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Len Penzo dot Com

The offbeat personal finance blog for responsible people.

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Black Coffee: Seeing Is Believing

By Len Penzo

It’s time to sit back, relax and enjoy a little joe …

Welcome to another rousing edition of Black Coffee, your off-beat weekly round-up of what’s been going on in the world of money and personal finance.

I’ve got another busy weekend ahead of me, so let’s get right to this week’s commentary …

Trust, but verify.

– Ronald Reagan

The lady across the hall tried to rob a department store – with a pricing gun. She said, ‘Give me all of the money in the vault, or I’m marking down everything in the store.’

– Steven Wright

Credits and Debits

Debit: Did you see this? Existing home sales data for January revealed that a resurgence in mortgage rates is finally starting to take its toll, as evidenced by a 4.9% decline month-over-month (MoM). That’s the biggest drop in 26 months. Now for the punchline: Prices are still climbing, despite the decline in sales. In fact, the housing market is so broken that the median debt-to-income (DTI) ratio to buy the median home is now a jaw-dropping 47%. With that in mind, it shouldn’t be surprising that only 24% of all US home sales in 2024 went to first-time home buyers – that’s the lowest share in history.

Debit: On a related note, US retail sales fell 0.9% last month. That marks the steepest monthly decline in 12 months. For those not counting at home, the downturn was spread across the sales spectrum, affecting everything from sporting goods to auto sales. As a result, economists are saying that this yet another sign that stagflation is taking root, which could delay Fed rate cuts. Let’s just hope it doesn’t delay any of those tax cuts that are supposedly in the pipeline …

h/t: @Kyle_C137

Debit: Needless to say, the retail sales decline has also hit eggs, which are in short supply due to bird flu. As a result, egg prices surged 15% in January – that was the largest increase since June 2015. A chicken breeder in Arkansas says she’s fielding 100 messages per day – double the usual number – from people wanting to buy her hens. And the owner of a company that rents chickens along with all of the necessary supplies – from feed to coops – is reporting that his inquiries are up 500%. On a side note … even if you’re not interested in buying a chicken coop, remember: You can always put four doors on it – then it becomes a chicken sedan.

Debit: By the way, if you’re looking for stagflation’s main culprit, you can blame America’s addiction to the credit card; the National Debt just keeps on climbing. It’s now more than $36 trillion – and rising. Rapidly. Oh … and there’s nothing the Department of Government Efficiency (sic) – a.k.a. “DOGE” – can do about it. It’s nothing personal, Mr. Musk. It’s just math.

Credit: Meanwhile, the extremely-astute macro analyst Daniel Oliver, who runs Myrmikan Research, points out “the inevitable corruption of banking: After its proper function of liquefying gold and monetizing commercial bills – activities that the free market supports – legal tender laws arrive and allow banks to monetize assets, then debt, then debt of ever greater quantity and ever worse quality.” Uh huh. Too bad there isn’t a guaranteed way to solve the problem. Oh, wait …

Source: Myrmikan Research

Credit: Not surprisingly, the recent gold market turmoil has President Trump now promising that a full audit of US gold holdings in Fort Knox is coming soon. Too bad his Treasury Secretary, Scott Bessent, didn’t seem to get the memo. We say that because last week he insisted that he had no plans to visit Fort Knox. He also tried to tamp down any speculation on America’s yellow metal reserves by claiming that “all the gold is there” and any senator is welcome to visit it at any time. Then again, that was news to US Senator Mike Lee who says he has been officially rebuffed by Fort Knox officials in the past. And he’s not the only one …


Credit: In the meantime, precious metals broker and analyst Andrew Maguire reports that the time for London to deliver gold to buyers requesting physical possession has now stretched from 8 weeks to 12 weeks. Despite this, LBMA officials in London insist that the delay has absolutely nothing to do with a lack of yellow metal in their vaults. To prove it, those same London officials presented a photo from deep inside the vault that they claim was taken just last week 😉  …

Debit: As for the Treasury Secretary’s claim that a “report” was issued last year on the status of the gold at Fort Knox, we’re quite certain that said “report” is not a detailed audit complete with bar numbers, vault locations and assay reports sampled from at least 2% of the total hoard. Until we see that data, we’ll continue to not believe him. After all, does he really think we’re that gullible? Then again, maybe he didn’t see the sign on the door …

Credit: Of course, the continuing lack of transparency regarding central bank, sovereign nation, and market-makers’ gold hoards is only causing revaluation speculation to grow with each passing day. So much so that precious metal analyst Vince Lanci remarked last week that, “gold revaluation is no longer fringe speculation. Trump’s sovereign wealth fund, Treasury Secretary Bessent’s monetization comments, economist Jim Grant’s sinking fund proposal, and growing mainstream attention signal that the Overton window has more than shifted – it has been been shattered.” And speaking of shattered proposals …

Debit: One thing is certain, as pointed out by Mr. Oliver: Even at $2900, gold is still cheaper in real terms than it was in 1969. This is based upon the fact that at today’s record nominal prices, the yellow metal currently comprises a paltry 11% of the Fed’s balance sheet. Maybe that’s why there are now reports out that say more than 2000 tons of gold has been transferred to the US over the past several weeks. By any measure, that’s a staggering amount of yellow metal. And, no; that’s not a typo. We just wish this so-called flex was:

Source: Myrmikan Research

h/t: @PinellasLP

Credit: We’ll let macro analyst Jesse Columbo wrap things up this week with this observation: “While revaluing America’s gold to $2900 would benefit the country, the resulting $749 billion windfall wouldn’t put a dent in the $36.5 trillion National Debt, which is growing by roughly $1 trillion every 100 days. And with unfunded obligations of (at least) $73 trillion, the measure would be a mere drop in the bucket.” In other words: If gold is going to rescue the US from its seemingly fast-approaching date with financial Armageddon, the yellow metal will have to be officially revalued at a price that’s far far higher than $2900. Got gold?

Last Week’s Poll Results

Does the US have all of the gold it claims to have?

  • Some, but not all. 58%
  • Nope! There’s very little left. 25%
  • Yes; all of it. 17%

More than 1500 Len Penzo dot Com readers responded to last week’s question and it turns out that 5 in 6 believe the US doesn’t have all 8133 tons of the yellow metal it claims to have in the vaults at Fort Knox, West Point, and Denver. Well … it’s hard to blame anyone for thinking that way when the US hasn’t had a full audit of its gold hoard in more seven decades.

If you have a question you’d like me to ask the readers here, send it to me at Len@LenPenzo.com and be sure to put “Question of the Week” in the subject line.

The Question of the Week

This poll is no longer accepting votes

Have you ever flown on a helicopter?
VoteResults

By the Numbers

Food staples have seen significant price increases over the past four years. Here are some of the biggest increases between Jan 2021 and Jan 2025. Can you guess the food staple with the largest price increase over that period?

15% Pork chops

22% Chicken

25% Bread

27% Rice

29% Ice cream

35% Butter

40% Ground beef

48% Sugar

53% Coffee

238% Eggs

Source: Statista via Zero Hedge

Useless News:

(h/t: Sally)

Squirrel Cam

The other day we caught Rita waiting patiently for the breakfast bowl to be put out. Before you hit play on this quick clip, see if you can find her in the still shot. I certainly didn’t see her until we saw the video!

http://lenpenzo.com/blog/wp-content/uploads/2025/02/Rita-Waiting.mp4

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Buy Me a Coffee? Thank You!

For the best reading experience, I present all of my fresh Black Coffee posts without ads. If you enjoyed this week’s column, buy me a coffee! (Dunkin’ Donuts; not Starbucks.) Thank you so much!


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More Useless News

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Letters, I Get Letters

Every week I feature the most interesting question or comment — assuming I get one, that is. And folks who are lucky enough to have the only question in the mailbag get their letter highlighted here whether it’s interesting or not! You can reach out to me at: Len@LenPenzo.com

After reading my article highlighting 34 tricks for achieving early retirement, JD had this to say regarding my repeated references to the high cost of kids:

Kids aren’t cheap, Len. But neither is my darn dog.

No kidding, JD — just be glad we don’t send pooches to college.

If you enjoyed this edition of Black Coffee and found it to be informative, please forward it to your friends and family. Thank you! 😀

I’m Len Penzo and I approved this message.

Photo Credit: public domain

March 1, 2025

Question of the Week

Aside from the US, which of these G7 countries have you visited?
VoteResults

Comments

  1. 1

    Lauren P. says

    Good morning Len, and thanks for another informative cuppa. I’ve been pondering what would happen if the U.S. gold reserves DO get audited and are found seriously depleted from what’s supposed to be there. Seems like market chaos, blame game, calls for heads to roll, etc. would result. If that happens what could the Administration’s next steps be?

    Meanwhile, in 1 week, clocks spring forward; I’m considering chickens in the Easter baskets instead of eggs this year… 😉

    • 2

      Susan says

      Lauren – I think we spring forward on March 9th this year? Either way it’s a PITA. I was hoping Trump was going to put an end to daylight savings time once and for all before I had to change all my clocks again. Maybe he’ll stop it in time for the fall back.

      • 3

        Lauren P. says

        Susan, I know lots of folks who agree with you re: stopping the time changes twice a year, but here in the northern latitudes where the daylight hours change more significantly from summer to winter, we appreciate the time changes. Otherwise, sunrise would be close to 8:30a.m. in December or about 4:13 a.m. in June, depending on if Standard or Daylight time were chosen! I think states should do like Arizona does and decide this for themselves. Either way, we’re looking forward to “springing forward” in a week! 🙂

    • 4

      Len Penzo says

      Hi Lauren! The only thing I know for certain if the US doesn’t have all the gold it claims to have is this: gold will have to be revalued even higher. As for DST, I’m an early bird, so I would prefer they keep the clocks set to Standard time all year long. But, hey … I’d just be happy if the clocks stayed at one time all year long, regardless of whether it was Standard Time or Daylight Savings Time! 🙂

  2. 5

    Sam I Am says

    Good roundup this week. Retail sales were down in January, but I am pretty sure they are almost always down during the first month of the year as people are in recovery mode from the holidays.

    • 6

      Len Penzo says

      Thanks, Sam. You may be right.

  3. 7

    InhalingCO2 says

    Thanks Len. Times are interesting indeed. I feel for young folks buying their first home and stretching their finances. Makes them prisoners to their jobs. I still believe living full time in your travel trailer or 5th wheel is the best choice. Drastically reducing your # 1 housing cost. Not for everyone, but works for some of us. Spring is here.

    • 8

      Len Penzo says

      I agree, CO2, the housing situation is untenable and needs to change so the younger generations can reasonably expect to be able to own a home before they reach their 30s. My kids are in their mid 20s and homeownership isn’t even a dream for them at this point. That’s why I’m all for a significant housing crash of 50% to 60%.

  4. 9

    Victor says

    I’m old enough to remember a time when the recommended DTI for a home buyer was 33%. Then they jacked it up to 36%. Then 40%. Hard to believe anyone would buy a new home when the payment consumes 47% of their take home pay.

    • 10

      Len Penzo says

      Very true. Those numbers are proof positive that the housing market is completely broken. We can thank almost 30 years of the Fed’s easy money-policies for that (artificially-low interest rates, buying up mortgage-backed securities, and QE).

  5. 11

    Harry Meyen says

    These problems are disturbing, but not surprising if you have paid attention for the last couple decades.

    • 12

      Len Penzo says

      Yep.

  6. 13

    Frank says

    While not a fan of gold, it is easier to keep than eggs. Guns and alcohol for the win….

    Regarding the marriage proposal, was the choice of location an indicator of his intelligence/maturity? She might have dodged a bullet….

    The level of secrecy surrounding Fort Knox is really over the top an unnecessary (it would literally take many large truck to haul away the gold [or gold painted lead ingots] if anyone ever broke in). Having an annual visit would dispel the rumors and a great publicity move for the Fed. So why not? Because it makes too much sense. I suspect that the gold is still there. “Never attribute to malice that which is adequately explained by incompetence”. Anyway, I understand that the NY Fed actually has more gold [or gold painted lead ingots]…. Apparently they do offer daily tours! So much for security concerns….

    • 14

      Len Penzo says

      Gold doesn’t break or spoil, that’s for sure!

      As for whether or not all the gold is there … it just boggles the mind that they refuse to perform a proper audit (assay & bar number count) at least once a decade, let alone annually. The Treasury once absurdly claimed it wasn’t done regularly because the cost (several million bucks) was prohibitive!

  7. 15

    bill says

    Hey Len, nice dad shoes and jeans. 😀

    • 16

      Len Penzo says

      I got more where that came from, Bill. 😉

  8. 17

    bill says

    You can save money on health care and having to buy new clothes by engaging in regular exercise. It’ll help you keep your weight down too.
    After 8 months of not being able to exercise, my doctor said that I can ride my stationary bike again. Well, it left me so sore that I couldn’t make it into the kitchen to get a snack. I’m noticing positive results already. 😀

    • 18

      Len Penzo says

      Ha ha! You need to keep a fruitcake in one of those metal baskets you put on the front of bikes.

      But you’re right, Bill. When we got our new pup last year, it quickly became apparent to us that he was not a couch potato like our last two dogs – he needed 2.5 to 3 miles of walking every day. Well … those daily walks (rain or shine) resulted in me losing more than 10 pounds. I feel much better too!

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