beating myself up over those two wrong statements of how I saw things working out… Time change, things change, I change… I roll with the punches, adapt, improvise, and change my stance…

Speaking of China… Reports yesterday have China’s inflation rising to a two year high, with pork really surging… Looks like inflation is taking hold over the world… And especially in countries that have shut down their economies during the plandemic… But also countries that have oodles of debt… I’m just saying…

Yesterday, I pointed out how behind the times the Bank of Japan was, and that was why the Japanese yen was hanging by it fingernails to the edge of the cliff… Well, I read yesterday that the Bank of Japan is planning on announcing a continuance of their current monetary policy, (read negative rates) … I can see traders stomping on the yen’s fingernails once that news gets wide distribution…

The U.S. Data Cupboard has the stupid CPI for us today… July Consumer Price Inflation (CPI) will print this morning, and the so-called experts have inflation falling in July from June… And you can bet your bottom dollar that the spin doctors will be saying that the Fed’s rate hikes are taking hold, and that inflation is now under control… Well, I’m telling you that when you hear that junk, just turn it off, because it couldn’t be further from the truth!

Here's where knowing history might help us... In the 70's, when we had a run of high inflation, there was a time when it appeared that inflation had been beaten back, only to have it rise up again a month or two later... I fear that this is what we are going to experience now... People will get lazy, and assume the rate hikes so far are good enough... Got Gold? 

To recap... Tuesday was a turnaround Tuesday, and not for the good for the currencies, as the dollar selling in the overnight markets Monday night, was turned around to a gain for the dollar by the end of the day Tuesday. Gold's rise was capped at $1,800, in a brazenly disgusting display of price manipulation. And the BOJ thinks that they can continue their negative yeilds monetary policy without harm. The yen fell to 136 on the news, just like Chuck thought it would... 

Before we head to the Big Finish this morning, I wanted to point something out that just doesn't make sense to me, and I wonder what the ROI is on missiles... Reuters reported this morning that: "Russian shelling killed 11 people in Ukraine's central Dnipropetrovsk region overnight." The Russian shelling netted only 11 kills, that just seems like they are wasting ammunition and money... But then I'm not a fan of any war, so there's that... 

For What It's Worth... Well this is the second time this week that I've chosen a piece of the 5 Minute Forecast for the FWIW... I saw the stuff on this piece a week ago, and thought, that this is the most disgusting display of being an elite that I can think of... This is Dave Gonigam's thought on the Fed San Francisco President, Mary Daly, and her comments on inflaton... Take it away Dave!

Maybe you saw the story last week: San Francisco Fed President Mary Daly put her foot in it during an interview with Reuters — waving off inflation as no big deal. "I don't feel the pain of inflation anymore," she said.

"I'm not immune to gas prices rising, food prices rising; I sometimes balk at the price of things, but I don’t find myself in a space where I have to make trade-offs, because I have enough. Many, many Americans have enough."

And the trade-offs people do have to make are no biggie, she added: "You may not be able to go to the vacation you want. You may end up instead camping or doing a staycation.”

Easy for her to say. In her current gig, Daly pulls down $427,000 a year. Granted, San Francisco is expensive, but still…

➢ Which reminds us: Earlier this summer, the well-heeled Garrison Keillor of A Prairie Home Companion fame similarly blew off inflation: “Don’t be disheartened. Deal with the problem. If you’re troubled by inflation, cut back on expenses. Don’t buy sparkling water. Fill up the glass with tap water and if you want bubbles, stick a straw in the water and blow.” For real

Anyway, it was the most tone-deaf moment by a Fed leader since New York Fed chief Bill Dudley’s edible-iPad moment more than a decade ago."

Chuck again... in case you forgot what Bill Dudley's edible-iPad moment was here's a quick explanation: On the basis of a wonky concept known as “hedonic adjustments,” Dudley essentially told the crowd that consumer price inflation was a figment of their imaginations. He cited the iPad — which had come on the market barely a year earlier.

“Today,” he explained, “you can buy an iPad 2 that costs the same as an iPad 1 that is twice as powerful. You have to look at the prices of all things.”

Chuck again, that's for real folks... he actually said those things back in 2011... Dudley stepped down from the Fed in 2018, never to be heard from again... 

Market Prices 8/10/2022: American Style: A$ .6970, kiwi .6309, C$ .7765, euro 1.0247, sterling 1.2101, Swiss $105.45, European Style: rand 16.4649, krone 9.6814, SEK 10.1279, forint 387.90, zloty 4.5865, koruna 23.8289, RUB 60.86, yen 136.00, sing 1.3771, HKD 7.8481, INR 79.51, China 6.7554, peso 20.20, BRL 5.1156, BBDXY 1,269.08, Dollar Index 106.27, Oil $88.84, 10-year 2.79%, Silver $20.43, Platinum $934.00, Palladium $2,194.00, Copper $3.59, and Gold... $1,790.41.

That's it for today.. A Short letter yesterday, a long one today, sort of like the price of Oil, up one day down the next! 16-5 was the score of the baseball game last night as the Rockies routed the Cardinals... Death by a 1,000 cuts was what watching this game was like... One of the good things about baseball, is you can forget about yesterday's game, because there's another game to play today! Not much else going on so... Steely Dan takes us to the finish line today with their great song: Aja... Aja, when all my dime dancing is through I run to you... Yeah, that song... I hope you have a Wonderful Wednesday today, and please Be Good To Yourself!