Buying fiats instead of physical Gold?

• The dollar had a bad week.

• Swiss francs being the cat's meow.

Good Day... And a Marvelous Monday to you. Well, my trip back to my little river town home was not without problems... We, normally do not check our bags, and now carrying a portable oxygen generator made our carrying on bags more difficult... But, in the end, we managed... Well, to be precise, my wife, Kathy managed most of it, looking much like a packed down sherpa... While I dealt with the portable oxygen generator... I was unaware that elevation played hell with your oxygen levels, and kept worrying about my oxygen level dropping, but in the end it all was fine, and our trip was made easier!  Alex picked us up at the airport and drove us home... Thanks Bud! Three Dog Night greets me this morning with their song: Eli's Coming... 

Well, if he's coming to save us, he's a dollar short and a day late, because the list of tariffs that were announced by the POTUS last Wednesday, is here to destroy us... That is, IF they actually get implemented, or if they are just a negotiating tool for better trade agreements... Already it has been reported that a list of countries on the Tariffs list have contacted the White House to talk about better trade agreements... In my heart of heart, I'm hoping this happens for all involved... I realize that China will be a tough nut to crack, but if the Chinese see that the majority of countries are interested in new trade agreements with the U.S., then maybe, just maybe, 'cause you never know (Andujar), the Chinese will come around to seeing things done the better way, and not through inflation causing tariffs... 

OK, well, the dollar got smoked again last Thursday and Friday.... And ended the week with the BBDXY trading at: 1,251, meaning that it had lost 20 index points from Monday last week... The loss of the dollar just on Friday, last week was 10 index points in the BBDXY... So, the euro, the offset currency, to the dollar, is trading within spittin' distance of 1.10 again, and the rest of the currencies are following the euro higher... Economists, even the two handed kind, have been issuing warnings about a "dumb thing to do" implementing these tariffs, and the stock Jockeys have really taken this "dumb thing to do" and gone on to sell stocks... The rot on the stock markets vine is really getting exposed right now, but that's not what we're here to talk about is it? 

But when stocks get sold, bonds get bought, and the yield on the 10-year Treasury Bond had fallen below 4%... A friendly neighborhood reminder that when bonds get bought, their price rises, and the yield drops... And vice versa when bonds get sold...  The yield on the 10-year Treasury ended the week trading with a 3.91%... WOW! 

And the price of Oil got sold off BIG TIME, late last week... The Oil traders see the tariffs as not only causing inflation, but also slowing the economy down, thus reducing disposable income and gas buying... And with that in their collective minds, they took down the price of Oil to end the week at $62...  That's a full $10 in price from where the price of Oil was a week ago...  I can't help it, but I think this selloff in Oil was a bit overdone, and when inflation comes along adding to our already higher prices for just about everything, the price of Oil, being a commodity, will most likely rally...  

And there was news overnight that the Saudi's had cut Oil prices to Southeast Asia... So, that surely isn't helping the price of Oil... 

In the overnight markets last night... The dollar raced back! The buying of the dollar was interesting, as it looked more like a correction than anything else... The BBDXY gained 12 index points overnight, and starts our day/ week trading at 1.266, quite an improvement from Friday's close, eh? And the rest of the currencies have given up the ground that they had gained last week... Except one currency that seems to be the cat's meow this morning, and that is the Swiss franc... Safe haven buying of francs is the order of business this morning... Funny, not funny ha-ha, but funny that this should be the case... Buying a fiat currency as a safe haven instead of hard, physical Gold really has me wondering what the hell these traders are thinking!  The software that outlook uses just tried to re-write that last sentence in a "nicer way", and of course I said, "no thank you!" 

Gold is up $3 to start our day/ week this morning, and Silver is up 76-cents, and that looks good to me! Silver has been drug through an alley of broken glass, and then driven off in a dump truck in recent times, so to see Silver outperforming Gold for once in blue moon, make me smile... And after watching my beloved Cardinals get swept by the Red Sox, I didn't have much to smile about yesterday... 

The price of Oil slipped another buck overnight to start the week trading with a $60 handle... And the 10-year Treasury's yield slipped back below 4% overnight, to start the week at 3.98%... Stocks getting sold, bonds getting bought, it's the same throughout history, folks... 

With stocks getting sold, some panic selling, and so on, selling in margin accounts, or a more dreadful thing, margin calls for stock values falling below the min. Equity in the margin accounts... To pay for these margin calls, the most liquid asset these people have is Gold... So, Gold gets sold to get cash to pay for the margin calls in stock accounts... I believe that I have told you this before, but long ago in a far-away Galaxy, I ran a margin Dept, and a local regional Brokerage House, that has now become quite BIG... And I saw many a good person come to tears when told they had to sell something in their account, to pay for a margin call... Well, I didn't actually see them come to tears, I heard them on the phone... The pleading the begging, the asking for more time, I've heard it all... But Fed Reserve rules are rules, and we had to follow them... 

I read a piece this weekend that talked about how if the stock crisis happened in Asia, then the selling of Gold would be much more pronounced, but here in the West, the effect is much less in the price of Gold, because, Westerners don't even know that they can own physical Gold much less sell it to pay for margin calls...  

So, tell me then why did Gold lose $77 on Friday, following up its $19 loss on Thursday, to end the week at $3,036. Silver saw the short paper traders go to town on its price both Thursday and Friday last week... On Thursday, Silver lost $2.02, and on Friday it lost $$2.27, to end the week at $29.55... Now if that's not what Ed Steer calls a "Bear Raid" in Silver I don't know what is.... Silver has been the whipping post boy of the metals in the last couple of weeks, and do you want to know why? Because it costs less of finance short positions in Silver than it does Gold...I'm not going to go all postal on the short paper traders here, instead, I'll point out that Silver (and Gold) is bargain basement cheaper! Beep, Beep, Beep, what's that sound? It's the sound of the truck backing up to load up on Silver (and some Gold) at these blue light special prices in Silver... 

You know, when I think about the dollar getting sold last week, I wonder what happened to its "safe haven status"? I mean, that in the past, whenever there was a crisis going on with the stock jockeys, investors would flock to the dollar for protection... But not this time... And while I don't like the saying, "This time is different", this time was different, and investors ran from the dollar... There are no ifs, ands or buts, here... Investors ran from the dollar! And I can't blame them!  

The tariffs are going to do some ugly things to the U.S. economy, IF they are allowed to be implemented...  And that can't be good for the dollar... I've got something for you regarding Foreign Central Banks and their holdings of dollars as reserve in the FWIW section today... So, be sure to stay here for that!  

I just can't get Smoot-Hawley off my mind here folks... If Smoot-Hawley tariffs weren't a main cause for the Great Depression, then they were at the scene of the crime...  My economics go to, Frank Trotter, who studied under the great Hy Minsky, and I had the unique opportunity to be with on several occasions many years ago... Would talk about the Minsky moment... A Minsky Moment is simply, the onset of a market collapse brought on by speculative activity that defines an unsustainable bullish period. Minsky moments generally occur after a long period of growth, which ultimately leads to overleveraging once prices stop rising.

In other words, when everyone thinks that this stock rally and economic phenomenon will go on forever, the Minsky Moment appears, and it all begins to circle the drain...  Trees don't grow to the moon, folks... Remember that! 

Well, that's just about all I have to say about the tariffs, and markets this morning, we might as well head to the Big Finish, eh? Except to mention that the DOGE folks, found that $1.3 Billion in checks were sent to deceased people here in the U.S. and the checks were cashed! Wait, What? Now, that this has been found, what are the steps that will be taken to prevent this from taking place again? That's the problem with the DOGE folks, so far folks... They find these frauds, wastes, and abuses, and then nothing is done to correct them...  I find this to be a real problem... But I'm not fool, I realize it will take an act of Congress to do something about them, and they will balk, because that's not what got them elected! 

The U.S. Data Cupboard last week had the March Jobs Jamboree numbers for us... 228,000 were created in the month, and there was only a rounding error taken away in the Birth / Death model, which is part of the BLS's hedonic adjustments... But the Unemployment Rate rose to 4.2% (from 4.1%) There was a ton of job creation in March, and one has to wonder what gives, with businesses closing and filing for Bankruptcy, growing by leaps and bounds, so there's no hiring going on there... The Gov't extras that DOGE has identified as non-essential, should be showing up in these Jobs Creation losses numbers... 

This Weeks's Data Cupboard is pretty void of real economic data, until we get to Wednesday, when the FOMC's Meeting Minutes will be printed for all to see what the Fed Heads really had to say about the economy and rate movements coming... 

To recap... The rot on the dollar's vine is being exposed these days, as the dollar had lost 20 index points in the BBDXY in the last 10 days... Gold is getting sold to pay for margin calls, and Silver is being sold short by the short paper traders and creating excellent buying opportunities in Silver... The currencies were gaining VS the dollar last week, with the dollar getting sold. The euro is the "leader of the pack" (the shangri-las) and the rest of the currencies were following the euro higher VS the dollar. Chuck talks a bit about the tariffs, and gives you his thoughts on all them... 

For What It's Worth... I came across this article on Saturday, after returning home, and thought back to a time when the dollar's share of reserve currencies around the world had shrunk to 63%, and thought then that the dollar was in trouble... 

Here's your snippet: "The U.S. dollar's status as the global reserve currency continues to erode, with gold and “non-traditional” reserve currencies gaining ground.

According to recently released IMF data, the dollar’s share of global reserve currencies slid further last year. Total holdings of dollar-denominated securities by central banks (excluding the Federal Reserve) fell by $59 billion in 2024.

As of the end of last year, dollars made up 57.8 percent of global reserves. That is the lowest level since 1994, representing a 7.3 percent decline in the last decade. In 2002, dollars accounted for about 72 percent of total reserves.

This isn’t the first surge of de-dollarization. The greenback’s share of reserves plunged during the inflationary years of the 1970s but recovered during the 1990s as price inflation cooled and U.S. budget deficits narrowed thanks to the post-Cold War “peace dividend.”

Today, the dollar faces a triple whammy - sticky price inflation, out-of-control federal spending driving massive budget deficits, and global wariness of the West’s weaponization of the dollar.

De-dollarization has accelerated since the U.S. and other Western nations imposed heavy sanctions on Russia in the wake of its invasion of Ukraine.

According to a report by the Atlantic Council, “In recent years, and especially since Russia’s invasion of Ukraine and the Group of Seven (G7)’s subsequent escalation in the use of financial sanctions, some countries have been signaling their intention to diversify away from dollars.”

What Is Replacing the Dollar?

If central banks are spurning dollars, what are they holding?

Increasingly, they are bolstering their reserve with gold.

Central bank gold demand topped 1,000 Tonnes for the third straight year in 2024. To put that into perspective, central bank gold reserves increased by an average of just 473 Tonnes annually between 2010 and 2021."

Chuck Again... Well, I've journaled here in the Pfennig previously, regarding how Central Banks were gobbling up the physical Gold... And now here's the proof in the pudding!

Market Prices 4/7/2025: American Style: A$ .6036, kiwi .5679, C$ .7015, euro 1.0946, sterling 1.2811, Swiss $1.1708, European Style: rand 19.5467, krone 10.8855, SEK 10.1012, forint 372.46, zloty 3.9234, koruna 23. 2054, RUB 86.34, yen 146.26, sing 1.3471, HKD 7.7682, INR 85.84, China 7.3090, peso 20.63, BRL 5.8424, BBDXY 1,266, Dollar Index 104.13, Oil $60.59, 10-year 3.98%, Silver $30.33, Platinum $910.00, Palladium $917.00, Copper $4.40, and Gold... $3,039.67.

That's it for today... Well, the final two teams in the NCAA basketball Championship Game tonight will be Florida, and Houston... I'm pulling for Florida... I guess, we'll see... Neither of the two teams I picked in my final two made it to the game, with both losing on Saturday... My beloved Cardinals are proving me wrong... I said while in Spring Training that they couldn't seem to find any timely hitting... But in the regular season so far, they've done well with their team hitting, so, no scout I could be! I do believe I'm getting better, I'm moving around much easier, and without my breathing and heart rate going as much haywire... I went downstairs as soon as I arrived home on Saturday, and can't climb the steps to go back upstairs, so I'm living in the basement! Hey! It's better than living in a trailer down by the river (Farley) !  That's just a funny saying from an old SNL skit, folks, I'm not making fun of anyone living in trailers! I ordered 3 new books to read, now that I'm not able to get out and move about the country, so I'll be getting to them today... The Moody Blues take us to the finish line this morning with their great song: Nights In White Satin... I hope you have a Marvelous Monday today, and will please Be Good To Yourself!