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.
READ THE FULL NEWSLETTER
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…
…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.
I have a LOT to speak of today – culminating in something I should have memorialized years ago, amidst my heyday of publishing “primers” of the gold Cartel’s myriad, day-to-day operations. I’m having trouble choosing which “PM bearish, everything-else-bullish” topic to start with – but due to how smothering the never-ending “Russian hacking scandal” has been – spearheaded by CNN, “America’s least trusted media outlet”; and the fact that started watching the incredible USA Network Series, Mr. Robot; I’m commencing with an item I’m sure will get little press – other than on Zero Hedge, where I found it – but has a LOT of relevance to the world’s future path.
Which is, the arrest of two hackers for breaking into thousands of Italian email accounts – including ECB Chairman Mario Draghi’s, and soon-to-resign Prime Minister Matteo Renzi’s. Quite obviously, the age of exponential technological advancement is upon us – like this month’s unveiling of Google’s “driverless cars”; to the point that not only will our lives dramatically change, but the means of them being violated will increase equally dramatically. Which in most cases, is a bad thing – but as WikiLeaks, Anonymous, and others have taught us, can also be an extremely powerful societal ally.
The emails and chat messages between Deutsche Bank and its PM-smashing “allies” – which are now public record; or the smoking gun revelations of collusion between the UK and U.S. governments to create the COMEX itself, solely for the purpose of suppressing Precious Metals. In other words, the powers that be’s’ long-standing secrecy is being compromised; and with each new revelation, more and more people will realize they have been duped, defrauded, and/or propagandized – resulting in actions that will inevitably undermine such schemes – like the past two years’ anti-establishment elections; and, inevitably, the overwhelming of rigged markets like stocks, bonds, currencies, and Precious Metals.
Speaking of currencies, seemingly each day a new one is crashing – like today, when the Venezuelan Bolivar, Turkish Lira, and Mexican Peso are hitting new all-time lows. And how about the Chinese Yuan; which, after its biggest ever one-day surge ever, of roughly 2% (amidst the PBOC’s largest-ever intervention); has lost more than half of its ill-begotten gains in less than a week – to the point that, now that the round number of 6.9/dollar has been recaptured by Yuan bears, the all-important 7.0/dollar level is once again looming. I.e., the point that the real speculation of just how low it can go will commence. And now that the entire investment world realizes just how tenuous the PBOC’s finances have become – care of the exploding capital outflow data that are blatantly understated; and irrespective, catalyzed dramatic capital controls’ it mayn’t be long before, as I predicted last week, the “cataclysmic financial big bang to end all big bangs – i.e., a significant Yuan devaluation – cascades over the drunken “Trump-flation” crowd, like a massive deflationary wave.
Not to mention, the cantankerous geopolitical age it will usher in, as the “final currency war” goes thermonuclear. This, as China’s chief trading partner – and economic competitor – the U.S., inaugurates the most protectionist-leaning President in decades, if not centuries. As I assure you, the U.S. response – and Chinese counter-responses – could be extremely deleterious to global economic activity, financial asset valuations, and foreign exchange stability. And it’s not just China, but all American trading partners – starting with Mexico and Japan, whose automakers are under siege by Trump before he’s even inaugurated. To that end, it was two years ago when I deemed the type of violent currency instability we are seeing today; which, if the Yuan is significantly devalued, will increase dramatically; the “single most Precious Metal bullish factor imaginable.” This, before I even conceived that a significant Yuan devaluation – or a vehemently anti-globalist U.S. President – was possible. Or, for that matter, a virally spreading “war on cash” – which may well, as soon as 12 months from now, envelop significant amounts of the “civilized” Western world.
Next up, the mirage of “recovery” the paradoxical “Trump-flation” meme has temporarily inspired – as evidenced by surging consumer and business “confidence,” despite abysmal real metrics like sales, production, earnings, and tax receipts. Ironically, much of said “confidence” resulted from the one-time, nearly $500 billion pre-election, debt-financed spending spree the Obama Administration went on this Fall, in an ultimately failed attempt to secure a Hillary Clinton presidency. That said, recent economic data clearly shows said “boost” is already wearing off as we head into 2017 – when a broad swath of recessionary waves will lambast America like a tsunami. Heck, not only was last week’s December NFP “jobs” report a disaster on the surface, but even the Wall Street spin that “wage growth” saved the day is being refuted; not to mention, as just one day later – i.e., yesterday – the Fed’s own Labor Market Conditions Index not only contracted, but depicted its largest year-over-year decline since 2010!
When I called the top in interest rates in early 2014’s “3.0%, ‘nuff said” and “2.6%, ‘nuff said,” the U.S. economic situation was far stronger than it is today, irrespective of the “bond vigilantes” having finally awoken after interest rates – both here and abroad – were driven by Central banks to their lowest-ever levels. I mean, with each passing day of economic data weakness – such as the first year-over-year automobile sales decline since 2009, and massive numbers of scheduled retail store closings; the fallacious meme that interest rates will rise due to a “strengthening economy” holds less and less water. Which is probably why the money markets anticipate just two rates hikes this year (I assume zero), versus the Fed’s vehement prediction of three; whilst Precious Metal prices are inexorably rising. And equally probably, why the bellwether ten-year Treasury yield may well have topped not at 3.0%; or even 2.6%; but instead, the key round number of 2.5%!
Regarding such anti-economic “waves,” let’s start with the giant pink elephant in the room that is surging Obamacare premiums; which even Trump knows have no chance of being “repealed and replaced” any time soon; which are DESTROYING the finances of millions of U.S. households. And how about the new Social Security Tax that came into effect yesterday, that hasn’t been covered anywhere but in Zero Hedge? Let alone, surging gasoline prices, care of the faux OPEC agreement – even if such gains have been muted so far, given the massive glut in the physical markets that grows larger with each passing day – no matter how much paper markets are goosed by “oil PPT” futures buying, and fraudulent “production cut” propaganda.
Yesterday’s news that the U.S. government will be selling eight million barrels from its Strategic Petroleum Reserve; given that – like China’s – it is massively larger than necessary; as clearly, the U.S. government has been “borrowing and spending” on crude oil to prop up prices, given the hundreds of E&P bankruptcies that would result from sub-$40/bbl prices. This, as it’s become common knowledge that China, too, has essentially filled its SPR – to the point that a potentially major source of – arguably artificial – demand may well morph into a very real source of incremental supply, at a time when OPEC/NOPEC is desperately trying to portray a market moving towards supply/demand “balance.” LOL, amidst an environment of record inventories; flattening demand; a multi-year high dollar; and heightened global energy conservation.
Which brings me to today’s topic – the 12:00 PM EST “cap of last resort” tactic the Cartel has been using, for years, to cap and/or attack nearly all Precious Metal rallies that continue past 10:00 AM EST; i.e., “key attack time #1,” representing the global close of physical gold and silver trading. Frankly, I’m not sure why I never wrote a dedicated piece regarding this most blatant – and demoralizing – of all Cartel algorithms; given that, in the polar opposite fashion of the “hail mary” algo that props up the “Dow Jones Propaganda Average” nearly every afternoon, the “COLR” algo starts the process of walking down (and in many cases, smashing away) Precious Metal gains, to prevent “undue” exuberance that might 1) generate strong daily gains, and/or 2) create “undue” momentum heading into the following trading day. That said, given the heinous price-capping we have witnessed essentially every day since the powers that be went all-in goosing stocks and suppressing PMs after the election, I felt it was time to add another installment to my ongoing series of “manipulation primers”; going all the way back to the four I published in 2010, before I started at Miles Franklin, comprising more than 700 cumulative pages.
Since joining Miles Franklin in 2011, I’ve penned the following; each with the goal of exposing the fraudulent PM paper markets, with the overarching goal of – along with GATA and a handful of other manipulation fighters – spreading said truth virally, so that millions; and hopefully, billions; will one day act to overwhelm it.
Sunday Night Sentiment (January 2012) – Capping and/or attacking PM prices Sunday night, to start the week poorly; including 171 of the past 179 weekends
Cartel Herald (April 2012) – The Cartel’s signature algorithm – shaped like a pennant –that has stopped essentially every PM rally in the 15 years I have been watching
Dow Jones Propaganda Average (April 2012) – Description of the “dead ringer”; “variations thereof”; and “hail mary” algorithms the PPT uses essentially every day to support the world’s most widely watched stock index
The 2:15 AM (May 2013) – Discusses how the Cartel nearly always caps and/or attacks at the 2:15 AM EST open of the London paper pre-market trading
Crybaby Attack (June 2013) – An “extreme version” of the 12:00 PM EST “Cap of Last Resort,” the Cartel sometimes pushes prices down at roughly 2:00 PM EST if even the “COLR” at 12:00 PM EST doesn’t work
Sixth Sigma Precious Metal Manipulation Proof (August 2014) – Shows how the Cartel “walks down” PM prices nearly every day in the ultra-thinly traded New York “aftermarket,” from 4:00 PM EST until the brief, 45-minute paper trading close at 5:05 PM EST
As for the 12:00 PM EST “cap of last resort,” it couldn’t be easier to explain. In fact, here it is yesterday; in silver’s case, at exactly 12:00 PM EST, kicked off by the aforementioned “Cartel Herald” algorithm; and in gold’s, roughly 45 minutes later. Again, it doesn’t have to be on up days – as plenty of times, big down moves commence at 12:00. However, for the most part it is used precisely as the name suggests; i.e., to make sure any “undue” price rises – such as those above the Cartel’s primary daily “upside limit” of 1.0% – are controlled and/or reversed.
Here are charts of just a sampling of trading activity in the past three weeks – encompassing nearly every trading day; amidst an extremely bullish phase, in which gold prices may well have bottomed.
During which, quite blatantly, the “COLR” algo was utilized – invariably, coupled with the “Cartel Herald” – to stop all PM rallies cold. In fact, some of the charts appear so similar – like December 29th, January 3rd, January 5th, and January 9th – you’d swear they were the same day, if you didn’t read the dates. Which, by the way, is exactly how you’d view the majority of “Dow Jones Propaganda Average” charts, “influenced” by the dead ringer, variations, thereof, and hail mary algos essentially every day.
Well, I guess that’s all I need to say about this topic, given how incredibly self-explanatory it is – to both observe, and interpret. Hopefully, this additional entry into my “manipulation primer archive” helps to empower you to see the forest through the trees when considering Precious Metal investments; which in my view, have historically low levels of risk in the historically tight physical realm – particularly now, amidst the end game of history’s largest, most destructive fiat Ponzi scheme. As opposed to “paper PM investments,” which have just as high of a chance of a “grand slam” as a “strikeout.”
P.S. I kid you not, it’s 12:00 PM EST as I’m about to hit “submit,” and would you like to see what the gold price is doing – with no other market materially budging? I mean, you just can’t make this stuff up!
I’m starting this at 8:30 PM MST Tuesday, in my eerily quiet house – as Sylvie is sleeping, Diana is teaching, and Giselle sits by my feet, waiting for her next snack. I’ll finish tomorrow morning, as I don’t want to miss a beat – in a rapidly changing world, chock full of Precious Metal bullish, everything-else-bearish headlines. Which I’ll simply start by saying – have no fear, I have not sold a single ounce of Precious Metals! Conversely, I hold more than ever before – at roughly 75% of my liquid net worth, a higher percentage than perhaps 90% of the world’s denizens; and likely, 99% of the Western world. To the contrary, I’ve simply re-organized my portfolio, as I’ve done dozens of times throughout my investment career.
Be it tax considerations, new products, or an updated economic or market outlook, I’ve continually “high-graded” my portfolio to take advantage of what I personally believe to be the most beneficial choices. To that end, I’ve in the past swapped “generic” gold and silver bullion coins for Royal Canadian Mint Wildlife, Bird of Prey, Call of the Wild, and Predator series’; and similar limited edition series’ from the Perth Mint; when the price is right – typically, when new series’ are first issued, yielding prices not much different than generic bullion coins. Additionally, I in 2011 chose to sell my last mining share, in favor of a 100% physical bullion portfolio – in which, I’ve several times swapped gold for silver when the gold/silver ratio appeared, to me personally, to be too high.
And lately – again, with tax considerations as important as anything else, I decided to swap my junk silver and fractional gold coins for one ounce bullion coins, for reasons I personally believe in. Unquestionably, all Precious Metal products will appreciate with spot prices, so it’s really just a matter of, as Miles Franklin’s President and Co-Founder Andy Schectman would put it, personal preference, a la Coke versus Pepsi versus Dr. Pepper or Sprite. And as for my holdings of Bitcoin, they came at the expense of cash – in many ways, given my view that as the global “war on cash” accelerates, even physical cash may no longer have relative value. Just ask anyone in India; Venezuela; or as of today, Greece; whose soon-to-be deposed government, led by the traitorous Alexis Tsipras, out of left field announced a “soft ban” on cash. Which, when reading the details, may well be as sinister, and deleterious, to Greek citizens, as Narendra Modi’s catastrophic, nation-destroying Indian decree.
Sadly, Greece’s horrific capital control announcement – which unquestionably, will accelerate the arrival of the GUARANTEED, CATASTROPHIC GrExit that MUST inevitably arrive – wasn’t even the biggest capital control announcement of the day. No, that was reserved for (who else but) China – which followed yesterday’s year-opening round of draconian capital control decrees by imposing strict reporting requirements on any Chinese citizens purchasing foreign currencies with Yuan. In other words, far worse, a far more draconian outcome than the anticipated announcement of reduced purchasing limits – as no matter what currency one sells Yuan for, the government now wants to not only know what you intend to buy with it, but when. Which is probably why Bitcoin hit another all-time high market capitalization; why Precious Metals rose despite, LOL, a “rising dollar”; and why my article yesterday couldn’t be more apropos – of how the “upcoming, cataclysmic, financial big bang to end all big bangs” I predicted a year ago (i.e., a massive Yuan devaluation) has been personally “upgraded” from inevitable to imminent.
And man, when it rains, it pours – as before I shut my computer for the night, Zero Hedge just reported that China’s main state-owned newspaper just put out an article stating “China may further cut U.S. Treasury holdings in 2017 if needed, to keep exchange rates stable…and the size of the reduction depends on (the amount of) capital outflows and (success of) FX market intervention.” In other words, China’s desperate financial Catch-22 is officially “on the table”; as if they don’t institute dramatic capital controls and “emergency measures” (like dumping hundreds of billions of Treasuries), the offshore Yuan – which subsequently “surged” back to 6.90/dollar – will collapse. And if they do, they will likely eat through their dwindling currency reserves far faster, heightening the likelihood of a full-blown currency crisis. Throw in the “wild card” of the trade wars Donald Trump has all but threatened – with China, Mexico, and essentially everyone else – and the odds of the MAJOR currency volatility I predicted in my year-end predictions increase dramatically. Or, as I described it in September 2014, the “single most PM-bullish factor imaginable.”
Next up, there’s the no-brainer story of the year, just one trading day after it started. Which is, today’s huge crude oil plunge, on news that – DUH! – the huge news story that was ignored last month, that Iraq will likely cheat on its “production cut” quota, has turned out to be true. To that end, NO ONE has been more vocal – and logical – about how the OPEC/NOPEC “deal” was a sham to begin with, from a group of economically dying nations desperate to prolong their mass bankruptcies a wee bit longer. Thus, pretending to forge a “production cut” agreement which has not a chance of occurring; let alone, succeeding, amidst history’s largest, for all intents and purposes irreversible, crude oil glut.
Trust me, the U.S. government, like every other market manipulation, is a primary “architect” of this fraud, too – not only so it and its Wall Street “henchman” can benefit from insider trading and market manipulation at your expense, but to desperately try to save America’s own, historically over-indebted energy industry. Which, like every other sector, is this financially perilous condition principally due to the destructive, greedy policies of Washington and Wall Street. From the beginning, particularly in light of my decade of experience as a Wall Street energy analyst – during which, OPEC meetings were as important to my career as Fed meetings are now – I was 100% positive this “deal” was a fraud; and seeing it start to implode one day into its launch, I am now 1,000% positive the markets will “call it out” – perhaps, violently so – in the coming months, to the detriment of the world’s largest revenue-producing, and debt-infested, industry.
Speaking of U.S. government-led fraud, did anyone see this article today – of how the mining industry’s essentially “lone wolf” fighter against Cartel suppression, Keith Neumeyer of First Majestic Resources, latched onto Deutsche Bank, Barclays, UBS, and others’ hideous silver manipulation admissions, to launch its own class action lawsuit – in which, he is inviting other silver producers to join? In other words, what I predicted last month – or for that matter, earlier this year, when this story first broke –that the parade of follow-on civil suits would be enormous, and the resulting due diligence damning, is coming true. To that end, I give my undying support to his cause – as if just a few major miners recognize, and act, to thwart the manipulation that has nearly destroyed their business, it will likely start a domino chain of events that will tighten up the historically tight physical gold and silver markets dramatically – to the point, potentially, that it catalyzes the Cartel’s inevitable demise.
Then there was the stark, terrifying admission by Texas’ Director of Public Policy Foundation – of what anyone with the slightest financial acumen knows too well; that not only is the now infamous Dallas Police and Fireman’s Pension Fund all but bankrupt, but nearly all pension funds are hopelessly underfunded – in my words, not his, because they are all PONZI SCHEMES based on fraudulent accounting assumptions, on the verge of bankruptcy due to years of zero interest rate policy that have dramatically reduced future earnings expectations (that haven’t yet been recognized); and set them up for collapse if interest rates rise even slightly – which I assure you they will, given that they have been “monetized” to record low levels, amidst history’s largest debt, deficit, and money printing edifice. And equally damaged when Central banks reduce rates in response – like the Fed, which inevitably must join the ECB and BOJ in the devastating, 99%-destroying realm of negative rates, if only to prevent its own, $4.5 trillion-plus monstrosity of a balance sheet – of historically overvalued Treasury and Mortgage bonds (and likely, further trillions of historically overvalued stocks) – from spontaneously combusting.
The great Graham Summers at Phoenix Capital’s “beware of the $52 trillion debt bomb” eloquently warned of what I have been shouting from the rooftops about for years; i.e., the worst imaginable “policy error” in Central banking history will occur if the Fed is stupid enough to raise rates further; with America – and the FED ITSELF – having more debt than any nation in history. Let alone, as its dollar is surging to 14-year highs (due to worldwide political, economic, and monetary fear, NOT “U.S. strength”), all but destroying what’s left of America’s economy and manufacturing base.
This, as Donald Trump attempts to politicize a handful of “job-saving” strong-arm negotiations, which will only cause inflation to explode further; corporate profits to plunge; and global backlash – from Mexico, for example – to occur. Heck, Trump actually put the DHS on alert today of his insane, megalomaniacal intention to actually build a wall across our Southern border today – causing the Mexican Peso to crash further into record low territory, which I assure you will lead to a vigorous, decidedly economically-negative response. Putting Summers’ brilliance in perspective, here’s what he wrote about the “logic” of the Fed raising rates with the dollar already at a multi-decade high, amidst the historic “final currency war” that promises to obliterate all fiat currency purchasing power.
“Indeed, there are few if any benefits to a strong $USD in the current fiat, debt-based monetary system the Fed is managing. Pushing for three rate hikes with the $USD at 102 (my comment – it’s now 103) is like pushing your friend to drink three more beers when he’s already got alcohol poisoning.”
Next up, there’s the Dying Demographic State of Germany – which as I shockingly disclosed this weekend, is actually tied with Japan for the world’s oldest population. Which couldn’t be more ominous, in light of this article about how Angela Merkel’s lunatic open borders policy has caused rising fears of the “Islam-ization” of one of the world’s most historically nationalistic – and brutally defensive – nations. Thus, when I read that sales of Hitler’s Mein Kampf recently surged; along with the popularity of the newly formed “Alternative for Deutschland” political party – which recently dealt Merkel a humiliating defeat in local elections in her home province – you can see how the political and economic situation in Europe’s largest economy could soon go from bad to worse. Germany, the nation which, for all intents and purposes, is holding together what’s left of the imploding European Union with smoke and mirrors – despite its Bundestag politicians and Bundesbank Central bankers vehemently opposing the psychotic QE program the ECB is desperately utilizing to, like the Chinese dumping U.S. Treasuries, prevent all-out, near-term collapse.
Which I assure you, wasn’t helped by yesterday’s news that German inflation surged to a fresh three-year high – which will only engender further ECB divisiveness; and anger within a nation whose historically dangerous “far right” movement is clearly on the rise. Or, for that matter, news that soon-to-be French President Marine LePen’s statement that if elected, she will immediately seek to remove France from the Euro currency, and re-denominate France’s debts in a newly-formed franc. To that end, Merkel’s decision yesterday to skip the hideously globalist Davos boondoggle later this month – where last year, Japan’s “unexpected” NIRP announcement was birthed; as well as the worldwide “war on cash”; is likely too little, too late, to prevent her from being soundly defeated in October’s German elections, and Germany itself from draconian political change.
Then there was the “economic data” the world round, in which “soft” PMI and other “diffusion indices” surged; partly on fallaciously misplaced “confidence” in Donald Trump – who not only won’t accomplish any of his campaign promises; but is actively engaging trade wars that will drive up the cost of living further, whilst catalyzing heightened geopolitical tensions and currency market “volatility” (read, crashes). Of course, the part the “evil Troika” of Washington, Wall Street, and the MSM won’t tell you is that said “diffusion indices” didn’t rise due to exploding demand or activity, but surging prices paid. In other words, higher inflation is what’s driving them higher – which is probably why the dollar subsequently surged to a new 14-year high, taking interest rates with it, under the assumption that the Fed would be forced to raise rates to slow it down. Which as Graham Summers noted above, would only make things worse, given that aside from currently hyper-inflating nations, all other Central banks are aggressively easing monetary policy.
But then, a “funny thing happened on the way to the form” – as the second such data emerged, the dollar plunged, Treasury yields imploded, and crude oil crashed (the Iraqi overproduction news certainly contributed, but the timing of the initial oil plunge was perfectly synchronized with the dollar/Treasury yield crashes). In other words, the same reaction that occurred last week when free-falling home sales were reported; and this morning (yes, I just woke up Wednesday), when it was reported that U.S. mortgage applications fell 2% last week, and refinancing applications an astonishing 22%.
As I wrote in January 2014’s “3.0% – ‘Nuff Said”; and May 2014’s follow-up “2.6% – ‘Nuff Said”, interest rates are approaching levels that, if they rise any further, will annihilate what’s left of the global economy; not to mention, worldwide fixed income and currency markets. Thus, putting the Fed in an increasingly tight box of its own creation; as if they are stupid enough to continue speaking (let alone, acting) “hawkishly,” they will destroy the U.S. economy; and in the process, their own, hideously overvalued $4.5 trillion balance sheet. But if they reverse course, which they ultimately must do, they will lose all remaining credibility. Not to mention, risk the final, inevitable destruction of the gold Cartel that works to “stabilize” the dollar’s value. And the funny part is, that when – not if – they reverse course and launch QE4, the odds are strong, if not stronger, of a continued bond market crash (and simultaneous Precious Metal explosion) than a powerful bond rally (and simultaneous Precious Metal explosion). Oh, the tangled web we weave, when we seek to deceive!
As for markets, Precious Metals rebounded sharply upon the bond markets’ reversal of fortune – but what do you know, after being hit by prototypical “Sunday Night Sentiment” and “2:15 AM” EST raids, their rally was magically “stopped” by the same “Cartel Herald” algorithm that has thwarted every PM rally in the 15 years I have been watching, at exactly the 12:00 PM EST “cap of last resort” time stamp I have been noting for more than a decade. This, despite not a single outside market movement to explain it –whilst of course, the “Dow Jones Propaganda Average” was saved with countless DLITR, or “don’t let it turn red” algorithms; and of course, the equally prototypical “hail mary” at day’s end.
Oh well, today’s started much better for both metals – which hopefully, as I suggested was very possible last week – have for the second straight year, “bottomed in late December.” And even if they didn’t, the “downside” is infinitesimal at worst, in my view, given surging demand; plunging production; and the aforementioned, guaranteed explosion of worldwide currency market instability. Not to mention, what the below, fantastically telling charts by the great Gary Chistenson tell us – of just how incredibly undervalued silver (and by proxy, gold) have become!
Last but not least in my “ominous reflections of 2017’s first trading day,” the fact that WikiLeaks founder Julian Assange, whilst vehemently denying “the Russians” were his source of anti-Hillary leaks, said that if you think 2016 was a big year for WikiLeaks, 2017 is going to “blow you away.” Which I have no doubt is true, as well as a great deal of the dying status quo –and hopefully with it, the heinous gold Cartel!
Before the U.S. has even opened for 2017 business, global markets have taken a dramatic step towards implosion – as the “year of monetary revolution” commences. Yes, the gold Cartel started the year as they start nearly every day; i.e., with a “Sunday Night Sentiment” raid, for the 170th time in the past 178 weekends (albeit, on a Monday due to the holiday); and subsequently, when gold had the nerve to rebound, a “2:15 AM” attack for the 761st time in the past 876 trading days, to make sure the year “starts right.”
However, with each passing day of gargantuan East/West physical premium differentials the odds of the Cartel’s inevitable implosion grow larger – particularly in light of the political, economic, social, and monetary carnage being wrought, at an increasingly parabolic rate by the “powers that be” known as governments, Central banks, and their Wall Street and corporate partners-in-crime” – as history’s largest, most destructive fiat Ponzi scheme, races through its cancerous, terminal phase. And nowhere is such self-destruction more evident than in the United States of Exceptionalism, where Barack Obama’s outgoing failure of an Administration is not only doing everything in its power to sabotage Donald Trump’s incoming Administration – but objectively speaking, catalyze World War III!
Moreover, despite the global currency collapse accelerating dramatically as I speak, the fallacious “Trump-Flation” meme hasn’t yet died – as exemplified by Chinese iron ore prices having risen 20% from their early 2015 lows, on a day when inventories hit an all-time high! Even JP Morgan, questionable motivations aside, espoused this weekend that Central banks have created “unprecedented distortions” in financial markets; which I assure you, will end with unprecedented losses – perhaps nominally, and definitely in real terms. Particularly those “betting” that Precious Metals, amidst historic physical market tightness, monetary destruction, and political uncertainty, will continue to trade at historically suppressed prices – to the point that the mining industry is now assured to experience an unprecedented production collapse.
Regarding said “dramatic step toward monetary implosion,” as I write in Tuesday’s wee hours, fiat currencies the world round are crashing – including the world’s second largest currency, the Euro, sitting mere basis points from a fresh 14-year low; the third largest, the Yen, which is in freefall mode; and essentially everything else – particularly of note, the Indian Rupee, whose fundamentals have plunged so dramatically following Narendra Modi’s psychotic cash ban decree, it is prompting banks to slash interest rates unilaterally, without even waiting for India’s Central bank to do so itself (it wouldn’t dare, as this would amount to an admission that the cash ban is failing).
However, the potentially cataclysmic monetary risk that surpasses all others combined is what has me most worried – and apparently, a billion Chinese, if this weekend’s parabolic Bitcoin surge, to nearly $1,100 on Chinese exchanges, is any indication. Which is, the rapidly declining state of China’s financial condition, as evidenced by the Yuan devaluation I first warned of in April 2015; followed by August 2015’s “upcoming, cataclysmic, financial big bang to end all big bangs,” mere hours before the first leg of the catastrophic, nuclear salvo of the “final currency war” was launched; i.e., the PBOC’s initial 7% devaluation of the Yuan.
I subsequently spent the summer of 2016 warning that as soon as the Yuan was officially accepted into the IMF’s “strategic currency basket” on September 30th, it would likely be devalued further, in response to an unprecedented collapse in Chinese export demand. Which it subsequently did, taking the officially pegged “onshore” Yuan to an all-time low fix last night of nearly 6.95/dollar, whilst the speculatively traded “offshore” Yuan plunged to nearly 6.99/dollar, as the lunatic Chinese government kicked and screamed, Animal House-style, of how “all’s well”; whilst, in true Keystone Kops form, it “adjusted” the dollar’s weight in the Yuan’s trade-weighted basket, to make it appear the Yuan is not free-falling.
This, as capital outflow is accelerating so dramatically, the Chinese government is selling U.S. Treasuries by the hundreds of billions, and expanding capital controls at an India-like pace – like yesterday’s PBOC decree, reducing the amount of Yuan-denominated cash transactions banks are required to “report” from 200,000 Yuan (~$28,000) to 50,000 Yuan. Which, I kid you not, was justified by today’s universal Central banking propaganda meme, of “improving the monitoring of money laundering, terrorist financing, graft, and tax fraud.” Moreover, following last week’s “unofficial” comments from a leading, but recently retired PBOC board member, that China should enact a “large, one-time” Yuan devaluation to preempt Donald Trump’s potentially protectionist policy proposals; just yesterday, an “official” Chinese trade publication “recommended” the same. To which I retort, that such draconian proposals, “trial balloons,” or whatever you want to call them couldn’t possibly be due to collapsing Chinese exports; a parabolically surging dollar; and the free-falling Euro, Yen, and essentially all other “competing” currencies; could they?
And yet, as the offshore Yuan plunged – to a low of 6.985/dollar, settling at 6.972/dollar as I write – the PBOC yet again demonstrated what I first discussed in September 2015, of how despite its economic might, China’s monetary politburo is “the most dangerous, destabilizing force on Earth”; when it again stepped up its “war on Yuan short-sellers,” by draining liquidity from the offshore market whilst simultaneously devaluing the onshore market. In other words, wasting billions more of increasingly scant capital fighting speculation in the offshore Yuan market of an exchange rate below the key psychological level of 7.0/dollar – whilst simultaneously devaluating the official rate to nearly that level, and clearly indicating its intention to eventually, perhaps imminently, do so irrespective. To wit, here’s what I wrote in the aforementioned, MUST READ article from 16 months ago.
“However, taking the cake in the category of Keystone Kops financial planning is the fact that – as exemplified by last night’s announcement of massive reserve requirements for those attempting to trade the Yuan ‘non-deliverable forward’ market – the Chinese are wasting countless hundreds of billions supporting the Yuan, whilst at the same time devaluing it! No, I’m not crazy – and actually, I’ve been writing of this since the initial Yuan devaluation three weeks ago. Which is, that whilst the initial devaluation was a modest 6%, the Chinese government clearly aims to de-peg the Yuan entirely – in what will be an equally “cataclysmic financial big bang to end all big bangs.” As is the case with the disclosure of its massive gold holdings – which they are now doing monthly, in very small increments – it doesn’t take a rocket scientist to see that the PBOC’ wants to gradually weaken the Yuan, as opposed to doing so at one fell swoop – and thus, causing a globally destructive monetary shock wave.”
Consider the below chart of Bitcoin’s price relative to the official (onshore) Yuan/dollar exchange rate. As Zero Hedge put it, “based on this chart alone, the recent Bitcoin surge would imply a substantial Yuan devaluation is looming – or even more aggressive capital controls.” Which are certainly major factors, although it’s possible that other factors are contributing, too – such as the ongoing and/or anticipated collapse of dozens of other currencies; as well as increased worldwide Bitcoin uptake and/or functionality. That said, given that roughly 90% of all Bitcoin trading occurs – for now – in China – you can bet an anticipated devaluation is a major factor behind its recent rise; as was “coincidentally” the case in the Spring and summer of 2015, just before the initial 7% Yuan devaluation was launched.
I want to repeat something else Zero Hedge wisely warned of, that “for those buying Bitcoin here on the momentum, we urge readers to be cautious – as by now, the PBOC has certainly noticed that the digital currency remains one of the final, and most successful, means of bypassing Chinese capital controls. Should Beijing mandate that Bitcoin can no longer be a means to illegally transfer capital offshore, there is risk of a dramatic, and sharp, drop in its price.” And the reason I do so, aside from highlighting the trading risks involved, is that it emphasizes the very important point I made in yesterday’s “2017 – The Year of Monetary Revolution.” To wit…
“I believe 2017 will be the year governments start to consider Bitcoin, not gold, to be the biggest threat to the dying monetary status quo – which is why I wrote last week’s MUST READ article, “why Bitcoin will cause gold and silver to go up.” In which, I espoused my strong belief that governments – in Don Quixote-like fashion, flailing at windmills – will spend less time worrying about suppressing Precious Metal prices, and more time futilely attempting to quash Bitcoin. Which, in light of the already historic tightness of the physical gold and silver markets, may well prove the catalyst for finally setting their manipulated prices free.”
In other words, as currency – and most fixed income – markets start to discount the dire consequences of the “cataclysmic financial big bang to end all big bangs” that a significant Yuan devaluation would engender – far larger than the 15% devaluation to date; the “Keystone Kops” PBOC is desperately attempting to limit the collateral damage, using whatever “draconian actions” they have at their disposal. Which other than a handful of brief, perhaps dramatic short-term declines if they word their propaganda carefully, will decidedly NOT work in the decentralized Bitcoin market – which is rapidly evolving into public consciousness as the future of day-to-day, transactional money. And certainly not in the historically tight physical gold market – although my guess is they’d attempt nothing of the sort on that end, given their own manic, overt acquisition of history’s most stabilizing – and currently, historically undervalued – monetary asset, no matter what propaganda is spewed by the world’s leading “anti-gold” forces – principally, from “leading” Western money printers like the U.S. and UK.
The preponderance of evidence – i.e., all one needs for a conviction in civil court – not only suggests a near-term, politically and economically debilitating Yuan devaluation is coming, but that its likelihood has, for all intents and purposes, been “upgraded” from inevitable to imminent. When it occurs, which may well be before Trump’s inauguration, the impact on global financial markets – and geopolitical tensions, to boot – will be nothing short of nuclear; with no markets benefiting more than physical Precious Metals; which incredibly, in the markets of said “leading Western money printers” like the U.S., can still be purchased at historically low prices, no matter what “metric” one uses to value them.
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