In my January 31st RANT, “SUNDAY NIGHT SENTIMENT,” I wrote of the Cartel’s decade-long penchant for attacking PAPER Precious Metals in the thinly-traded Sunday night markets; i.e., when only Hong Kong – or even Sydney – have available trading platforms.
Call it a curse or blessing, but Precious Metals trade 24/5 – plus – care of electronic trading platforms, subject to heavy intervention. Consequently, PM’s are typically lower 90% of the time after the NYSE closes, for example. Other markets also trade overnight, such as currencies and crude oil. However, they rarely have material moves in the wee hours; as no one MANIPULATES them with the same intensity.
I have long noted TPTB’s last remaining “weapons” of MONEY PRINTING, MARKET MANIPULATION, and PROPAGANDA; cumulatively, utilized to affect popular PERCEPTION; i.e., sentiment.
Moreover, given the tiny size of the global PM community, it doesn’t take much to dissipate bullishness; particularly given the constant attacks, smashes, and WATERFALL DECLINES characterizing the market; let alone, the relentless stream of fear-mongering – both inside and outside the PM community; and, most importantly, the tendency of PM believers to avoid PHYSICAL bullion in lieu of highly speculative “PAPER PM Investments” like ETFs and mining shares.
The most notorious “SENTIMENT” attack was the May 1st, 2011 “SUNDAY NIGHT PAPER SILVER MASSACRE”, per below. As silver approached its “ultimate triple-top breakout” at $50/oz, industry supply SOLD OUT, yielding genuine Cartel fear of a monetary meltdown.
Thus, with the Chinese market CLOSED for a holiday, and only the thinly-traded Sydney platform open, they attacked silver for $6/oz in roughly 12 minutes; stooping so low as to use the “bin Laden killed card” as cover to “double down” when silver attempted to recoup its losses (as if bin Laden had anything to do with silver)…
Aside from such dramatic, “blitzkrieg” attacks, PMs are always “capped” on Sunday nights during upcycle periods – as we saw from mid-August through the “QE3” announcement in mid-September – and ATTACKED during (Cartel-engineered) downcycles.
Consequently, I do as much manipulation analysis on the upside as the downside. Only after reviewing both sets of data does it become clear just how pervasive the Cartel’s activities are; as described in my March 9th RANT, “CHUTES AND LADDERS.”
Below, I compared the level of Sunday night silver increases during the three upcycles of the past year, as well as the four downcycles. As anticipated, the average Sunday night increase during PM upcycles – comprising 24 weeks of data – was a miniscule $0.10/ounce…
…less than a third the average $0.32/ounce decline during the 22 down weeks…
Of course, the latter data ignores the fact that Cartel blitzkrieg attacks often occur during COMEX hours, negating the need to attack Sunday night, given how much damage was already done; such as was the February 2012 “LEAP DAY VIOLATION,” when Cartel forces inflicted a $2.50/oz decline. Conversely, similarly-sized COMEX surges NEVER occur…
The key takeaway – as always – is to understand PAPER markets are but an ILLUSION; following a stale, transparent SCRIPT aiming to divert your capital from PHYSICAL Precious Metals. If you understand, you’ll realize why “PAPER PM Investments” are a one-way ticket to the poorhouse, and PHYSICAL gold and silver impervious to such criminal machinations.
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Way to go, ADMIRAL SPROTT! Less than two weeks ago, our fearless leader announced a $349 million offering of PSLV, the Sprott Physical Silver Trust, and since then gold rocked $5.00/oz higher, Cartel suppression and all. This afternoon, post market close, the Sprott Physical Gold Trust, or PHYS, announced an overnight offering of up to $200 million, to purchase PHYSICAL gold tomorrow morning.
Unlike the PSLV offering, which was open-ended as to pricing, the PHYS offering memorandum states the deal will be priced at $15.19-$15.24/share, slightly below today’s closing price of $15.34/share, which would push its market cap up to $2.3 billion. Today’s closing price represented a 5.0% premium to Net Asset Value, so the deal (as has been the case for EVERY offering of the five closed-end bullion funds PHYS, PSLV, CEF, GTU, and SVRZF) will be accretive to current shareholders. Last year, PHYS also closed an offering very near the previous day’s closing price, so I am highly confident this deal, too, will be a smashing success.
As I described in last week’s RANT, Eric Sprott is a man on a mission to destroy the Cartel, much like myself but with the financial firepower to back up his knowledge and passion. Do not underestimate the extent of damage he can cause the Cartel, which in my view is on the verge of breaking down to start with.
Per the title of today’s RANT topic, in line with what most people anticipated, the Cartel started yet another week off by attacking PMs at the open of the thinly-traded Asian markets on Sunday night, a long-standing tactic utilized to wilt SENTIMENT during a time of the day gold and silver investors have been conditioned to fear following a decade of systematic, manipulative abuse. To which I respond, “Is that all you got?”
As you can see below, all KEY ATTACK TIMES were utilized today in varying degrees, starting with the pre-emptive Sunday night walk down, followed by the WATERFALL DECLINE at EXACTLY 3:00 AM EST, a hard cap of gold’s rebound rally at EXACTLY the 8:20 AM EST COMEX open, a second WATERFALL DECLINE when gold attempted to go positive at EXACTLY the PM FIX at 10:00 AM EST, and of course the high tick of the day at EXACTLY 12:00 PM EST, the “cap of last resort.” So for those of you that think gold was “resting” or “consolidating” last week’s sharp gains, I say BALDERDASH! Show me a decline that does not occur at the same times of day as ALWAYS, and I’ll agree with you. But until then, give me a break, particularly when that same KEY ROUND NUMBER of $1,750/ounce is again being heavily defended.
EACH and EVERY Cartel “supplemental tool” was utilized today, starting with the Dow / Gold x 2 ALGORITHM we saw all morning when the Dow had the nerve to actually open down 100 points. You see, a 100 point Dow decline is the PPT equivalent of the Cartel’s 2% rule. In other words, while PAPER gold is essentially NEVER allowed to rise more than 2% in a single day (let alone 1%), the Dow is no longer allowed triple-digit declines, even though 100 points only equates to a measly 0.75% at current prices.
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READ THE FULL NEWSLETTER
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MONDAY EVENING REPORT
Late this evening, Jim Sinclair sent an urgent email about an impending event of great importance that MUST be heeded, on which he completed a special interview with the Ellis Martin Report about. The event involves the potential treatment of the impending Greek default by the ISDA, or International Swaps and Derivatives Association, the trade group responsible for deciding whether or not a “credit event” is considered a “default” under the terms of myriad credit default swap, or CDS, agreements.
If you remember the late October “Greek 50% haircut” deal – which triggered a huge equity rally, but NEVER happened, the ISDA determined a 50% debt write-down to NOT be a “default,” in perhaps the biggest farce in market history. Of course, the ISDA is a trade association managed by the very firms that create derivatives and swaps – namely, the five banks responsible for writing 97% of ALL CDS swaps – JP Morgan, Goldman Sachs, Citibank, Morgan Stanley, and Bank of America. I know, you really can’t make this up, a trade organization with the power to declare its mistakes “non-events,” but that’s the world of criminality we live in.
READ THE FULL NEWSLETTER ________________________________
TUESDAY MORNING COMMENTARY
After all that occurred last night, this morning is a bit anti-climactic. As noted above, the mantra of the day remains PRINT MONEY and MANIPULATE MARKETS, and as usual the Dow futures are higher. Overnight news is relatively thin, as has been the case during the recent period of market “LOCKDOWN” by TPTB, unless you believe Israel warning Iran of an imminent invasion, i.e. the potential commencement of World War III, is not newsworthy.
I also see Venezuela finally took delivery of its 160 tons of gold, formerly stored in London. I can only imagine the hoops the thieving BOE had to jump through to secure such metal, which I’d bet dollars to doughnuts was sold or leased years ago to illicitly hold gold prices down. Better yet, will they be able to honor the next batch of gold repatriation demand, such as the imminent summons of Holland’s 613 tonnes? And, for that matter, will the New York Fed be able to do same when they, too, are demanded gold from supposed custodial accounts of foreign central banks?
According to this article, markets are somehow “juiced” by the idea of a Greek default – er, 70% write-down – as if no one, such as the BANKS that own this debt, will be impacted. Oh wait, I see, “LTRO 2” is coming on February 29th to save the day, with the current consensus that an additional €1+ TRILLION will be PRINTED by the ECB – aside from non-stop, “off balance sheet” funding from the Fed “swap facility” to cover up these bank losses and enable carry trade “profits” to pay BONUSES with. No, this won’t end badly.
The PHYS press release just emerged while proofreading, and it was a BLOW OUT deal, of $303.8 million priced at $15.19/share, compared to the initial offering range of “up to $200 million, including overallotment, at $15.19-$15.24/share.” As it turns out, the deal will be $349 million if the overallotment is exercised, EXACTLY the same amount of Sprott’s PSLV silver offering last week. As Eric Sprott has emphasized for some time now, silver sales continue to be 1:1 on a dollar basis with gold sales, and thus the current 51:1 gold: silver ratio will not last much longer. I agree whole-heartedly, as both ADMIRAL SPROTT and myself believe the gold:silver ratio will fall to AT LEAST the historic ratio of 15:1, perhaps significantly lower.
Sunday afternoon, when the world’s working classes are finally relaxed at the tail end of their weekly “48-hour vacation.” During summertime, the barbecue is smoking, and in the winter the TV blaring with the mesmerizing sounds of pro football. For most, the last thing on one’s mind is financial markets, unless of course you’re a die-hard Precious Metals investor. Gold’s 24 hour per day trading liquidity is a comforting thought, but as all “goldbugs” know, the Cartel does its best handiwork in the wee hours of the night, particularly 3:00 AM EST when no markets are actively traded.
On average, gold trades higher during the Asian trading hours, excepting the SUNDAY NIGHT OPEN, when the Cartel often aims to “set the tone” for the day by smacking the market lower. Here in Denver, it is roughly 4:00 PM when Asian gold starts trading, so I can see quite early if a Cartel scheme is in action, such as the SUNDAY NIGHT PAPER SILVER MASSACRE on May 2nd, 2011, below.
I have not pored through all the Sunday night charts as in past RANTS, particularly the three COMEX GOLD MANIPULATION PICTORIALS published in 2011, links below. However, I can tell you – from a decade of experience – that the ONLY time in the overnight session (pre- 3:00 AM EST, of course) that gold typically falls is the Sunday night open, and I’d venture gold rises more than 0.5% at the Sunday night opening less than 2% of the time.
That said, there have been extended periods of “Sunday night excitement,” such as when gold is an extended up move based on news the Cartel has trouble “managing,” such as S&P’s downgrade of the U.S.’s AAA rating on August 6th, 2011.
When such periods occur, the Cartel still attempts to start most weeks with a “negative bang,” in this case below at that same pesky, KEY ROUND NUMBER of $1,750/ounce! However, under such circumstances Asian buying often overcomes these attacks quickly, as we saw the Sunday following the U.S. debt downgrade, below. READ THE FULL NEWSLETTER
It’s Monday morning, and there’s no rest for the weary. And by weary, I don’t just mean last night’s lack of sleep – notwithstanding the prudent investment choices that have kept me from real insomnia – but 13-plus years of fighting a war with reality I neither chose nor relish. Yes, I love what I do – perhaps, more than ever before – and it’s for people like you that I wake up earlier than ever, bright eyed and bushy-tailed. But no, there is nothing “fun” about manipulated markets, which in many ways have rendered moot 26-years of academic and practical experience analyzing fundamentals – and subsequently, choosing appropriate investments, for myself and others.
Here at Miles Franklin, we do not “recommend” anything, but simply tell the truth as we see it – which, manipulation or not, must eventually be reflected in financial (and physical gold and silver) markets. That said, the “short-term,” in a world amidst the most hideous, blatant episode of money printing, market manipulation, and propaganda, has turned out to be far less “short” than imagined – care of the unprecedented advancement of “weapons of mass financial destruction,” far beyond anything imagined during previous bubbles. Of course, no such “previous bubble” involved the end of the economic and monetary world as we have known it, which is precisely what we are dealing with today. And fortunately, those holding physical gold and silver have actual supply and demand forces on their side; as opposed to “paper PM investments,” and nearly all other financial assets – which cumulatively, have never been so overvalued, or vulnerable to the relentless, expanding strength of “Economic Mother Nature” and the “unstoppable tsunami of reality.”
Last week, the Wall Street Journal started to be thrown on my driveway without prompting, marking the first time I have seen this vile publication since I stopped reading it 17 years ago. Back in the formative years of my career – starting with my first internship during college (selling CD’s via cold calling, yielding 8% compared to 0% today), the Wall Street Journal was a veritable text book for learning about financial markets. Today, it has become such a blatant propagandist rag, it takes all my strength to not call their offices and tell them I’d prefer a free subscription to Satan’s handbook. Such as, for instance, the stunningly ignorant, aggressively vicious articles they published this weekend, titled “gold bugs getting exterminated” and “let’s be honest, about gold – it’s a pet rock” – the latter of which stated, with a seemingly “straight face,” that “gold is supposed to be a haven amidst hard times and soft money. So why, even as Greece has defaulted; the euro has sunk against the dollar; and the Chinese stock market has stumbled; has gold been sitting there like a pet rock?”
The reason, of course, for anyone with a pulse; an interest in truth; and the ability to discern reality from fraud; is that – per Michael Pento’s spot-on comments this weekend, “there are no free markets left in this world, and it’s becoming increasingly evident that most people on Wall Street prefer it that way. To wit, we have grown so accustomed to market manipulation; we have completely lost sight of how a free market is supposed to function.”
Regarding Precious Metals – which, over several millennia, have represented the polar opposite of the fraud paper money has proven to be – no one has better reported the manipulative horrors that have brought the global economy to its knees better than GATA, via the courageous, unyielding leadership of Bill Murphy and Chris Powell. To wit, even before last night’s heinous Cartel “hit,” GATA published this must read article – of how, with each passing day, more and more people are first realizing, and then publicly admitting, the truth. Such as, for example, John Hathaway of the Tocqueville Fund; i.e., one of the oldest, most respected mainstream portfolio managers. Who, despite his specialty in Precious Metals, has for years ignored the most important factor affecting the market he is mandated to invest in; that is, until now.
“At some basic level, all investors are aware of the gold price, as its unruly behavior could render the (government’s) ‘Truman Show’ dysfunctional. Allowing free-market expression of gold prices (poses) a serious risk at the highest policy levels; (and thus), gold’s strong increase amidst liberal doses of QE post-2008 through 2011 (struck) a note discordant with an otherwise happy fable, confirming what many investors suspected: i.e, QE and ZIRP failed to produce economic growth, and may well have jeopardized future prospects for a return to solid economic footing.
(Thus), it makes us wonder whether we are witnessing the final moments of a second, more sophisticated version of the 1960s London Gold Pool; i.e, a scheme organized by the U.S. and European governments to suppress the free-market gold price, to camouflage the growing, adverse fundamentals for the U.S. dollar. The present-day magnitude of fiscal and monetary irresponsibility, in our view, exceeds the precedent of the 1960s by multiples. And thus, it is only fitting that the elaboration and complexity of disguise required to beautify the underlying reality would be proportional. Government intervention via price suppression (interest rates, currencies) or price inflation (financial assets) seems to pervade all financial markets, so why should gold be exempt?”
I mean, at some point even the most die-hard “mainstreamers” have to admit to the reality that all they have been taught – in many cases, providing the means to earn a living – no longer exists. Like, for instance, the use of fundamental, technical, and sentiment metrics to gauge entry and exit points for financial assets. As now that governments are overtly manipulating markets – be it via traditional, “accepted” means like Central bank QE; or new, “unconventional” methods like the outright purchase of stocks (as documented here, here, here, here, and here), it’s no longer “conspiracy theory” to speak of market intervention – particularly when those executing it are being caught red-handed, in everything from stocks, to bonds, interest rates, currencies, and – what do you know – gold. And as for government participation in such schemes, one doesn’t have to an inordinate amount of “research” to realize such policy exists – as the U.S. government, for example, admits to regarding bonds (i.e., Federal Reserve interest rate policy); stocks; and oh yeah, gold and foreign exchange. Heck, the Chicago Mercantile Exchange – which in many ways, has acted as a de facto government agency for years, now offers “volume discounts” for Central bank trading in commodity, equity, currency, and fixed income futures!
Even MSM lackeys like Bloomberg are starting to understand the racket – in realizing, for instance, that China’s gold reserve announcement on Friday, comically understated as it was, was wildly bullish for long-term Precious Metals demand. That said, how ironic is it that, of all the media outlets on the planet, the one most antagonistic to gold has been Kitco? Which, whilst its bankruptcy protection approaches its fifth year, continues to publish the most anti-gold propaganda imaginable; such as, unsurprisingly, it’s “top story” following last night’s Cartel raid being Reuters’ unmitigated drivel that gold was down due to “dollar demand.” And this, whilst the dollar index, which is up solely due the collapse of the European Union, and self-immolation of the Bank of Japan, was completely unchanged from its Friday afternoon close; as were, by the way, all other markets.
That said, it’s time to focus on the “end game” playing out right before our eyes – firstly, for history’s largest, most destructive fiat Ponzi scheme; and secondly, investors’ diminishing ability to protect themselves with increasingly scarce Precious Metals. To wit, for 15 years the Cartel has run roughshod over the supposed “markets” for gold and silver; not only creating the grossest deformations in global economic (and financial markets) history, but destroying miners’ long-term survivability – as I discussed at length last week. That said, even Friday’s egregious Precious Metals paper raids couldn’t prepare us for what we witnessed last night; when, out of the blue, the Cartel attacked gold with a vengeance not seen since May 1st, 2011’s “Sunday Night Paper Silver Massacre.” Only this time – unlike then, when a “catalyst” was feigned in the form of the supposed capture of Osama bin Laden – there was absolutely, positively no news to account for, in the thinnest of Sunday night Asian trading, gold plunging by an astonishing $52/oz, or 4.6%, in one minute. Below I have placed, side by side, silver “trading” from May 1st, 2011 (a night, by the way, when China was closed for a holiday) and gold last night. Look familiar, does it?
Frankly, now that the Cartel has attacked on 107 of the past 109 Sunday nights, it’s difficult to be surprised. That said, we are talking about a $52/oz plunge in one minute – which, as noted above, won’t be lost on a world increasingly aware of the fraudulence of financial markets; increasingly fearful of the aforementioned “end game” of global currency collapse; and increasingly knowledgeable of the expanding, gaping chasm between physical Precious Metals demand and supply.
And again, there is absolutely nothing about this raid – from a time and method perspective – differing from dozens of others over the years; including the 478th “2:15 AM” EST raid the past 544 trading days, to additional attacks at the 8:20 AM and 9:30 AM EST opens of the COMEX and New York Stock Exchange, respectively. In fact, just as a whopping $1.4 billion of “paper gold” – or 2% of worldwide annual production – was dumped at the COMEX open on Friday morning, $2.7 billion hit the Asian markets “at one fell swoop” last night, with the obvious intention of taking prices down.
Holding physical gold and silver, the impact of such a raid is minimal – particularly in the case of silver, which as we speak is still amidst a major shortage, causing premiums and delivery times to significantly expand. However, regarding “paper PM investments” like mining shares, the end game I have for four years vehemently warned of is in sight. This weekend’s Audio blog discussed the utter annihilation of mining shares on Friday; and as I write this morning, the HUI is down another 8%, to levels not seen since 2003. In other words, discounting what I have long predicted; i.e., the utter collapse of supply – of both gold and silver – that likely, for all intents and purposes, will be permanent. Frankly, if prices don’t rebound significantly, and imminently, I’m not sure that even a massive consolidation wave will save Precious Metals mining; particularly in silver, now that base metal prices, too, appear headed to multi-decade lows. Not to mention, the world’s most important commodity – crude oil – and commodities in general, which this morning, cumulatively, hit a new 13-year low, causing global currency markets’ ongoing, Federal Reserve-fostered crash to accelerate. As long-time readers are well aware, I believe commodity markets have been so egregiously “deformed” by decades of inadvertent Central bank propping, it could be years, if not decades before they return to equilibrium. And in the process, the countless corporations, municipalities, and sovereign nations dependent on their sale – which cumulatively are already in more debt than at any time in history – will go bankrupt.
Here at Miles Franklin, we couldn’t be more aware of what Precious Metals holders have been through over the past four years, and are going through right now. We, too, have suffered, but our business couldn’t be more stable, and our desire to protect clients far beyond the “profit motive.” To that end, we simply ask you to call us at 800-822-8080, and give us a chance to earn your business. In our view, the physical shortages of 2008, 2011, 2013, and today are “culminating” – and when they do, the all but assured long-term shortages, certainly at prices resembling today’s comically suppressed levels, will make it difficult for most, if not all of the “99%” to protect themselves from the hyper inflationary Central bank nightmare that’s rapidly approaching.
Before starting, I want to share a comment from “Reader Ed” – which frankly, is one of the nicest compliments I’ve received in my career. In my view, the Miles Franklin Blog is one of the best sources of information about the global economy, financial markets, and Precious Metals fundamentals around – in large part, because we focus on, plain and simple, on the unvarnished truth. Yes, the truth can set you free – which is why I take great pains to instill this concept into my three-year old daughter; and why, per the comment below, the entire world – and certainly the opaque Precious Metals community – would greatly benefit from more of it. Which, by the way, I am 1,000% confident will occur in the coming months and years.
“These Hoffman articles are among the most well thought out and intelligently articulated of all the internet commentators who deal with economics and the PM’s. If all the other people in the PM business were as reasonable and balanced, there might be less skepticism among readers of the other sites who appear to have grown weary of all the unfulfilled predictions.”
Again, per yesterday’s must hear Audioblog, we are not making “predictions” of financial market performance; even, for that matter, gold and silver over the “short-term.” Conversely, we simply aim to spread truth; which, hopefully, you will, too. The world is a very big place, with close to seven and a half billion denizens. That said, the Internets reach continues to grow exponentially; and thus, nearly everyone will soon have access to alternative views. And given the power of our particular message – of the inevitability of fiat currency depreciation, and real money appreciation, we have no doubt our work – and yours, if you help to spread it – will be fruitful.
That said, let’s move on to today’s very important message. That is, after a brief discussion of today’s “horrible headlines” – which sadly, will worsen with each passing day, until the inevitable, and perhaps imminent, collapse of history’s largest, most destructive fiat Ponzi scheme. After which, life “as we have known it” will disappear; for a time, to be replaced with a far scarier existence – but eventually, a more stable, productive global economy, based on sound money. To that end, it is not the Miles Franklin’s Blog intent to guide, advise, or prepare you for such unknowns; but instead, to simply make you aware of what has always occurred to fiat currencies under such scenarios – and conversely, what has always been the demand response of real money.
OK, so let’s start with political lunacy – like the U.S. House of Representatives voting by the horrifying tally of 348-48 to arm the Ukrainian government, in what borders on an implicit act of war against Russia. Last year, we warned of just how dangerous the situation in this extremely troubled geopolitically important region could get. And now, with the currencies of both Russian and the Ukraine having collapsed; countless failed cease fires; expanding casualties; non-existent peace negotiations; aggressive Cold War rhetoric; and outright nuclear threats – such as Russia delivered yesterday – we can only say this. To ignore the potential for significant global geopolitical instability, particularly given the consternation caused by plunging oil prices – is to, at least financially, “whistle past the graveyard.”
Meanwhile in Europe, Greece – and the entire European Union – edges closer to the abyss. In what has become a cross between the worst Greek comedy and tragedy, we’re now told Greece has until Monday to submit details of the ridiculous, ambiguous “reforms” that emerged from the February 20th funding deadline crisis; which, as it turns out, weren’t even written by the Greeks! Frankly, I don’t think anyone is even paying attention anymore – as no matter how much can-kicking is attempted, it is a mathematical certainty Greece will fail in the near future; and when it does, the resulting “Grexit” will be financially – and psychologically – devastating to the world’s second largest currency.
But the scariest part of all is that it’s not just the “PIIGS” in imminent danger, but all of Europe; and for that matter, the entire world, given the ubiquitous financial ties in place. That said, Europe is clearly the epicenter – which is why yesterday’s news that France plans to unveil a broad swath of currency controls is so terrifying – like the limitation and surveillance of nearly all cash transactions, and the required reporting of gold transportation throughout France. Yes, my European friends, we could not be more urgent regarding just how small your window of opportunity to protect financial assets has become – and when the Euro does inevitably collapse, that window will likely be permanently closed.
Already, our Mexican readers – suffering from the inflationary effects of a plunging Peso – are telling us of how difficult it has become to source Precious Metals, let alone at a reasonable price. Well, guess what’s coming soon to Europe? And for that matter, American, and the rest of the world? This is why you must act now to protect yourself from draconian government acts – which only occur in response to calamity. Clearly, the French government senses calamity now. And thus, we ask, would you rather own “priceless precious metals or worthless fiat currency?”
Here in the United States of Collapse, this morning’s horrifying February durable goods orders number (-1.4% versus expectations of +0.7%) continues a relentless stream of “2008-like” data, completely invalidating the fraudulent “PMI Manufacturing” diffusion index figure I railed about yesterday. I mean geez, what part of the biggest annual plunge in global trade volume since mid-2011’s Global Meltdown II do people not understand? Or, for that matter, yesterday afternoon’s American Petroleum Institute data, revealing the largest inventory build in 34 years? Or heck, the pathetic “benefit” of $11 trillion of global economy on the dying U.S. economic empire – which trust us, would look far uglier if real, “apples to apples” accounting was utilized. Consequently, the 10-year Treasury yield is trading – as I write Wednesday morning – at a paltry 1.86%, compared to 2.26% in the moments following last month’s historically fraudulent NFP employment report. For the millionth time, as I wrote in last year’s “most damning proof of QE failure,” Treasury rates are plunging because the entire world is front-running the inevitable launch of QE4 – which frankly, would not surprise me if it occurs this year. Nor would it surprise Whirlybird Janet herself, how last month delivered the “most unequivocally dovish FOMC statement in memory” to Congress.
And now, for today’s principal topic; i.e., the “worst precious metal sentiment in two decades.” That said, let’s start by saying “sentiment” is a very ambiguous concept; and thus, constantly miscalculated, misinterpreted, and misunderstood. Let alone, by newsletter writers seeking to generate trading activity, by insisting it can be quantitatively harnessed. Which, by the way, is particularly dangerous in the Precious Metals sector, given how it is the most manipulated (read: suppressed) on the planet, with “Cartel traders” well aware of everything from sentiment readings to technical resistance and support levels.
However, the physical gold and silver markets are entirely different animals, for a variety of reasons. To start, nearly all buyers – of physical metal, not “paper PM investments” like mining shares, ETFs, and closed-end funds – do so for the right reasons; i.e, long-term protection against and fiat currency inflation, and insurance against political, economic, and market calamity. Secondly, the time, effort, and cost of selling gold and silver is a considerable deterrent; i.e., the polar opposite of owning, for example, GLD or CEF, in which one click of the mouse, and you’re divested. And finally, as pertains to the current situation, never have the fundamentals for Precious Metals ownership – both monetary and economic – been so powerful; let alone, with prices trading below the miners’ respective costs of production, making it that much more difficult to pull the trigger on a sell order.
That said, this is unquestionably the most terrified I have seen the Precious Metals community since entering it 13 years ago; as is the case with Miles Franklin, which has been in the Precious Metals business for two decades. The reason, of course, is the relentless Cartel attacks that, while ongoing since the PM bull commenced at the turn of the century, accelerated exponentially when TPTB went “all in” to market manipulation in mid-2011, and berserk following the infamous April 2013 “closed door” meeting between Obama and the “TBTF” bank CEOs (just one day before the hideous “alternative currency destruction” raids). Things have gotten so bad, we have now witnessed psychology-destroying “Sunday Night Sentiment” raids on 91 of the last 92 weeks; “2:15 AM” EST raids on 405 of the past 464 trading days; “Sixth Sigma” declines in thin aftermarket trading; and of course, unconscionably blatant silver waterfall declines. And this, amidst some of the most violently positive PM headlines of our lifetimes.
Consequently, Miles Franklin is actually seeing the first material selling activity since going into business in 1989. Not that the total volumes are particularly large – or that such supply has a material impact on prices (likely, it’s already in China). However, we have not seen material selling activity since the PM bull market commenced nearly two decades ago; and again, this is occurring amidst the most bullish PM news flow of our lifetimes – much less, with prices so low, the mining industry is on the verge of collapse! Obviously, Americans have become so frustrated – and jaded to the expectation of new Cartel attacks – that seemingly no news prompts them to action. And clearly, since people like myself are already fully invested, the U.S. market requires new buying leadership to restart it. Of course, this is hardly the case overseas, where plunging currencies have caused gold prices to surge in foreign currencies. However, to secular Americans, such reality isn’t even on their radar screen yet.
Consequently, the charlatans financial opportunists characterized as “deflationists” are having their 15 minutes of fame, making ridiculous predictions like sub-$1,000 gold and sub-$13 silver, in the hopes of generating readership and trade commissions. Remember, not only is “deflation” a myth in fiat currency regimes (how’s yourcost of living doing?), but even if it were real (other than gasoline prices, which constitute a very small, albeit high profile, portion of one’s budget), Precious Metals have always been the best performing asset class during such periods. Let alone, when prices have already been pushed well below the industry’s cost of sustainability; and for the majority of mines, the actual variable cost of production.
As they say, “buy low and sell high.” And if today’s historically low prices – relative to worldwide fiat currency outstanding; mining economics; and political, economic, financial, and monetary uncertainty – can’t convince you today’s prices are “extremely oversold,” I don’t know what will. And, as always, if you do decide the time is now to protect your assets with the only real money the world has ever known, we hope you’ll call Miles Franklin at 800-822-8080,and “give us a chance” to earn your business.
PROTECT YOURSELF, and do it NOW!
Call Miles Franklin at 800-822-8080, and talk to one of our brokers. Through industry-leading customer service and competitive pricing, we aim to EARN your business.
Yes, 77 “Sunday Night Sentiment” attacks in the past 78 weeks – whilst no other market materially moved. Actually, tonight took a full two hours before the typical Cartel raid; with oil sitting at the same -1% level as it opened at two hours ago, as opposed to most weeks, when the attacks start within 15 minutes of the ultra-thin Sunday night open (if that long).
Think these monsters aren’t terrified? Amazing how much more intense the attacks became in the weeks leading up to the Swiss vote; let alone, now that the END GAME of global economic collapse is upon us.
Why am I writing this – on Sunday night, as Diana is cooking dinner? To let you know just how desperate TPTB have become to prevent the “Achilles Heel of the Financial World” – i.e., silver, from doing NOW what it must inevitably do, sooner or later…
And remember, gold is up for the year – by 1% in the U.S., and on average, 5% in the rest of the world (as you’ll see in my next article). And as for silver, demand has NEVER been higher – or the outlook for supply EVER so weak.
Andy Hoffman joins Elijah Johnson of Finance and Liberty to discuss the Sunday night sentiment attacks, physical markets and paper markets, silver is the most undervalued against the dollar in 15 years, the stock market and the bond market.
It’s Monday morning, and hallelujah – we not only did we not see a “Sunday Night Sentiment” attack for the first time in 40 weeks – as early attempts were rebuffed at the likely new floor level of $1,300/oz. but no “2:15 AM EST” raid occurred either. Quite shocking and laughably, even the typically fantastic Zero Hedge attributed gold’s strength to “Ukraine fears” – as if the expanding instability in that dark corner of the Earth is “new news.”
So here we are, just days after another Fed “tapering” lie, COMEX options expiration, and the most blatantly fabricated NFP report in U.S. history; and lo and behold, PMs are trading higher. Given their ragingly strong fundamentals, this should surprise no one with even a mild understanding of the reasons for – and mechanisms of gold and silver price suppression. However, what really is puzzling and alarming to the highest order – is the fact that despite increased “tapering” – in our view, a lieto start with particularly given “Belgium’s” sudden Treasury buying surge; is the fact that Treasury yields, amidst a so-called economic “recovery,” have plunged to seven-month lows.
Bloomberg put out a story this morning that new pension rules will yield dramatically increased Treasury bond demand in the coming years. However, its logic couldn’t be more ridiculous – in claiming:
Pension plans, which oversee $16.3 trillion, are shifting into longer-term Treasuries to lock-in last year’s stock gains by matching assets with their future liabilities as funding deficits narrow.
In other words, selling stocks to buy bonds and yet, not a peep about how doing so would crush the stock market; much less, the fiduciary madness of purchasing Treasury bonds near record low yields, amidst record money printing, surging real inflation, and exploding Federal debt. Granted, the fact that the Fed suicidally bought up a third of the entire Treasury market has tightened supply somewhat; but at such extremely overvalued levels, one would not expect such moronic “investment decisions” by the nation’s largest fiduciaries – particularly given the sea of sovereign red ink anticipated in coming years. But alas, this is the bubble world the Fed has created which will continue in all its glory, until eventually it catastrophically collapses.
In many ways, Friday’s comical NFP report represented an inflection point in TPTB’s war against reality. It was inevitable they’d eventually overplay their psychotic game of money printing, market manipulation and propaganda; and watching the Fed clearly attempting to push rates up may just well be the denouement of this suicidal exercise. To wit, they no doubt anticipated the benchmark 10-year Treasury yield to jump back to the middle of their “managed” 2.6%-3.0% range when the BLS published the “huge” 288,000 job number. However, once the market realized just how fabricated the data was – and how ugly the internals underlying it – rates instead plummeted; and by late afternoon, were on the verge of breaking below the seven month-low of 2.60%. Eventually, the Fed lost this game, as the “quintuple bottom” at 2.60% was broken with rates this morning falling further to 2.57%, and appearing likely to fall much lower.
And why, you ask, is such lunacy continuing? Yep, expectations the Fed will not only end its “tapering” pretense in the near-future, but increase QE as it becomes painfully clear no recovery is present; nor ever was, or will be until the cancerous fiat currency regime, once and for all dies. Sure, the Cartel took some solace in capping Friday’s gold rise at exactly 1.0% at exactly the 10:00 AM EST close of the physical markets, at exactly $1,300 with a prototypical “Cartel Herald” algorithm – replete with late day “walk down” to $1,299. However, this morning’s increase – albeit, again capped at exactly 1.0% – negates that “victory”; and given the above, may well mark an upsurge in global physical demand, well above and beyond last year’s historic levels.
The fact is, Central banks the world round have created bubbles in the world’s ugliest most toxic assets via “promises” to support insolvent entities from “too big to fail” banks to sovereign Treasuries themselves. To wit, we have long documented how several PIIGS’ sovereign yields are now, insanely, below those of U.S. Treasuries care of Draghi’s July 2012 promise that the ECB would do “whatever it takes” to save the Euro. Ultimately, the largest bubbles of all are the currencies themselves which in due time – perhaps much sooner than most can imagine – will collapse like the 599 before them. David Stockman, a former Budget Office Director in the Reagan Administration, recently wrote a series of fantastic articles discussing such, like this one – describing the sorry state of the American consumer, per below…
Time wrote at the end of January:
Too many of us are living paycheck to paycheck. The CFED, or Corporate Federation of Enterprise Development, finds that 44% of Americans are living with less than $5,887 in savings for a family of four. The plight of these folks is compounded by the fact that the recession ravaged many Americans’ credit scores to the point that now 56% percent have subprime credit.
…and this one depicting the abject failure of Japan’s “Abenomics” – per below…
In a survey of 1,000 consumers on March 29-30 by broadcaster Fuji News Network, 69% said they had not made any special purchases ahead of the sales tax rise, and 77% said they didn’t feel an economic recovery was under way.
However, the most damning of all – inspiring today’s article – was this dire depiction of the ongoing Chinese economic collapse, per below…
The borrowing, building and speculating mania in China has obviously gotten so extreme that even the new regime in Beijing has been desperately trying to cool it down. But this will end up as a catastrophic failure—not the ‘soft landing’ brayed about by Wall Street bulls who do not have the slightest comprehension of the difference between free market capitalism and the phony ‘red capitalism’ that has been confected by the party-controlled apparatus of the massive, intrusive, bureaucratic and hierarchically-driven Chinese State.
Essentially, it describes the unprecedented real estate and construction speculation the Chinese government has fostered via unfettered money printing and lack of regulation of “shadow banking” lending. To the end of siphoning every imaginable job from the West, the Chinese government has indeed succeeded. However, in using such destructive fiscal and monetary policies – ironically, not much different than those employed by its Western peers – it has created the largest economic bubble in human history. We discussed such madness in March’s “Most Terrifying Article We’ve Ever Read” – as well as the terrifying ramifications of the PBOC’s decision to allow the Yuan to further weaken in April’s “Chinese financial torture. However, given the importance of this potentially world-destroying event it makes sense to explore the issue from Stockman’s unique angle as well.
And given the universal “karma” of writing of the TRUTH, take a look at the Chinese news that emerged simultaneously; starting with a leaked recording from the Vice-Chairman of Vanke Group, China’s largest real estate developer – in which he stated:
It is a dangerous bubble, and already deflating’. China has reached its capacity limit for new construction of residential projects… and I don’t see any possibility for a rise in home prices.
The below chart depicting parabolic growth in Chinese housing inventory confirms his fears, nearly doubling in the past two years…
Zero Hedge
…and this morning, China’s Manufacturing PMI contracted for the sixth month in a row at just 48.1 making an utter mockeryof the government’s 7.7% GDP growth projection made just two months ago. But the real shocker was news that Chinese home sales collapsed by an astounding 47% from a year ago, and an otherworldly 65% in “tier-2” cities…
1st-tier city sales fall 40% y/y
2nd-tier city sales drop 65% y/y
3rd-tier and 4th-tier city sales decline 32% y/y
And thus, if anyone continues to harbor belief that somehow, somewhere, a miraculous economic “recovery” will save the day, it’s time to embrace the “realization of reality” rapidly sweeping the planet. China has been the “world’s growth engine” since Western economies peaked at the turn of the century but sadly, as you can see such “growth” was largely funded with the same debt, money printing, and lax regulation that destroyed the United States, Europe, and Japan. The “China Syndrome” is now melting down and with it, TPTB’s last remaining prayer of salvaging its failed gambit of unprecedented money printing, market manipulation and propaganda.
Under such a scenario, how can anyone not consider protecting their net worth with at least a modicum of “financial insurance”; i.e., real money? To wit, gold and silver are decidedly NOT “investments”; but instead, the only assets known to have survived through 5,000 years of recorded history – as opposed to fiat currencies, none of which have survived more than 50 years without either collapsing or significantly devaluing. With global economies plunging, money printing, inflation, and social unrest surging and debt levels of all kind rising parabolically, it’s only a matter of time before the dollar-based standard dies as well – and with it, the “Cartel’s” ability to artificially suppress gold and silver prices.
It’s New Year’s Eve morning, and I had planned on taking the day off from writing. However, given the incredibly blatant Cartel attacks of the past two days, I thought a PM “reality check” was in order. First, we experienced the 20th “Sunday Night Sentiment” attack in the past 21 weeks; yet again, with the quite obvious intention of holding silver below the $20/oz. “line in the sand” erected six weeks ago.
Next, the Cartel executed its third blitzkrieg attempt to break the June gold and silver lows of $1,182/oz. and $18.50/oz., respectively; conveniently, on the year’s final day, per this DEAD ON comment by Zero Hedge:
It seems someone wants the status-quo-defying precious metals going out at their lows, as central-planning-supporting stocks go out at their highs.
-December 31, 2013
I mean, you simply had to see this one to believe it; as with NOTHING going on elsewhere, gold suddenly plunged $10/oz. in a matter of seconds – and silver, an even more incredible 3%.
But then again, in this “year of infamy,” silver has endured at least one 2+% PAPER attack on more than half of all trading days. And as you can clearlysee below, most of such attacks were utilized to cap silver rises; as despite 135 such intra-day attacks – out of 252 trading days – on only 33 occasions did silver actually close at least 2% lower. FYI, the “Dow Jones Propaganda Average’s” only 2+% down day was on June 20th – i.e., the day the Fed first hinted it mighttaper QE, when the PPT allowed it to fall a whopping 2.3%.
Whilst this fraudulent, manipulative paper naked shorting was ongoing (I’ll get to the “happy conclusion” shortly), the COMEX December gold contract went off the board. Roughly 660,000 ounces stood for delivery this month, very little of which has yet left the COMEX warehouses. And thus, unless JP Morgan magically comes up with a new source of supply in the next few days, the COMEX’s registered gold inventory will likely end the year at no more than 200,000 ounces – worth $240 million at current prices. Better yet, last year’s February contract was as big as the December contract. And thus, with 223,000 contracts currently open – representing 22.3 million ounces of gold – the odds of a February “default event” grow exponentially larger. FYI, assuming the Fed is actually printing $75 billion/month (last week, I proved that amount is closer to $130 billion), its daily “production” is roughly $250 million; i.e., the value of the entire COMEX registered gold inventory.
Meanwhile, the year ended with yet another explosive burst of global PHYSICAL buying, as characterized by thesedramatic Chinese pictures. I initially wrote of China’s “irrefutable physical gold reality” from Guangzhou (Canton) in August; and if these photos of “holiday shopping” don’t drive the point home, I don’t know what will.
Based on published data, Chinese physical gold imports will end 2013 at more than double 2012’s record levels, at roughly 1,200 tonnes (below data is through October); and who knows how much more demand the unpublished data would uncover?
Clearly, Chinese silver consumption is off the charts as well; as given a relatively weak year for U.S. demand, U.S. Mint Silver Eagle sales still exceeded 2011’s record level. Of course it was the Chinese buying them; and likely the Indians as well, given that Indian silver imports will end 2013 at a record level as well, exceeding the previous high from 2008.
As most readers know well, Indians have dramatically increased silver purchases in response to onerous gold import restrictions imposed by the soon-to-be-deposed Indian government; which itself, is likely seeing record demand as well, when incorporating the exploding Indian smuggling trade. According to William Kaye, Indian gold imports could alsototal a staggering 1,200 tonnes in 2013, despite such restrictions. But heck, you don’t need to take his word for it. Just look at the surging PHYSICAL premiums being paid as we speak – of nearly 25% over the paper “spot price,” and draw your own conclusions. FYI, total global gold production is roughly 2,700 tonnes; and thus, India and China alone will likely acquire ALL of it.
Moreover, as Cartel banks like JP Morgan, Goldman Sachs, and Bank of America try to scare you into believing PMs are about to “crash,” we ask you to consider the largely ignored issue of fundamentals. I don’t think anyone has focused more on PM cost of production than the Miles Franklin Blog – other than Steve St. Angelo at the SRSRocco report, of course; and I think fourth quarter mining “earnings” will bear this out in spades. For gold, the “all in” cost of mining – i.e., mining and reserve replacement – is at least $1,500/oz., per thisquote from Gold Fields’ CEO, Nick Holland (Gold Fields is the world’s fourth largest gold producer). As for silver, St. Angelo proved prices must be above $25/oz. to enable the mining industry to produce positive cash flow; and thus, at current levels, we anticipate dramatic mine closure announcements in the coming months. Heck, silver industry capital expenditures are down 62% in 2013 alone; and as for 2014, look out below at the current price levels.
Worse yet, mining companies typically update their reserves at year-end. And thus, when fourth quarter earnings reports are released, we expect dramatic reserve reductions across the entire industry. In other words, proving economic gold and silver “ceases to exist” at current prices. According to thisFinancial Times article, for example, industry leaders Barrick Gold and Newmont Mining assumed prices of $1,500/oz. and $1,400/oz., respectively, for the majority of their 2012 reserve calculations. And trust me, if the world’s two largest gold miners – owning many of the world’s low-cost mines – will be dramatically cutting reserve estimates, you can imagine what “the rest” will do.
Irrespective of what the Cartel attempts in the paper markets in 2014, this “reality check” should make it crystal clearthat the “shelf life” of such manipulations has never been shorter. Physical demand has never been stronger; nor has the political, economic and social factors weighing against fiat currency and for real money. Per our “2014 predictions,” the odds of a further separation between paper and physical prices in 2014 are extremely high; as inevitably, reality will win out – as it always does.
To end the year on a particularly positive note, here is how the PM markets reacted to the Cartel’s latest attempt to break the June lows – whilst interest rates broke out to a new multi-year high. The more the Cartel fails to break the metals, the stronger the price support; and thus, the greater the odds of a true, sustainable bottoms. Although, if they actually do manage to break those lows, they will simply accelerate the PHYSICAL drain that will ultimately destroy them. FYI, I bought more PHYSICAL silver this morning; and hopefully, you too will realize that NEVER in history have prices been more inexpensive.
From the entire Miles Franklin team, we wish you a happy, healthy, and prosperous New Year. And as always, we ask you to “give us a chance” to earn your business!
It’s 3:00 AM EST Monday morning, and I couldn’t sleep. Naturally, with absolutely zero material news or overnight action in the global capital markets, we’ve been treated to perhaps the 20th straight “Sunday Night Sentiment” PM attack – followed by the 140th visit from the 2:15 AM EST suppression algorithm in the past 154 days. Frankly, I’m just looking forward to 2013’s end; as never in my 24-year career have I been more frustrated, or angry. Western governments, led by the United States of Dying Hegemony, have taken over all financial markets for the moment, ruling them with an iron fist. As former Assistant Treasury Secretary – and current Freedom Fighter – Paul Craig Roberts notes it is simply unfathomable how such criminality remains largely ignored by the Western MSM. And not just in the gold and silver markets, but all forms of information dissemination and “price discovery.”
Fortunately, the laws of “Economic Mother Nature” cannot, and will not, be repealed. Clearly, something extremely extraordinary is going on the global physical markets, as the trend toward collapsing gold inventories has reached crisis levels. To wit, on Friday alone, another 13% of the COMEX registered inventory disappeared, leaving a record-low 432,000 ounces supporting the entire Ponzi scheme, worth a piddling $500 million at today’s prices.
Moreover, by year-end, it’s entirely possible that no more than 100,000 ounces will remain, in light of additional December contracts still standing for delivery. Meanwhile, Shanghai Gold Exchange volumes have recently exploded, suggesting additional, massive physical deliveries in the coming weeks; whilst Indian gold premiums have surged to a record 23.5% above the Western “spot price.” In fact, Paper PM prices have been suppressed so extraordinarily, that despite the most positive supply/demand fundamentals of our lifetimes, major mining companies are cutting staff, capital expenditures, and production en masse.
Something’s got to give in the coming weeks and months; and when it does, it may well be historic – per Friday afternoon’s quote from the great Andrew Maguire:
In the real world, wholesalers were the busiest in months yesterday, and they are run off their feet again today. Looking at the charts, that’s really counterintuitive to what’s happening. There is enormous demand sub-$1,200, and these divergences cannot last much longer.
This enormous leverage employed by these paper market sellers is a distortion of what’s really happening. We’re stretched so far that the unwind and the rebound higher is going to be disorderly, as sovereign and central bank buyers continue to milk Comex based leverage selling.
They are busy converting this resulting spot price into physical (gold) at the painted fixes (in London). This physical latency will catch up in a very disorderly way the moment the downside momentum wavers. And we’re reaching the point where we can see that change in behavior is beginning to become evident.
Maguire mentions the aptly named London “fixes”; which for years, I have cited as the Cartel’s primary attack times – particularly the “PM Fix” at 10:00 AM EST, marking the end of the global Physical PM trading day. Amazingly, throughout a 13-year bull market, gold is actually net down during the ensuing “paper” period – particularly, New York COMEX trading; and finally, the word is getting out.
Last month, it was reported by Bloomberg, the Wall Street Journal, and other MSM outlets that the PM fixes were being investigated for trading improprieties, surrounding the five firms involved; i.e., Barclays, Deutsche Bank, Bank of Nova Scotia, HSBC and Societe Generale. The fact that Barclays was the central figure in last year’s LIBOR rigging scandal only makes things that much more suspicious; let alone, that HSBC is custodian of the controversial GLD gold ETF, and Bank of Nova Scotia one of the three main COMEX depository managers. Frankly, I don’t expect TPTB to allow the investigation – which, ironically, includes the U.S. CFTC – to conclude anything substantial. However, in our view, the fact it is getting such widespread attention may well prove a “tipping point” in the battle between the fraudulent paper and real physical markets.
Thus, I was extremely encouraged by thisfollow-up article by Bloomberg on Thursday, highlighting what we view as by far, the most damning evidence against the paper manipulators. Long-time Miles Franklin Blog readers are well aware of the fine work of European analyst Dmitri Speck, who has charted every single day of gold and silver trading over the past 15 years; i.e., since former Treasury Secretary (and Goldman Sachs CEO) Robert Rubin famously espoused America’s to-this-day-ambiguous “strong dollar policy.” Bloomberg actually published his infamous chart memorializing the unnatural suppression of prices at both the AM and PM “fixes”; asking the obvious question of how these banks’ manipulative activities can be stopped.
In the excellent 1997 movie Contact, Jody Foster travels through a wormhole to a distant galaxy; where she meets an alien being, asking him how their respective races’ relationship would progress. He tells her “in baby steps”; indicating that in time, all will be revealed – which is exactly what is going on in the heavily manipulated Precious Metal markets. In other words, in time, the entire world will be aware that archaic paper exchanges like the LBMA and COMEX are not only obsolete, but rigged. Better yet, it won’t take “ages” to occur; as the Cartel’s “Achilles Heel” of collapsing physical supply, amidst surging physical demand and prices below the cost of production – may well cause such “enlightenment” to occur much sooner, and more explosively, than most can imagine.
From this summer’s depths, at $1,182/oz. gold and $18.50/oz. silver – i.e., not far from this morning’s levels – prices suddenly surged to $1,430/oz. and $25.00/oz., respectively, in just a month’s time. Will this happen again in early 2014? We have no crystal ball, of course. However, it’s difficult to believe it won’t; as the proverbial “beach ball” has never been held this far underwater – amidst a political, economic, and social environment in which any number of black, “grey,” or other types of “swans” are lurking. And even if we wait somewhat longer for this inevitable validation, the opportunity to protect one’s assets from the long-term inflation guaranteed by cornered Central banks has never been better. No inflation, you say? Then how is it that both chicken and beef prices hit all-time highs last week – with the prospect of Obamacare’s widespread launch driving the world’s highest healthcare costsexponentially higher?
Just like any other inexorable trend, the “mainstreaming of PM manipulation” will spread the world until ultimately, the so-called “arbitrage” between physical and paper prices is resolved – in the favor of the “path of least resistance”; i.e., materially higher levels. Unfortunately, such an event will also be accompanied by the realization that “money” as we have known it is dying; at which point, either you will have safeguarded your financial future with real money or forever lost the chance – certainly at prices even remotely near today’s historically suppressed levels. As always, we encourage you to do your own due diligence; and please, utilize Miles Franklin as a resource whenever possible. Remember, our goal is to educate, assist, and of course, broker any future transactions you decide to make. We have been doing just this for 24 years – without a single registered complaint with the Better Business Bureau; and strive to be the most competitive, service-oriented, and respected name in the bullion business.
For the entiretyof my “TEN YEARS OF HEAVEN AND HELL” – soon to be eleven – I have endured the ignominy of Cartel PM attacks. Starting with “SUNDAY NIGHT SENTIMENT” raids, to the KEY ATTACK TIMES of 3:00 AM EST, 8:20 AM EST, 10:00 AM EST, and 12:00 PM EST; and more recently, 2:15 AM EST and 7:00 AM EST – I have seen it ALL. Sadly, such “operatives” are becoming more frequent andintense; as TPTB realize the END GAME of fiat currency collapse is rapidly approaching.
On a daily basis, it appears PMs are ALWAYS down; morning, noon, and evening. Nearly EVERY time I walk into the gym, down they go; or anytime I jump into my car; or look at my screen. Just watch CNBC in the morning; and you’ll see that nine out of every ten times “gold” pops up on the screen, it immediately ticks down. Moreover, ninety-nine times out of a hundred, when I click on my Kitco app, gold and silver immediately decline. And perhaps 999 times out of 1,000; when gold re-opens in the ultra-thin “Globex” electronic market at 6:00 PM EST, the first tick is down.
Thus, it seems quite the paradox that gold and silver are the WORLD’S BEST PERFORMING MARKETS over the past 12 years; rising, on average, by 17%-20% – and in gold’s case, NEVER having a down year…
…despite the fact that during New York trading hours – when 99% of ALL significant price moves occur – gold is net DOWN over this period. FYI, the 10:00 AM EST WATERFALL DECLINE in the chart below represents the afternoon “P.M. Fix” in London; when PHYSICAL trading ends for the day, and (naked shorted) PAPER trading dominates…
Conversely, the “DOW JONES PROPAGANDA AVERAGE” appears to ALWAYS be higher; no matter the news or time of day. For the past decade, I estimate Dow futures have been called higher or barely lower on 99% of all trading days; compared to no more than 50% for PMs – despite the aforementioned bull market.
Despite the “perma-green” status perpetrated on the Dow by the “President’s Working Group on Financial Markets,” the WORLD’S MOST WIDELY VIEWED INDEX has barely risen in the past 12 years. Moreover, if you exclude the survivor bias of deleting bankrupt or reorganized companies like General Motors, AIG, Citigroup, and Eastman Kodak, the Dow would likely be down over this period…
Of course, if you adjust the Dow for INFLATION, it is down significantly; by 28% utilizing the government-published CPI Index, or 35%+ including GM, AIG, C, and EK…
…and an astonishing 67% (or 75%+ including GM, AIG, C, and EK) when incorporating TRUE inflation statistics, as measured by John Williams of ShadowStats.com…
…per the chart below; perhaps one of the most important you will ever see…
It’s difficult to comprehend how the PPT can keep the Dow higher nearly all the time without it meaningfully rising. Conversely, PMs nearly always appear to be down; yet, year after year, end up higher. Thus, the “DOW-GOLD PARADOX”; which defines the TPTB’s strategy of keeping investors away from assets that PROTECT them, and in investments that HARM them.
So long as you realize their “Achilles Heel” is the lack of available PHYSICAL gold and silver (utilized to suppress prices), you will NOT fall prey to this trap; and thus, be SAVED when other assets – government-supported or otherwise – FAIL.
PROTECT YOURSELF, and do it NOW!
Call Miles Franklin at 800-822-8080, and talk to one of our brokers. Through industry-leading customer service and competitive pricing, we aim to EARN your business.
Yesterday, we learned that Donald Trump Jr. was allegedly involved in secret meetings with a Russian lawyer last year, in an alleged attempt to obtain anti-Hillary information. This, as Trump’s snot-nosed, silver spoon son-in-law, Jared Kushner – a mere 36 years old – was collaborating with Qatarian sheiks whilst Saudi Arabia “coincidentally” declared economic war on it – under the ultimate “pot calling the kettle black” insinuation that Qatar funds terrorism. To which, I can only say, how ridiculous is it that the President’s family is involved in such blatant conflict of interest activities; and doubly so, how screwed up has America’s increasingly Banana Republic political system become? Which I only state, to demonstrate how painstakingly obvious the need for portfolio insurance has become – at a time, no less, when historic market manipulation has not only produced “dotcom valuations in a Great Depression Era,” but the most undervalued Precious Metal prices – on an inflation-adjusted basis – ever.
Yes, the Trump Jr. “news” provided the catalyst for Precious Metals’ long overdue bottom. Likely, as the COMEX “commercials” were aggressively covering additional shorts – starting with what in hindsight can be viewed as “Operation July 4th week silver slam.” During which, gold and silver prices were mauled – starting on the painfully thin July 3rd half-day, amidst a veritable tsunami of PiMBEEB news, with no other market materially moving. To that end, I’m looking forward to Friday’s COMEX COT, or Commitment of Traders report, which will show us just how much more (naked) short covering was done amidst Monday’s paper carnage. Not to mention, Thursday night’s silver “flash crash”; Friday’s post-NFP PM bashing; and Monday morning’s ugly early action. When, following the 192nd “Sunday Night Sentiment” raid of the past 202 weekends, silver opened paper COMEX trading at a year-plus low of $15.20/oz. This, during a week of particularly bullish physical PM news, such as India’s massive May gold purchases; seven percent of the entire COMEX registered gold inventory being withdrawn in a single day; and the world’s second largest silver mine, Tahoe Resources Escobal Mine in Guatemala, being shut down indefinitely.
On a morning when Janet Yellen is scheduled to give her semi-annual “Humphrey-Hawkins” Congressional economic testimony – in which the only material “news” is the city of Hartford, Connecticut being downgraded to junk status (get ready Chicago and Trenton, you’re next!) – I wanted to revisit my December 2016 article, “silver fundamentals versus the base metal bubble.” The reason being, that if the dislocation between base metal and silver prices was egregious then, it’s far more so now. In fact, comparing the financial landscape then – just after the election, when the newly fabricated “Trump-flation” meme was driving “markets”; not to mention, the equally fallacious premise that higher inflation is bad for Precious Metals; silver has not only become significantly more undervalued relative to base metals, but EVERYTHING ELSE!
Yes, the entire Precious Metal space has become – care of historic manipulation, such as the “Operation July 4th Week Silver Slam” – as undervalued as at any time in memory, with only the (Cartel-promulgated) spike-bottom low as the 2008 Financial Crisis commenced being comparable. However, in silver’s case, the “historic valuation anomalies” I wrote of earlier this month are even more pronounced – given that they are not only relative to the broad markets, but other Precious Metals, too.
Here’s a table comparing silver with a variety of other markets. In the first column are values at the time of December’s “silver fundamentals versus the base metal bubble” article. I mean, just how ridiculous can this dislocation be!
For one, base metals have been flat to higher – despite not only plunging economic data, but a 10% decline in the broader CRB Commodity Index! The dollar has been slaughtered; interest rates are unchanged; and economic data – including housing starts, a major component of base metal demand – has significantly weakened. And yet, base metals are higher, and silver – of which, nearly three-quarters of mine supply is utilized for industrial purposes – 5% lower? In fact, the only “improvement” since early December is in the blatantly rigged “Dow Jones Propaganda Average”; as, per what I discussed last month, “unfathomably bald-faced lies depict a Fed desperate to promulgate a dead meme”; and consequently, put off the “most overdue financial crisis in history.” Which includes lying through its teeth about the “recovery” that doesn’t exist – even in its own economic reports; and relentlessly propping the Dow, via the ubiquitous “dead ringer” algorithm, during its 10:00 AM “open market operations.”
Otherwise, essentially all political, economic, and monetary news flow suggests higher silver prices; let alone, now that the shutdown of the world’s second largest silver mine ensures the production decline that commenced last year will accelerate. Not to mention, versus gold – as unfathomably, during a period in which base metal and gold prices rose, silver declined 5% – resulting in a dramatic increase in the gold/silver ratio, from 70 in December to a nearly all-time high 77 today. I mean, the only other times the gold/silver ratio has traded this high since the Precious Metal bull market commenced at the turn of the century were in the 9/11 aftermath; the height of the 2008 Financial Crisis (when physical silver prices were nearly twice the Cartel-suppressed paper prices); and the sector’s likely ultimate bottom at the end of 2015.
My friends, we are on the cusp of an historic inflection point in history – politically, economically, and monetarily. Fraudulent memes are rapidly dying, regarding a great many things – from the omnipotence of Central banks, to the power of governments, the stability of “money,” and the ability to mask irreversible economic rot with money printing, market manipulation, and propaganda. Let alone, in physical markets like Precious Metals and commodities; the former of which, are amidst chronic supply deficits; and the latter, chronic oversupply.
Consequently, the urgency to PROTECT your assets has never been stronger; and in the case of silver, not only is it as undervalued as ever on a nominal basis, but relative to essentially everything else! To that end, if you are considering the purchase and/or storage of silver (see yesterday’s must-read article on silver storage), we humbly ask you to give Miles Franklin a call at 800-822-8080, and give us a chance to earn your business.
P.S. JUST AS I WAS ABOUT TO HIT SEND, JANET YELLEN’S PREPARED REMARKS FOR TODAY’S HUMPHREY-HAWKINS SEMI-ANNUAL CONGRESSIONAL ECONOMIC TESTIMONY CAME OUT – AND WOW, WAS IT “UNEXPECTEDLY” UBER-DOVISH; AND CONSEQUENTLY, PRECIOUS METAL BULLISH! TO WIT, “RATES WON’T HAVE TO RISE MUCH FURTHER TO GET TO NEUTRAL.” NUFF’ SAID!
I have many important things to say in today’s very important, and pragmatic, article; and thus, am starting it early Sunday morning. After which, I’ll take a break, and resume Monday morning – so you won’t miss a moment of real-time commentary, in an ever-changing, and increasingly “PiMBEEB,” world.
To start, my increasingly strong belief that Precious Metals are set up for a sharp rebound in the not-too-distant future. Not that I know why the Cartel has been so vicious in recent weeks – starting the day of the Fed’s shockingly unexpected “hawkish hike” last month; when, despite an onslaught of negative economic news, the “data dependent” FOMC’s statement; whilst objectively, being as far from “hawkish” as possible; didn’t offer a single hint that it might slow its (turtle-like, statistically insignificant) “tightening” cycle any time soon. This, as gold was just about to break above $1,300/oz, with both metals on the verge of decidedly breaching their 200 week moving averages and 5½ year downtrend lines. Hint, hint.
Irrespective, it all comes down to what drew me to GATA, or the Gold Anti-Trust Action Committee, 15 years ago; i.e, that ultimately, today’s “New York Gold Pool” will be defeated – as all Cartels ultimately are (like OPEC – perhaps, by year-end), by the reality of the physical markets underlying the paper frauds that mask them, no matter how sophisticated the “manipulative technology.” In OPEC’s case, due to the historic energy glut that may never reverse; and in the gold Cartel’s case, the equally massive shortages coming, given the – perhaps, irreversible as well – damage inflicted on the mining industry by two decades of price suppression, coupled with exploding physical demand (caused by price suppression and unprecedented “money” printing. And of course, the overt and covert rundown of Central bank inventories – likely, to modern era lows – in the quest to promulgate history’s largest, most destructive fiat Ponzi scheme. To that end, after reading Jim Rickards’ MUST READ article this weekend – based on his extremely high level of “inside” information regarding the global physical gold market – I believe this more strongly than ever.
In Friday’s “latest Cartel blitzkrieg, and fabricated ‘jobs’ report, setting the stage for significant precious metal shortage,” I discussed silver’s heinous “flash crash” 12 hours before yet another ugly jobs report; which, unlike last month’s NFP horror show, was “dressed up” with a fabricated, “better than expected” headline number. In fact, a half hour after the report’s dissemination – which by the way, caused the “odds” of a September rate hike to plunge from 18% to 13%, gold was only down $1 for the day; whilst silver, which was smashed by a whopping $1.50/oz in seconds during the aforementioned “flash crash,” came within a dime of turning positive.
That said, clearly Thursday night’s flash crash was done for several reasons. One, to “signal” what was coming Friday morning; when, following the aforementioned, bullish PM action following the supposedly “strong” jobs report, prices were suddenly smashed into oblivion despite no other market materially budging. To that end, interest rates and the dollar index were no different at day’s end – with gold down $13/oz, and silver $0.45/oz (this, as oil prices plunged, whilst base metal prices were flat) – than they were when gold was down just $1/oz, and silver $0.10/oz. Secondly, to (as always) deliver a false message that the “better than expected” jobs report was “bad” for Precious Metals, and “good” for stocks. This, despite the odds of a September rate hike declining after the report! But most of all, in my view, it afforded the Cartel – er, the COMEX “commercials” – a chance to cover as many (naked) shorts as possible.
Which I say with such confidence, given that the weekly COT, or Commitment of Traders, report that was published Friday at 3:30 PM EST depicted an acceleration of the massive short covering efforts that commenced four weeks ago…I kid you not, EXACTLY when the Fed’s “hawkish hike” was enacted. Yes, the COT report only describes “commercial” activities up until Tuesday afternoon’s close. However, I think it’s safe to assume that amidst the massive Cartel attacks this week; starting with the unfathomably blatant raid during Monday’s paper-thin pre-Holiday trading session; and culminating with Friday’s post “flash crash” blitzkrieg attack; that the odds that next week’s COT report will depict further “commercial” short covering – perhaps, dramatically so, is extremely high.
Following four weeks of massive short covering (again, excluding what likely occurred in the three trading days since the most recent COT reporting period), the “commercial” short position in both gold and silver has plunged to levels not seen since…drum roll please…the ultimate Precious Metal bottom in December 2015, when gold touched $1,060/oz, and silver $13.75/oz; which ironically, occurred the very week the Fed “raised rates” for the first time. Which I put in quotes, given how comical it is to believe that raising rates from ZERO to 0.25% – which 19 months later, are still just 1.25%, with essentially no chance of being raised until at least December -can be considered “raising” at all.
In the process, both gold and – particularly, silver – have been driven to extremely technically oversold levels. Which, while having relatively low importance in my analysis, given that short-term technical analysis is largely ineffective in rigged markets, there is definitely a strong precedent – even in recent years, when Cartel manipulation has been most pronounced – for a material bounce when paper gold and silver prices become so technically oversold.
Will this occur this week? I guess we’ll know soon – as clearly, there will be no shortage of PiMBEEB events to catalyze it (most notably, Janet Yellen’s semi-annual “Humphrey-Hawkins” Congressional economic testimony on Wednesday). Not that a “catalyst” is required, with PM prices trading at their most undervalued inflation-adjusted levels ever, amidst the most intense Central bank “inflation creation” ever.
Well, it’s early Monday morning, and I’ve had a full day to consolidate my thoughts. Particularly after seeing last night’s 192nd “Sunday Night Sentiment” raid of the past 202 weekends – including 25 of 27 this year, with gold up 5%. And of course, the 870th “2:15 AM” attack of the past 992 trading days – in prototypical format, starting with the same “Cartel Herald” algorithm that has suppressed every Precious Metal rally in memory. FYI, the only “news” last night was the LOL, “strong economic data” reported by Zero Hedge – that China’s (comically rigged) CPI was in line with “expectations,” of rising 1.5% year-over-year and falling 0.2% month-over-month. Pardon my stupidity, but exactly how is that “strong economic news?”
How is it that the freefall decline of crude oil – the world’s most important, and debt-infested commodity – not considered as important as a rigged, in-line inflation number? Nor the fact that second quarter corporate earnings, which will start to be reported this week, are expected to be weak. Nor the shut-down of the world’s second largest silver mine – Tahoe Resources’ Escobal Mine in Guatemala, due to a bitter environmental conflict that could last all year, at the least? I mean, wheat surged last month due to dry weather; and oil surges any time a comically discredited OPEC member comments about “potential production cuts.” Yet, the long-term plunge in Precious Metal production is, for now, not considered relevant; nor short-term fundamentals, per the Guatemala news.
Which, I might add, shouts as loudly as possible why I have warned of the risks of “paper PM investments” for the past six years. To that end, consider that by far, Tahoe has been one of the mining industry’s best operators, of one of the world’s largest silver mines. And yet, over the past three years, whilst silver has been smashed 25% by the Cartel, Tahoe’s stock has plunged 80%.
Anyhow, as I watch this Precious Metal carnage – which again, has resulted in gold still being up 5% this year; and silver, down just 3%; the mosaic I started discussing above is taking a more defined shape. I mean, consider that the massive PM smash – culminating in Thursday night’s silver “flash crash” (mere hours after the Tahoe Resources news); and this morning’s early 2% silver smash – with not a single other market materially moving (including oil, which is down just 1%); commenced on the ultra-thinly traded pre-holiday session last Monday, when the only significant “news” was plunging auto sales and construction spending. Next, consider that not a thing has changed fundamentally in recent weeks, regarding the world’s all-time high Central Bank money printing (see, the Bank of Japan, on Friday, promising to monetize unlimited 10-year JGB’s, or Japanese Government Bonds, at 0.10%). Nor has the global economic outlook, particularly now that oil is in freefall mode; and per this must listen interview with Andrew Maguire this weekend, the physical gold market appears to be as strong as ever.
Throw in the massive Cartel – er “commercial” – short covering that commenced last month; and likely, exploded following Monday’s “pre-holiday annihilation” raid and Thursday’s silver “flash crash”; which likely, will increase further as COMEX “spec traders” awaken to another $0.30/oz decline this morning; and it becomes a very valid conclusion that said “commercials” may in fact by making a run at covering most, if not all of their shorts. Will that be the case, for the first time in the past 15 years for gold, and at least 30 years for silver? Only time will tell, but it is a fact that the physical supply/demand balance has never been tighter – and will only become more so, as the terminal stage of history’s largest, most destructive fiat Ponzi scheme plays out.
Which brings me to today’s extremely important – and timely – principal topic; i.e., the historic precious metal portfolio “high-grading” opportunity the Cartel has presented us. That is, the opportunity to capitalize on the “historic valuation anomalies” the recent, historically egregious Cartel attacks have created, by reducing Precious Metal sentiment to its lowest level in at least 15 years – amidst the most PiMBEEB, or “Precious Metal bullish, everything-else-bearish” environment of our lifetimes.
Generally speaking, the best time to “rebalance” one’s portfolio – by asset class, tax optimization considerations, or otherwise – is during times of extreme movements, be they up or down. As a large Precious Metal investor, I have done this numerous times over the past 15 years – to “high-grade” my portfolio to what I view to be the most optimal asset mix. In 2011, for instance, I sold all my mining shares to buy physical metal; and since then, have made several metal “swaps” to take tax losses, capitalize on changes in the gold/silver ratio, and/or upgrade to numismatic or semi-numismatic coins when premiums (over generic bullion coins) declined enough to make the trade relatively risk-free.
In this case, we are faced with a scenario in which both gold and silver are trading at their all-time lowest inflation-adjusted prices, at a time when every imaginable fundamental – and technical – indicator suggests that if a bottom hasn’t been reached yet, it will be soon. Moreover, the platinum/gold ratio is at an all-time low; the silver/gold ratio is nearly at a 25-year low; and numismatic premiums – relative to generic bullion coins, are as low as Miles Franklin has seen in its 28 years in business. To that end, per last month’s “single easiest way to understand Precious Metals’ value,” I just purchased 1904 MS-62 American Gold Liberty coins for nearly the same price as brand new 2017 American Gold Eagles, given how the historically weak PM sentiment has caused the prices of coins that traded at 50%-100% premiums less than a decade ago to lose, for the time being, essentially all their numismatic premiums.
Regarding the latter, Miles Franklin – which has not received a single registered complaint since opening its doors in 1989 – prides itself on avoiding numismatic recommendations (other than to numismatic experts) unless premiums fall to levels where the customer is, in essence, receiving free optionality potential. Conversely, we heavily recommend the swapping of numismatics into greater volumes of bullion coins when premiums rise significantly – as was the case a few years back, when Miles Franklin’s President and Co-Founder, Andy Schectman, called every numismatic client he knew, begging them to capitalize on the massive post-Obama election gold numismatic premiums, by swapping into bullion coins. Clearly, this was the best “trade” we ever recommended to clients – which today, is the exact opposite situation; i.e, the potential to swap newly minted bullion coins into age-old numismatics at essentially zero premiums.
To that end, if you have any questions about the pricing and/or logistics of such trades, please call Miles Franklin at 800-822-8080, and give us a chance to earn your business. Most of our brokers have been doing this since the 1980s; and thus, are as knowledgeable about these topics as anyone in the business, bar none!
The gold Cartel will eventually collapse – just like all Cartels before it, like the London Gold Pool in 1968, before gold surged from $35/oz to nearly $900/oz a decade later. However, in the meantime, we must continue to fight a monetary battle to the death – which mathematically, must be won by sound money; as, per the immortal theme of Gresham’s Law, good money always chases out bad. Not to mention, Economics 101; as, per last week’s “Precious Metals’ ultimate downside protection,” the mining industry has been so decimated by two decades of price suppression, supply is guaranteed to plunge indefinitely. This, as the terminal, malignant phase of history’s largest, most destructive fiat Ponzi scheme causes global Central bank printing presses to be turned up to “ludicrous speed” (Spaceballs reference).
Thus, on one of the year’s thinnest trading days – the day before July 4th, when trading desks are manned by skeleton crews – what were the odds we wouldn’t see the 191st “Sunday Night Sentiment” attack of the past 201 weekends, and 866th “2:15 AM” raid of the past 988 trading days? This, on a day teeming with the PiMBEEB headlines I’ll discuss shortly; whilst other commodity prices are flat to higher; interest rates are barely changed; and the only reason the dollar is modestly above its post-election low, is the historic, unexpected, landslide defeat Shinzo Abe’s Liberal Democratic Party suffered in yesterday’s Tokyo regional elections, causing the Yen to significantly decline.
To that end, to put the blatancy of the U.S. government-led Precious Metal manipulation into perspective, 201 weekends and 866 trading days represents nearly four years of time. In this case going all the way back to the spring of 2013, right after Obama’s infamous “closed door meeting” with the top “too big to fail” bank CEOs preceded, by one day, the vicious “alternative currency destruction” attack; clearly, utilized to push PMs below their respective 200-week moving averages, and launch a now four-year propaganda campaign regarding the Fed “tightening” that has yet to occur.
During this period, believe it or not, gold is up $80/oz; and silver, $1/oz. In other words, we’re to believe that during a four-year period when Precious Metals rose 7%; not to mention, as global money printing went parabolic; countless fiat currencies crashed; and “tightening” and all, the Fed still has a 1% interest rate and a $4.5 trillion balance sheet; that a “freely-traded market” produced PM declines on 95% of all weekends, and 88% of all London paper pre-market openings? Frankly, even “sixth sigma” doesn’t properly describe such blatancy – in suppressing what the fiat-currency-loving “powers that be” fear more than anything; like fire to the Scarecrow, and Kryptonite to Superman.
To that point, it’s quite funny – and interesting – that Superman’s menace was “Krypto”-nite; given that, in my very strong view, “Crypto” currencies will ultimately be the powers that be’s’ principal monetary nemesis; and, per December’s “why Bitcoin will make gold and silver go up,” Precious Metals’ most powerful ally. Thus, when I saw this weekend’s extremely interesting news that Delaware – by far, the state with the most incorporated companies – is about to enact a law legalizing stock trading on blockchains, my spider senses started tinging. As clearly, when this commences, it will dramatically decentralize financial markets; to the point that exchanges – from the NYSE to the COMEX (which FYI, is incorporated in Delaware) – will be replaced by the inexorably advancing tsunami of financial technology. Which, by the way, is exactly what is occurring in the crypto-currency “ICO,” or Initial Coin Offering, market. As I wrote in May, “decentralization is the future of monetary value” – and when it comes to crypto-currency and Precious Metals, nothing better defines decentralized. As opposed to fiat currency, which could not be more centralized, and destructive, if it tried.
As for this weekend’s PiMBEEB onslaught, much of it is directly related to today’s principal theme – of the borrowed time the U.S. dollar is living on as “world’s reserve currency,” given that it has more debt than most other nations combined; a long-dead manufacturing sector; a reckless Central bank that has destroyed countless nations via the unprecedented exportation of inflation; and a rapidly deteriorating diplomatic reputation, which the historically undiplomatic Trump Administration has dramatically worsened via its aggressively “America First” geopolitical and trade policies. Not to mention, a President whose unfiltered “Tweeting” has offended many of the world’s most important leaders and nations.
To start, we have the States of Illinois, Connecticut, New Jersey, and Maine all failing to pass fiscal 2018 budgets – to the point that “emergency measures” have either been, or shortly will be, instituted, to keep them afloat. In other words, America’s growing bankruptcy epidemic, at all levels, is being exposed – to the point that actual bankruptcy proceedings, Puerto Rican style, are likely. In all cases, criminal governments – like New Jersey’s, whose hideous fiscal collapse in large part occurred under the stewardship of none other than Jon Corzine – are desperately attempting, like the Federal government in advance of its “debt ceiling” limit this Fall, to enact near-term patches, to, as always, “kick the can” those last few inches.
However, in some cases, like Illinois, the situation is so bad, a bankruptcy filing appears imminent. To the point that, at the last possible second, the Illinois Congress is trying to pass yet another massive tax increase to “pay” for its out-of-control spending – in a State that has already experienced, by far, the biggest exodus from its borders since Louisiana post-Katrina. But don’t worry, buy stocks and sell gold – as this couldn’t possibly cause any problems; particularly when the only way to “fund” Illinois’ bills – like the tens of billions of its pension funds that will go broke otherwise – is the issuance of more Federal “money,” followed by its “monetization” by the Fed.
Then we have today’s Saudi/Qatar ultimatum; which, when Qatar ultimately rejects it, will dramatically increase the odds of Middle Eastern military conflict. Not to mention, the for all intents and purposes death of the Obamacare “repeal and replace” movement; a U.S.-provoked confrontation between U.S. and Chinese warships; and the surreal explosion of the domestic war between Donald Trump and everybody – from the press, to Congress, to State governments – so much so, famed Watergate reporter Bob Woodward deems it the “malignant Presidency”; and it becomes painfully apparent just how dangerous the world is becoming; and within it, how much power, and respect, the “world’s reserve currency” issuing United States is losing, at an alarmingly rapid rate.
To wit, it would be wise to listen to Kyle Bass’s pronouncement this weekend that America’s relationship with China has dramatically deteriorated; as China is not only the U.S.’s largest creditor – which as of last year, no longer buys U.S. Treasuries; but the world’s largest manufacturing nation, with the ability to dramatically weaken our already historically weak balance of trade; and thus, the dollar’s value, and the Fed’s ability to support it; at any given time. A sentiment which, with eerily perfect timing, was mirrored by none other than Chinese Premier Xi Jinping this morning; who, mere hours after Trump had the gall to call him about “containing” the North Korean situation, just one week after Tweeting that the Chinese had not been helpful in this regard – issued a statement that U.S.-China relations have been affected by “negative factors” since the two first met at Trump’s Mar-a-Lago resort three months ago. A statement which couldn’t be more ominous ahead of next week’s G-20 summit, when Trump may propose additional Chinese trade tariffs.
Clearly, in every imaginable way, America’s role as a political and monetary “leader” is diminishing, in dramatic fashion – and I’m not even going to breach its collapsing economy, per the U.S. “macro surprise index” plunge depicted below; ironically – commencing nearly to the day Trump was elected; given that Whirlybird Janet decided, contrary to her policy of essentially the entire Obama Presidency, to start aggressively raising rates – against Trump’s vehement opposition – at that very moment in time. FYI, isn’t it funny how Friday’s and today’s “soft data” Chicago PMI and ISM Manufacturing Indices “surged”; yet simultaneously, today’s hard data report of May Construction Spending plunged?
But I digress, as the most important point I want to make, to drive home today’s theme – is the below chart, of a survey taken by the highly respected firm, Pew Research. Which frankly, floored me, given just how obvious it is that America is rapidly becoming a global pariah. To wit, roughly 85% of citizens in the world’s leading Western nations don’t trust Donald Trump – and by proxy, the United States.
You are free to interpret this survey any way you wish, of course. However, there is NO WAY anyone can dispute the rapidly widening schism between America and the rest of the world – be it with “allies” like Western Europe, South Korea, Japan, Australia, and Canada; “competitors” like China; and enemies, like Russia. And when you’re hyperinflating managing the world’s “reserve currency,” such a schism will undoubtedly have dire ramifications on the world’s monetary order.
Which consequently, in a world amidst historic physical Precious Metal market tightness – last I looked, the Chinese were the world’s largest buyer; as the “gold Cartel” desperately tries to maintain a dying status quo; whilst crypto-currency, with each passing day grows more powerful; the odds of a significant monetary “reset” have never been higher – against fiat toilet paper in general; and more specifically, its U.S. dollar “leadership.”
