A Pfennig For Your Thoughts

In This Issue…

  • Japanese Tankan slides a bit…
  • ISM expected to improve…
  • Gold and silver say game on!
  • Eurozone economy has the momentum!

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And Now… Today’s Pfennig!

Opening Day!

Good day… And welcome to April! Well… Beat the drum, and hold the phone, the sun came out today, we’re born again, there’s new grass on the field… Yes, it’s Opening Day in baseball (yes, there was a game last night, but today is Opening Day!), and my beloved Cardinals are in Philadelphia to begin the season. I see the currencies put on a one-week tent revival last week while I was gone… And gold has really taken off again… So, there’s a lot for me to talk about… However, some very strong storms ripped through this area last night, and I’m without power on the desk right now…

Laptop battery power, with no trading screens to view, is what I have working for me this morning… Hopefully, I can get this written, and the power will come back, and I will be able to plug in and send it out! If not, who knows when you’ll actually receive it!

Well… The tent revival for the currencies left town overnight and took with it the strength it had given to the currencies for a week… The Japanese Tankan report came out a bit weaker than expected… And that turned the tide on the yen… While that was going on, European traders began to believe the forecasts that U.S. manufacturing as reported by the ISM this morning will have risen to the highest level since last October… That has sent the euro back below the 1.21 figure… But always, always I tell you, this is short-term noise… Use it as an opportunity to buy cheaper!

I was reading a story this weekend that caught my attention… Reuters reported that…”Currency funds expect to end the first quarter on a sour note, but hope that a weak dollar trend widely expected later this year and lucrative emerging market trades will break their slump.”

Yes, a widely expected weak dollar trend later this year… I agree with that one! And Bill Bonner and Addison Wiggin had a great piece in their Friday Daily Reckoning (http://www.dailyreckoning.com) regarding the U.S. Trade Gap, and how it relates to the future value of the dollar… Here’s a snippet…

Willem Buiter, a monetary astronomer at Goldman Sachs, comments:

“With the U.S. trade gap in October 2005 widening to a new record U.S. $68.9 billion, the U.S. current account deficit is unsustainable. Its correction will require a large depreciation of the real effective U.S. Dollar exchange rate, on reasonable estimates by no less than 30%, and quite possibly by more.”

And to follow that up… This was reported…

“The Asian Development Bank warned readers last week to “prepare for a collapse of the dollar.”

I foresee this short-term noise with a weaker euro vs. the dollar to be short lived as I expect ECB President Jean-Claude Trichet to step up the anti-inflation rhetoric this week. This is his chance to shine… Let’s see how well he does, eh?

On Friday, it was reported that Manufacturing in the dozen euro nations expanded at the fastest pace in more than five years in March! Last week, we also had a soaring IFO Business Confidence report from Germany… So… Who says things aren’t coming in line for the Eurozone economy?

Not Tim Fox, a currency strategist at Dresdner Kleinwort Wasserstein in London, as he was quoted as saying… “The momentum is behind the European economy.”

OK… Gold has finally started its next move upward toward $600… The move has been fueled by a few things… The weaker dollar last week… The nervousness surrounding Iran and their threat to cut oil production… The overall instability in the world today… And a war in Iraq that doesn’t seem to have an end… Yet…

My friend, David Galland, of the Casey Research team (/index.php) wrote this about ten days ago, but I wanted to share it with you because once again Doug Casey was right on top of the gold market…

”I mention all of this because Wednesday, March 22, Doug made another one of “those” statements, saying that he is now convinced that gold is on the verge of its next big move up, a move he believes will surprise everyone.

The day that Doug related that to me, his latest in a string of calling the big moves, gold closed at $550.75. Today as I write this, just a day over a week later, gold is trading at over $582.00, a gain of over $32.”

Good call, Doug!

I think I’ll head to the Big Finish on that note!

Currencies today: A$ .7175, kiwi .6150, C$ .8525, euro 1.2065, sterling 1.7285, Swiss .7640, ISK 73.20, rand 6.1575, krone 6.5735, forint 217.64, zloty 3.24, koruna 23.5375, yen 118.50, baht 38.80, sing 1.6175, China 8.0199, pesos 10.8720, (no dollar index today), silver $11.65, and gold… $586.50

That’s it for today… my spring-break with the family to Jupiter Florida to spend time watching baseball was GREAT! We had a marvelous time! I have to share with you a story about my little buddy… We were eating dinner one night, and right across from us were two Big Time Cardinals players, Chris Carpenter (last year’s Cy Young winner) and Jim Edmonds… Alex (my little buddy) got to talk to them, and they autographed his baseball cap… He came back to our booth, and said… “I think… I’m going to… faint!” HAHAHAHA… We laughed so hard! Oh, well, I bored you to tears with that one, so, have a great Monday and week… It’s Opening Day! YAHOO! Baseball is Back!

Chuck Butler
EverBank World Markets