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In This Issue.

* Euro rises, A$'s get hammered.

* RBA turns on green lights to A$ weakness.

* Has CNY gone too far, too fast?.

* A$ and C$ grow up to "big boy" currencies .

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

2-Day FOMC Meeting Begins Today.

Good day. And a Tom Terrific Tuesday to you! Speaking of Tom and his dog, Mighty Manfred the Wonderdog. I was a real Crabby Appleton yesterday afternoon. I was glad to see that I woke up this morning with a different attitude! Not sure why I became "rotten to the core" yesterday, I think it was a lack of sleep.

The currencies and metals continued their mixed bag of results throughout yesterday, with the Aussie dollar (A$) losing all the ground it had gained this past week on a report that the Reserve Bank of Australia's (RBA) minutes of their last meeting indicated that the RBA is wanting the A$ to weaken further. Basically when a Central Bank says stuff like that, the markets are more than willing to help them by turning all the traffic lights to green. Especially when you have a currency that has gained so much in the past 11 years, the willingness of the markets to go ahead and play ball with the central bank as long as they can take profits, takes center stage.

Yesterday I told you about the G-8 meeting in Northern Ireland. Just to show you how much these G-8 leaders are out of touch with what's going on in the world today, they issued a communiqué saying that they see the worst is over for the world economy. Really? Let's see, the World's 4 largest economies, The Eurozone, The U.S., China and Japan are all mired in either slowdowns or recessions, and a couple in depressions. The U.S. & Japan are currently in a competition to see who can print more money to buy bonds, and the Eurozone can't squeeze a drop of blood from their economy right now. And then there's China, who by all accounts are slowing down. But the worst is over? Really? Rose colored glasses. note to self. Self, you need to buy some of those rose colored glasses.

Hey. I told you yesterday that I was going out on the big fat limb (to support me, we certainly don't want limbs breaking on the tree or me!) and calling for Big Ben to sound dovish, thus reversing the calls for the tapering of Quantitative Easing (QE) to begin. Well, I found another arrow in my quiver this morning, but you have to stay with me on this, for this borders on conspiracy thinking. This morning the U.S. president said that "Ben Bernanke has stayed in his post longer than he wanted to or was supposed to" OK. that smells of Big Ben slipping out the back door. and that leads me to be more cemented in my call yesterday. Here's the skinny on all this.

I see Big Ben keeping the pedal to the metal on QE. But before he has to announce any type of "tapering" he slips out the back door, and rides off into the sunset, hoping to have put a 100 miles of desert between his hide and the crashing down of the economy when QE gets tapered. He'll be able to say, "hey, when I was there, everything was working" (at least in his mind!)

Well. The FOMC meeting begins today, with the QE announcement tomorrow. It's one of those 2-day meetings, when the board games get taken off the shelves, and you get to hear cries of "you sunk my battleship" coming from the meeting room.

Ok. Enough of that! You know, a couple of weeks ago, I did that interview on the Street.com and in the interview, I talked about the euro briefly. I said that the euro hasn't always had a good economy to underpin the euro's rise. And that's what's happening now. The euro has gained 4% VS the dollar in the past 4 weeks, and all the while having an economy that borders on sinking into a deep dark abyss. Why is the euro stronger? Well. As I always say, when people ask me about the euro remaining strong in the face of turmoil, calls for a breakup, collapse, and sovereign defaults. If the euro can remain strong in the face of all that, what does that tell you about the dollar?

I saw an article on Yahoo Finance yesterday (thanks Ty) that talked about this very thing. euro strength. The article alluded to Emerging markets unwinding and finding solace in the euro. Interesting don't you think? Especially considering all the negativity that surrounded the single unit in the past 3 years?

The euro is attempting another run at 1.34 this morning on the back of a the latest German Investor Confidence as measured by the think tank ZEW, which saw an increase in their index number to 38.5 from 36.4 in May. The 38.5 was better than the forecasts (38.1), and reflects the stronger German Industrial Production than forecast and stronger German economy overall. Remember, Germany is the Eurozone's largest economy, so when Germany is doing better, it gives the euro a boost.

The Big Boss, Frank Trotter, who was in NYC yesterday to do some interviews, face to face, sent me the link to a story in the Economist, regarding the Chinese renminbi / yuan. Here are a couple of snippets from the story in the Economist that I found to be very interesting. "TEN years ago, the yuan made its debut as a global economic bugbear. In June 2003, America's then treasury secretary, John Snow, publicly encouraged China to loosen a policy under which its currency was pegged at 8.28 to the dollar. The next month four senators wrote an angry letter urging Mr Snow to investigate China for "currency manipulation.

A decade later, Mr Schumer and other senators are still bashing the yuan: eight of them re-introduced a bill last week that would slap duties on currency manipulators. But much else has changed. Now allowed to float by 1% a day on either side of a reference rate set each morning by the central bank, the yuan closed trading on May 27th at 6.12 to the dollar, 35% stronger than its June 2003 rate. It has risen more against the dollar since March than it rose in the whole of last year, and its climb against Japan's currency has been even steeper. Since November, when the markets began to anticipate dramatic monetary easing in Japan, the yuan has gained over 20% against a weakened yen." - Economist

Chuck again. Yes, the renminbi's rise this year has been something to behold, but.. one has to wonder if it has been a case of a little too far, and too fast? Especially now that we all agree that the Chinese economy is slowing down. What's the appeal? Apparently the Capitalists are pushing the Communists around here, right? That's where I think the rubber hits the road folks. And we could very well see the renminbi / yuan take a breather here, just so the Gov't can prove to the markets that this is no One-Way Street!

The renminbi / yuan is becoming a "big boy" currency folks, growing up right before our eyes. Speaking of "big boy" currencies. It appears that the IMF is going to actually give the Canadian and Aussie dollars their own buckets in the IMF's next report on currency reserves held by each country's central bank. The next report will come on 6/28 (Alex's birthday, and Dawn & Jerry's 10th anniversary!). Previous to the next report, the IMF only identified, dollars, euros, pounds, yen and francs, and then bunched all other currencies in a category called, well, you guessed it, "other currencies" (very creative of the IMF, don't you agree?) But now, Aussie & Canadian dollars will have their own buckets. I guess they will have become "big boy" currencies!

Speaking of the Canadian dollar / loonie. The loonie received some good M&A news overnight that will help underpin the currency going forward. A Chinese company is taking a 59% stake in a Canadian iron ore company, and valued around C$4 Billion. Let's see that would be, using my new math skills. C$2.36 Billion Canadian dollars that will have to be bought to settle that deal.

Gold is getting drug through the mud again this morning, dulling its shine once again. I think that if Big Ben carries out my call from the big fat limb, that Gold would rebound viciously. well that is until the NY manipulators go to work. Did you hear about the story that came from China last week during the Dragon Boat Festival? The report was about how 10,000 Chinese people stood in line to buy physical Gold. OK, remember how I've always told you to only believe 1/2 of the what the Chinese say their economic data reports? I've got to say that while I believe the line could have been very long, I doubt seriously that it consisted of 10,000 people! Exaggeration is truth that has lost its temper.

For What It's Worth. Always worth a read. the great Richard Russell, gives us some thoughts on Gold manipulation this morning. Here's Richard Russell. "It looks like the great gold rip-off is completed and over. A few of the banks (JPM) spread the rumor that gold was heading for $1,000 and that the bull market in gold was toast. This set off a panic in gold and silver, which served the perpetrators well.

As the metals swooned, the crooks, who had sold the metals short, made a tidy fortune as the metals collapsed. At the same time, they loaded up on cheap gold and silver. In all, quite a play, during which a good many duped investors dumped their silver and gold.

I understand that there is now a huge speculative short position in gold on the Comex. This position will have to be covered. This means driving the shorts out of the market. Thus, the manipulators will have cleaned up -- first by selling the metals short, and then by loading up on the metals at the bottom of the panic in preparation for (hopefully) the ride up.

My guess is that China and Russia soaked up a good deal of the bargain-priced gold near the bottom of the panic. China waits patiently while the US spends its way into bankruptcy. Which reminds me, there's still lots of talk about the true amount of gold owned by the US. Then why the hell doesn't the government or the Fed finally audit our gold holdings and put an end to the rumors? From what I understand, neither the Fed nor the US government want an audit. If the gold is really there, then why don't they put an end to all the rumors? For heaven's sake, let's have an audit -- or is there really something to hide?

I feel we are besieged with rumors, secrets, lies and manipulations. I've felt this way before, but I've never felt this strongly that we (Americans) are being lied to and manipulated. What's to hide? Jesus told us that we must know the truth, and the truth will make us free. Then for God's sake, start telling us the truth! My intuition tells me that if it's a secret, it's probably evil. Ultimately, good or bad, everything comes to light-- although it may take time." - Richard Russell.

Chuck again.. I just love reading Richard Russell's thoughts on the markets.

To recap. The mixed results for the currencies and metals continued throughout the day and in the overnight sessions. The euro is attempting another run at 1.34 on the back of a better than expected ZEW, and the Aussie dollar has given back the recovered ground, on a report that the RBA has turned the green lights on for currency weakness. Chuck highlights the Chinese renminbi's recent run, and asks if this has gone too far, too fast?

Currencies today 6/18/13. American Style: A$ .9445, kiwi .7970, C$ .9795, euro 1.3375, sterling 1.5605, Swiss $1.0855, . European Style: rand 10.0430, krone 5.7550, SEK 6.4855, forint 219.35, zloty 3.1825, koruna 19.2180, RUB 32.06, yen 95.30, sing 1.2610, HKD 7.7580, INR 58.78, China 6.1651, pesos 12.86, BRL 2.1705, Dollar Index 80.77, Oil $97.48, 10-year 2.19%, Silver $21.74, and Gold. $1,373.20

That's it for today. I've been doing so much writing, other than the Pfennig, lately, maybe that's what had me doing my best Crabby Appleton yesterday! Funny, I went back to the NewsMax magazine article from Jan 2011 (written in Dec 2012 of course!) titled: Is Silver The New Gold. I talked about how Silver was below $25, and what a good bargain it was. I guess that still holds true! A nasty rain storm swept through St. Louis last night, causing a 2-hour rain delay for Cardinals - Cubs. So instead of getting to watch 4 to 5 innings, I got to watch 2 innings. My TV in the basement where I watch TV all the time, when not outside, shot craps on me last week. It lasted 10 years, so I guess I'm OK with that, but had to go out and buy a new one, which is not my fave thing to do (talk to salespeople) Cardinals won last night, so maybe that's why I woke up in a better mood today! And Happy Birthday to Paul McCartney who turns 71 today. (could that be right? Sure doesn't seem like it!) Alrighty then. it's getting late! I hope you have a Tom Terrific Tuesday!

Chuck Butler
EverBank World Markets

Posted 06-18-2013 11:38 AM by Chuck Butler
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