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The Miles Franklin Blog continually attempts to refine itself, to make itself more user-friendly amidst its “mission statement” of helping readers understand what’s really occurring in the global economy and financial markets.  At the moment, we’re experimenting with shortening my articles further, which should help to focus the message.  That said, we have always viewed it as important to keep you apprised of all the day’s key issues, particularly as relates to Precious Metals; and thus, I’m going to simply list them up front, without going into great detail.  That way, I can focus more on the day’s principal topic – which in today’s case, is the so-called “recovery” that sooner or later, even the “evil troika” of Washington, Wall Street, and the MSM will give up trying to propagandize.

In the meantime, here are some of the day’s other PM-positive “horrible headlines”…

  1. China and South Korea signed a trade agreement to trade in Yuan and Won; i.e, yet another “de-dollarization” initiative involving a so-called U.S. “ally”
  2. The return of “Arab Spring,” an inevitability given surging global inflation care of accelerated Central bank money printing.  The implosion of Arab Spring poster child – and home of 80 million people – Egypt continues, as exploding deficits prompted its government to end gasoline subsidies, causing prices to surge nearly 80% overnight.  Meanwhile, escalating violence in Kuwait increases the specter of a new “Arab Spring hotspot.”
  3. Due to a combination of the ECB’s negative interest policy and plain old Spanish insolvency – across all sectors, public and private – the Spanish government issued a retroactive deposit tax on all bank deposits.  This can be interpreted in no other way than a bail-in; and trust us, Spain is NOT the most challenged European economy.  In other words, why anyone would still keep material amounts of capital in banks is beyond us, particularly PIIGS nations where 135 million people reside.
  4. The Bank of International Settlements, or BIS, is proposing new measures that would make it harder for banks to understate the riskiness of their assets, such as ending the long-standing allowance of considering all government bonds risk-free.  If issued, this could be catastrophic for many European banks – hence, the stock weakness we have discussed for the past week – particularly Spanish and Italian banks, whose Ponzi scheme of holding massive quantities of government bonds funded by the ECB’s LTRO bailout scheme are most blatant.
  5. Incredibly, the U.S. government is following up its unjustified “money laundering” accusations against France’s Banque Paribas – you know, the one that caused the head French Central banker, Foreign Minister, and energy CEO to call for “de-dollarization” – by attacking Germany’s Commerzbank and Deutsche Bank as well.  First, we won’t give Germany back its gold, and now this.  I mean, just how badly are we trying to alienate the entire world, including said “allies?”

OK, now for the primary issue at hand; i.e., the U.S. economic “recovery” that will shortly, once and for all, be thrown into history’s dustbin of failed propaganda.  This particular “deception initiative” commenced last Spring, when the term “tapering” was thrust upon the media landscape.  In actuality, said “recovery” was nothing more than heightened accounting gimmickry, such as redefining “GDP” to include non-income producing activities and reducing the “GDP deflator” despite surging inflation.  Moreover, we decidedly proved tapering was but a mirage – and this Winter’s sudden surge in “Belgian” Treasury buying proved our point further; i.e., the Fed has not only continued to monetize, but at a far greater rate than reported.  Worse yet, the MSM continually reported ugly, QE-fostered housing bubbles as the backbone of sustainable expansion – when in fact, they simply enriched the “1%” at the expense of the “99%,” before clearly rolling over in recent months.  And oh yeah, the massive PM attacks that commenced with the April 12th, 2013 meeting between Obama and “TBTF” bank CEO’s; which were propagandized, as always, as “proof” of the recovery’s veracity.

That said, the denouement of last year’s recovery hype was the horrific holiday retail season – by far, the worst since 2009, yielding surging store closings atop abysmal consumer spending.  And no, it wasn’t due to “the weather” – which not only did we prove otherwise in “Mother Nature has had enough,” but has since been validated by countless data points.  Not to mention, the fact that online sales declined by more than in-store sales, and sales at “1%” stores like Porsche and Tiffany were just fine.  “Weather” or not, first quarter GDP growth, despite the comical inclusion of an all-time low GDP deflator amidst rocketing “need versus want” costs, was negative 3%, compared to initial estimates closer to positive 3% and last year’s +1.8%.

Since the end of March, U.S. economic data has been decidedly negative; in other words, mirroring the entire world.  The ECB’s recent decision to lower rates to negative territory puts an exclamation point on the true state of the global economy, compounding the horrific implosion of Eastern “growth engines” China and Japan.  As we discussed in last week’s “Island of Lies,” the only place where “positive” economic data still exists is in the BLS’s fraudulent “headline” unemployment figures, and equally rigged “diffusion indices.”  To the contrary, we have detailed what real economic figures are saying – which sadly, is at best stagnation.  In other words, if anyone believes Wall Street’s estimates 2Q GDP growth estimate of +3%, we have a bridge to sell you.

Econ data 7 9

Now that the all-out propaganda effort that is the monthly NFP report is over, the all-important 10-year Treasury yield has again fallen below the 2.6% level (2.57% as I write) that we defined as the “most damning proof yet of QE failure”; i.e, plunging rates despite so-called “recovery.”  Yesterday, Gallup’s June spending survey collapsed by 7% from May’s level; and today, the NFIB small business survey – you know of CEO’s that were supposedly behind the “surge” in May payrolls, “unexpectedly” plunged by 2% from a month ago.  In other words, the ugly figures above were decidedly validated, making Wall Street’s “3%” second quarter GDP estimates appear even more ludicrous.

However, said “horrible headlines” pale in comparison to those witnessed this morning; in our view, putting the nail in the coffin of anyone still fighting the tide of economic reality.  First, Samsung reported weak earnings due to slowing smartphone demand; in other words, validating that discretionary spending is declining worldwide.  Better yet, Walmart’s CEO, Bill Simon, drove a stake through the heart of said “recovery” propaganda in stating the so-called jobs improvement is “really hard to see in our business today.”  In fact, he flat out stated that Walmart’s lower- and middle-income customers appear to have made a number of changes to their shopping habits that were “not the best thing in the world for a retailer,” as they “adapt to what has been a difficult macroeconomic situation.”

In other words, the world’s largest retailer – accounting for roughly one-eighth of all U.S. spending – sees absolutely, utterly ZERO economic recovery.  And thus, for anyone still betting the Fed can print its way to prosperity – let alone, stop printing for fear of instantaneous economic implosion – we dare you to bet otherwise.  History is on our side, without fail, and as we speak the entire global economy is collapsing; sadly, led by the nation doing its best to propagandize economic “leadership.”

Meanwhile, PHYSICAL precious metals demand has never been higher – as exemplified by evidence China has consumed at least three-quarters of year-to-date global gold production.  Not to mention, as we are just two days from the annual Indian budget report, in which it is widely anticipated that last year’s suicidal Precious Metal import tariffs and restrictions will be at least reduced, and possibly eliminated.  And as for silver, which nearly 100 years ago the Chinese government proclaimed to be “very closely connected with the purchasing power of more than one half the human race” – the below chart depicts the biggest buying opportunity since the gold standard was abandoned; to which we can only add, ignore it at your own peril!

Pys demand