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Money Daily has been providing business and financial market news, views, and coverage on a nearly continuous basis since 2006. Complete archives are available at moneydaily.blogspot.com.
Money Daily has been providing business and financial market news, views, and coverage on a nearly continuous basis since 2006. Complete archives are available at moneydaily.blogspot.com.
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Friday, May 28, 2021, 8:20 am ET
With a 600-point gain to close out the week, the Nikkei 225 has put on gains in six of the last seven sessions, extending its close for the week to just above the 50-day moving average. This is a very strong market signal, suggesting that globally, stocks are set to move another leg higher.
As difficult as it is to believe that grossly overvalued stocks - by most measures, US stocks are trading at levels higher than prior to the crashes of 1929 and 2008 - can move significantly higher from where they are already trading, the reality is that higher stock prices are exactly what the oligarchs, central banks, hedge funds, and politicians want. They believe that higher share prices for publicly-traded companies are most beneficial to their portfolios, add to the coffers of pension funds, and keep the US dollar from collapsing into a pile of worthless chits.
So long as stocks remain the only game in town, or at least the most attractive, Wall Street traders will dream up new reasons to own the stocks of the Dow 30, the tech giants, the oil companies, insurance concerns, and mostly big cap growth stocks.
The song they sing to American consumers is a single chorus. Buy products made by Proctor & Gamble, 3M, Apple, Coca-Cola. Spend at Home Depot, Lowe's, Best Buy. Use Visa, Mastercard. Charge through Bank of America, JP Morgan Chase, Citigroup. Buy a GM car, or maybe a Tesla. Eat only at McDonald's, Taco Bell, KFC, and drink Pepsi. Get a vaccine and buy drugs from Pfizer, Merck, Johnson & Johnson. Don't save. Spend. Spend more. Buy more products from companies listed on the NASDAQ, Dow, S&P 500, or NYSE. Never mind that almost everything is made in China.
It's consumerism at its finest, much of it promoted to the unthinking, unblinking, mask-wearing American consumer. Never mind that the industrial output of the country is a shadow of what it formerly was. Do not question any authority, especially that of Janet Yellen, the US Treasurer, or Jerome Powell, head of the Federal Reserve.
And, by all means, do not buy gold, silver, or cryptocurrencies.
Have a happy Memorial Day. Please take a moment out of your holiday routine to remember those who gave their lives to defend our freedom and compare yourself to those who gave the ultimate sacrifice while you carry on with your life, knowing that the current occupant of the White House is an imposter, did not win the 2020 presidential election, and is incapable of leading the country.
Think of what you can do to restore sanity, honesty, and principle to our media, politics, society.
Or, you can just grill some hots and burgers, play horseshoes and never mind that the way of life you used to know is gradually being transformed into a giant plantation.
At the Close, Thursday, May 27, 2021:
Thursday, May 27, 2021, 8:51 am ET
The recent crash in cryptocurrencies, which saw Bitcoin fall from a high over $64,000 to a low around $30,000, has been devastating to some fans of crypto in general, as hodlers watched their dreams of financial independence vanish over the course of just a few weeks.
With Bitcoin's demise, other cryptos, altcoins, and tokens fell in sympathy. It seemed that the entire crypto universe was subject to the whims of billionaires like Elon Musk and his tweets and to the FUD spread by mainstream media, various governments (China and the USA, in the main) and no-coiners mouthing off on social media platforms.
In the span of about six weeks from its high of $64,899 (April 13) to the low of $30,000 (May 19), the price of Bitcoin in US$ had fallen by 54%. Though the decline was abrupt and very large, Bitcoin detractors generally fail to point out that the world's first cryptocurrency was, for the better part of the past 12 years, the best-performing asset in the world, rising from mere pennies since its inception in 2009 to today's levels.
Bad-mouthing an asset - be it a stock, bond, work of art, or crypto coin - may be an effective tactic in the short term, though the lasting effects are somewhat less damaging. In the case of Bitcoin, which is an asset unto itself still in relative infancy, the effect of the nearly constant barrage of negativity seems to have fallen mostly on deaf ears.
After all, even after the recent crash, Bitcoin is trading at levels from late January and early February and remains positive for the year (28,990, December 31, 2020), up 36%, using a price of $39,500 as a benchmark.
One of the reasons Bitcoin remains viable is its perceived value, a far different measure than price. Large holders - known by some as whales - see value in Bitcoin and other cryptos, as it is separate from government issued fiat currencies such as the US$, yen, euro, and Chinese yuan. With a maximum of 21 million Bitcoins to be mined (currently 18.7 million already mined) there is still a long way to go for Bitcoin, which should remain the leading crypto until nearly all of the coins are mined unless all governments ban Bitcoin mining, as China and Iran have already done, though China's ban appears to have no teeth. There are many miners in China operating with full knowledge of the government.
Miners will always move to the best mining location, one which offers low cost electricity and a favorable regulatory environment. Thus the pace of Bitcoin mining may be slowed for some time, but, since the rewards are high (Bitcoins), miners will continue trying to solve complex math problems to earn more coin.
The recent price drag may prove to be only a temporary setback and a buying opportunity for those arguably late to the party. Adoption by mainstream banking and financial institutions has barely begun. Big players such as JP Morgan Chase and Goldman Sachs have only recently - within the past month - announced that they will make Bitcoin and other cryptos available to clients. That trend should enhance the value proposition as more staid and steady investors devote some portion of their portfolios to dabble in the crypto world.
Additionally, the ways to buy, sell, trade, and move crypto are still evolving. PayPal, which recently announced first quarter earnings, topped estimates yet again. The company has beaten Wall Street estimates seven of its last eight quarters.
The company also announced yesterday that it would allow members to send cryptocurrency, like Bitcoin, off its platform into private wallets and, assumably, other exchanges, such as Coinbase or Binance.
PayPal opened trading on select cryptocurrencies to US customers in November, 2020, and began allowing users to pay for goods and services with crypto in March, 2021.
The company reported adjusted EPS of $1.22 per share, well beyond estimates of $1.01. It was the second set of results to include PayPal's crypto buying and selling service. The company has said customers who purchased crypto through the platform have been logging into PayPal twice as often as they were before they could buy crypto.
As the rate of adoption in PayPal continues to spread within the company and to other payment providers (think Visa, MasterCard), the value proposition will only improve. Naysayers will continue to spread rumors of the demise of Bitcoin, but they should begin to understand that Bitcoin has already been declared dead 416 times, so the latest killing is actually nothing new.
Like any new technology, blockchain, the backbone of Bitcoin and all decentralized cryptos, will continue to evolve and improve. Until the forces of nature or the force of government absolutely crushes blockchain, cryptos will continue to attract attention. Blockchain technology is so intriguing, central banks have already announced plans to issue digital currencies, known as CBDCs (Central Bank Digital Currencies). China has already begun testing one, known popularly as "digital yuan."
Whatever the plans of central banks and governments, the crypto saga is still being written. While Bitcoin's eventual rise (or fall) may not be as dramatic as it was during the latter part of 2020 and the early months of 2021, it's not going away any time soon.
In other markets, gold and silver failed to maintain bid levels above $1900 and $28, respectively, as the trained seals at the bullion banks cannot help themselves from shorting the precious metals, as has been their practice for many years. Once new regulations via Basel III become reality at the end of June, the main players in the gold and silver suppression business will likely have to find new circus animals.
In the interim, investors will just have to treat the suppressions as buying opportunities.
Stocks haven't had any exciting news or catalysts to move them higher the past few sessions, the slow pace possibly continuing Thursday and Friday, leading into the three-day holiday weekend. The next potential market mover could be the May non-farm payroll jobs report, due for release a week from tomorrow, June 4. Following that, the Fed holds a FOMC meeting June 15-16, though no new interest rate policy is expected. Rather, some nuance in the messaging by the Fed could indicate some future move, but for now, jawboning remains the Fed's preferred tool to offer markets a pretense of control.
At 8:30 am ET Thursday morning, the Labor Department announced initial claims falling for the fourth consecutive week, to 406,000. Stock futures are mixed heading into the open.
At the Close, Wednesday, May 26, 2021:
Wednesday, May 26, 2021, 10:30 am ET
Stocks spent most of the day traversing the UNCH on Tuesday, while what could be developing into a major story was happening on the COMEX, where silver and gold were making strides toward levels which are significant.
When stocks opened in New York, both of the metals shot higher, an event uncommon to veterans watchers of the commodity futures markets. After sold gains, both gold and silver traded in harmony, but only began a further ascent as the stock markets were closing, around 3:00 - 4:00 pm ET.
When the futures trading closed in New York at 5:00 pm, gold stood at $1898.80, while silver finished up at $27.98, both numbers just below key psychological levels, and for silver, a major point of resistance.
Overnight, in Asian markets, the metals traded in mixed fashion until the opening in Hong Kong, where buyers took out the key levels in both, silver spiking beyond $28 and gold surpassing and holding above $1900.
Catalysts for the advances are fairly plain to see for interested parties. Beyond the upcoming rule changes in Basil III, which, for all intents and purposes will dramatically change the suppression regime on the COMEX for good, to the benefit of gold investors and to the detriment of the terminally short bullion banks, there has been an explosion in retail demand, from the "apes" at redditt group r/WallStreetSilver, and now, it appears, gold buyers are entering orders at an elevated pace.
The changes proposed by the Basel III rules come at what could be considered a critical impasse. Fiat currencies around the world are failing in dramatic fashion. From the Japanese yen, to the euro, to the US dollar, they are all under assault from decades of government overspending, central bank quantitative easing and balance sheet expansion, and, as the entire planet approaches the 50-year anniversary of the formal end of the gold standard (Nixon, August, 1971), complete exhaustion.
Evidence of high demand is noted at online retail dealers. For instance, this notice on the sale site of Scottsdale Mint:
SHIPPING NOTICE: Be advised that most products are estimated to ship in 4-8 weeks from the date of payment clearing (Eagles/Buffalos/Maples can be longer). We appreciate your understanding that these are best "estimates" and that unforeseen delays can happen. Scottsdale Mint manufactures hundreds of variations of Gold and Silver products for third party bullion dealers, private banks, and foreign central banks, in addition to this website. All metal is secure in our vaults and it simply takes time to process into finished retail products. We thank you for your patience.
Alas, as the stock exchanges open in New York, gold, and, especially, silver, have come off their high levels. Gold has retreated to around $1904, while silver has been shamelessly beaten down to $27.87.
Will the fraud ever end?
Change is afoot. Of course, the changes necessary for a functioning society run contrary to the wishes and desires of the financial elites, the central banks, and the hopelessly corrupt governments of developed nations. The struggle for freedom by ordinary men and women will not be without significant pain and suffering. Those in power will not relinquish it readily or without a fight. Preparing for the worst while hoping for the best outcomes would be a reasonable approach for a majority of people striving for economic and political freedom.
Tyrants, psychopaths, and megalomaniacs never surrender. They must be defeated. Sic Semper Tyrannis
Editor's Note: Apologies for the late publication of today's note. Early this morning Money Daily was hit with a power outage which was restored after a short time, but that was followed by an internet disruption. All seems to be working well as of 9:45 am ET.
At the Close, Tuesday, May 25, 2021:
Tuesday, May 25, 2021, 8:58 am ET
Taking a much-needed day off.
Suffice it to say, cryptocurrencies are recovering, the stock market continues to go up. Everything is seemingly under control. For today, at least.
At the Close, Monday, May 24, 2021:
Sunday, May 23, 2021, 10:30 am ET
The week was a mixed decision for stocks, with all of the major indices lower except the NASDAQ, which ended a string of four straight weeks in the red. Stocks are apparently in no danger of serious declines even though the Dow, S&P and NYSE Composite were all down for their second consecutive week. Bounces off the 50-day moving averages have become so commonplace as to be laughable. Each of the aforementioned three did so on Wednesday as stocks reversed course after frightening declines early in the session.
Best exemplifying the moving average bounce was the Dow, which on Wednesday started broadly lower, down as much as 587 points only to rally to a close down a mere 163 points, the 400-point rally purportedly the product of buy programs triggered by the dip to buy the dip. It's pretty standard practice these day as stocks can only go down when the computers deem it necessary.
Most of the public's attention was focused on Bitcoin and the crypto space over the course of the week, as was the attention of the Fed and its cohorts in China. A very concerted effort was made to discredit, vilify, and, in China's case, ban cryptocurrencies by various parties. For its part, China reiterated its ban on the use of cryptocurrencies and the mining of such, even though Bitcoin and altcoin mining is very active and well-supported in the People's Republic. The efforts to clamp down on the nascent competition to fiat currencies and the central banking way of life were glaringly obvious and continued into the weekend.
After bouncing off a low of $30,000 on Wednesday, Bitcoin advanced to over $40,000 on Thursday and into Friday morning, but those gains were quickly eviscerated Friday afternoon, taking the price back down to the $35,000 range. Saturday into Sunday morning saw more selling, sending Bitcoin below $34,000. As of 10:00 am ET Sunday morning, it's trading around $33,800, making the week a confidence-mashing loss of 27%.
For the week, Ethereum was down more than 40%, bottoming out at $2,000 Sunday morning. Like Bitcoin, its price has been cut by more than half off the recent all-time highs. On May 12, ETH was at $4,384. Thanks largely to mainstream noise and covert opposition, the crypto world has been crushed in the near term. While proponents are still making the rounds, calling the recent declines a buying opportunity (which they very well may be), the general consensus is that the leading edge of the falling knife is still to sharp to handle. Time will tell whether the establishment forces can prevail over the wave of the future.
For what it's worth, the people helping take down the cryptos are the same ones actively engaged in (or so they say) developing blockchain currencies of their own. Central banks around the world have not been shy about the fact that they are researching and developing what's become known as CBDCs (Central Bank Digital Currencies) which would speed transactions and put the public in direct contact with the central authority, cutting out the need for middlemen suhc as commercial, retail banks.
There's likely a good deal of posturing in the central bank statements about cryptocurrency and their desire to develop their own. While it's apparent to many that the end of the road for unbacked fiat is in sight, the central banks aren't likely to make drastic changes to the status quo without an extended fight. After all, they have the world entrapped in monstrous, odious debt and like it that way. Taking down the competition - as they routinely do with gold and silver via the COMEX - is just another day at the office for the disingenuous counterfeiters.
Crypto losses may have turned into precious metal gains. It was an outstanding week for physical gold and silver purchasers and investors. Gold rose from $1838.10 to $1,881.80, a five month high. Silver, being that it is the most-hated competing money to central bankers, fared less well, though it had its moments, rising from $27.36 an ounce to $27.66 during the week, with a couple of forays above $28 per ounce, reaching as high as $28.33 on the futures exchanges. Friday's close in New York was the best since February 24 of this year.
Recent articles about the effect of new Basel III rules on unallocated gold and silver have put some parties on notice. Goldmoney's head of research, Alasdair Macleod, has been on top of the story. His most recent article - The End of Paper Gold and Silver Markets - details the coming regulations and possible scenarios, following up on his previous coverage from the week prior.
Here are the most recent prices for common one ounce gold and silver items sold on eBay (numismatics excluded, shipping - often free - included):
Item: Low / High / Average / Median
The steady climb in gold and silver over the past two months has been welcome relief and may be pointing to fresh highs. If silver can breach and hold above $28 an ounce and gold over $1925, breakouts could occur rapidly. Money Daily's survey of Single Ounce Silver Market Price Benchmark (SOSMPB) rose over the week to $43.59, up a stunning $2.43 from last week ($41.16).
Treasury bonds barely budged, with the 10-year, 20-year, and 30-year maturities holding yields in a tight range. The 30-year dropped two basis points, to 2.33% yield. The 20-year fell one basis point, to 2.44%, and yield on the 10-year note remained at 1.63% after rising earlier in the week.
Ominously, the US Treasury reported the 30-day bill (1 month) at it's lowest possible level, 0.00%, five times in the last seven working days, including four of the five days last week. This underscores the Fed's tenuous position vis a vis negative yields, a practice widely employed by members of the EU and the BoJ. While published rates are at zero or above, real rates - when measured against inflation - are all negative, rendering bonds the worst investment of the year, guaranteed to lose money over time. Such is the plight of the Federal Reserve, which is monetizing government debt as quickly as Janet Yellen's Treasury can issue it.
According to Wolf Richter of wolfstreet.com the Federal Reserve has purchased $2.44 trillion of government-issued debt since March of 2020, making it by far the largest holder of US government debt with a staggering 17.6% share of the $28.3 trillion (and rising) national debt.
For comparison, the two largest foreign holders of US debt, Japan and China, together hold 8.3% of the debt, a figure that has gone into terminal decline over the past five years. The percentage of all foreign holders' share of US government debt has fallen from nearly 35% in 2015 to 25% presently, some $7 trillion of it.
Needing to keep US debt viable in markets, the Federal Reserve has finally emerged as the buyer of first and last resort. Their recent buying spree rivals the hyper-inflationary tactics of the Weimar Republic, Venezuela, and Zimbabwe. Anybody of the belief that hand-outs and free money from the government are positive for the economy needs only to visit their local hardware store or grocery chain to see prices rising out of control. Insisting that the current spate of inflation is transitory, the Fed is openly lying to the public as it permanently devalues the currency.
With the dollar index closing out the week at 90.03, its lowest level since 2014, it appears to be only a matter of time before there's another mammoth financial crisis which will erode the value of US currency to levels not seen since the GFC of 08-09. The world is losing interest (no pun intended) in US$ debt and is rapidly losing patience over the insistence by the federal government to continue running enormous deficits year after year without a single thought towards correcting their spendthrift ways.
The US cannot win its fight against inflation, rampaging debt burdens, unemployment, or its already shrunken industrial base so long as the Federal Reserve continues to fail at performing its dual mandates of stable prices and full employment. It is a miserable failure, obvious to many, especially those who seek relief via cryptocurrencies, precious metals, jewelry, collectibles, or other hard assets. A compromised congress comprised of pompous liars, cheats, and thieves, stands as the ultimate complement to the current occupant of the White House, a complete fraud and known criminal who should be behind bars. The nation's system of justice is entirely corrupt and broken, all of it heralded and praised by a nonsensical mainstream press that has foregone principles of honest journalism for access, bribes, and devotion to a false narrative. If you're not thoroughly disgusted by now, you've got your eyes closed and hands over your ears.
One small consolation is that the price of WTI crude oil ended the week at $63.88 a barrel, down from $65.37 the prior Friday. Maybe the average price for gas in the US will come down from its seven-year high of $3.04 a gallon.
That's some wishful thinking, right there.
At the Close, Friday, May 21, 2021:
For the Week:
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