So close – but yet, so far. That’s probably how long-suffering Cartel victims – i.e., tens of thousands of Americans trying to protect themselves from the relentless, soon-to-be-explosive monetary inflation the Fed perpetrates each day. The same goes for hundreds of thousands of non-Americans, but given that essentially all other currencies have already collapsed, gold in non-dollar terms is already trading at, near, or in many cases well-above, previous all-time highs – invariably, from 2011-12. Thus, days like yesterday aren’t nearly as frustrating, rage-inspiring, and demoralizing for foreigners than Americans.
Not that yesterday’s “BS NFP” report should come as a surprise, given how much is at stake. For one, the Fed’s credibility is so low, one more realistic jobs report would likely have permanently silenced its “recovery” propaganda. Which in turn, would have ignited an explosive Precious Metals rally; and an equally violent Treasury yield plunge, in anticipation of imminent NIRP and QE. Which would have served as nuclear fuel to Trump’s campaign, destroying Hillary Clinton’s primary campaign “platform,” that the economy is improving. Remember, the Obama Administration was miserably fail. Which is exactly what I’m predicting of the “BS NFP Attack” today.
The reason being, that the Cartel’s – er, “commercials’” – naked short position is going parabolic; and thus, desperately needs to be covered. Which has decidedly NOT occurred; as despite the aforementioned “best laid manipulative plans,” prices bottomed within two weeks of the FOMC Minutes Attack, before rocketing to new multi-year highs a month later. The reason being, that rising competition from institutions, including Central banks, to buy on “dips,” has made it nearly impossible for “commercials” to extricate themselves. Heck, following last month’s “292,000 job” NFP report, on July 8th, PM prices recovered within minutes from the Cartel’s initial post-NFP raid, and rocketed higher. Thus, even yesterday’s equally egregious data-cooking gambit could have failed, given that today’s political, economic, and monetary environment is far worse than a month ago.
To wit, here’s a mere smattering of reasons why not only should yesterday’s “jobs” report have been horrible, but last month’s “292,000 job” report should have been negatively revised.
- The July Challenger Job Cut report, published Thursday, surged 20%
- Payroll withholding taxes declined during July, and are strongly down for the year
- Auto sales plunged in July, with Ford itself proclaiming the auto “recovery” over
- The restaurant traffic index – as exemplified by declining McDonalds comparable store sales – is in freefall. Remember, “waiters and bartenders” have been the biggest source of new “jobs” since the 2008 crisis.
- The Fed’s own Labor Conditions Index hit its lowest ever level in July
- The July ISM Service Index declined, whilst the PM Service Index was flat. And cumulatively, the service economy is “gangbusters,” compared to the comatose manufacturing sector.
- June construction spending, factory orders, and durable goods orders were down 0.6%, 1.5%, and 4.0%, respectively; the latter two, amidst the longest continuous declines in U.S. history
- The CRB Commodity index, led by the “world’s most important commodity,” crude oil, has been in freefall
- The U.S. inventory-to-sales ratio is at an all-time high, aside from the 2008 crisis peak
- 2Q GDP “growth” was just reported to be massively lower than expected, at 1.2% versus the “expected” 2.6%; whilst 1Q GDP growth was revised dramatically lower, from 1.2% to 0.8%.
- The plunge in global stocks and commodities – notwithstanding the PPT’s maniacal support of the “Dow Jones Propaganda Average,” has caused the dollar to surge, crimping corporate earnings that were already down year-over-year for five straight quarters. Other than all that, Mrs. Lincoln, the play was great!
Of course, the powers that be’s’ need to not only post a “strong number,” but win the day in the markets was – as noted above – stronger than ever. Oh, the PPT would have pushed stock prices up irrespective – as it always does following jobs reports, be they “good” or “bad.” However, it was entirely possible that PMs would again thwart their manipulations and surge higher. And with silver sitting within a few pennies of its 50-month moving average of $20.46/oz, which has served as the most massive Cartel “line in the sand” I can remember, it’s entirely possible the end game of “commercial signal failure” could have commenced yesterday if the NFP report was bad.
To wit, I’ve written all week of how yesterday’s COT report, released at 3:30 PM EST, would depict a further increase in the Cartel’s – er “commercials”’ – record short position, given that last week’s cycle, ending Tuesday, included Wednesday’s post-FOMC PM surge, Friday’s post-GDP surge, and Monday’s follow up gains, when silver actually closed at $20.60/oz. Thus, if prices had ended yesterday higher – let alone, materially so – it’s highly likely the long-awaited “commercial signal failure” would have been catalyzed.
As it turns out, the report was far more bullish than even I could have imagined. In other words, an unmitigated Cartel disaster – which I assure you, won’t be lost on traders next week. To wit, the gold “commercial” short surged by 47,349 contracts, or 15%, to a new record high of 356,372, worth $48 billion. How crazy is this, you ask? Well, I’ve been maintaining the below chart since 2002, and last month I was forced to lower the y-axis “minimum bound” from 300,000 to 350,000. And now, just a month later, I’ve been forced to lower it to 400,000!
In silver, the Cartel went equally “hog wild” – shorting another 6,014 contracts, extending its already record high level to 113,137, worth $11 billion. Think this isn’t a lot of shorting? Well, consider that silver’s open interest of $11 billion is 23% of gold’s, despite annual silver production, in dollar terms, being just 13% of gold’s. The reason being, the silver “Achilles Heel” has the Cartel on the ropes, given how supply is historically tight; whilst demand is surging, money printing exploding, and production dead in the water.
To that end, for those worried that the U.S. Mint’s June and July silver sales figures are low… For one, I’d advise you to ignore anything published by the government, especially one so desperate to keep PM prices – and sentiment – down. Secondly, someone is clearly buying silver, lest prices wouldn’t continue to rise in the face of the Cartel’s best manipulative efforts. And here’s a hint who might be buying. Perhaps, the citizens of dozens of countries whose currencies are collapsing, who decidedly do not buy from the U.S. Mint.
As for the NFP report itself, the “headline” figure of 255,000 was, for the second straight month, “much better than expected.” However, given the aforementioned commentary about the upcoming election, the odds this number was real were below slim, and below none. Particularly in light of facts, such as…
- The BEA last week admitted its “seasonal adjustment” methodology for both GDP and Personal Income is flawed. Irrespective, the BLS’ “birth/death” model added 115,000 “jobs,” despite more small companies dying than being born for eight years running. Meanwhile, adding insult to injury, the July NFP report was given its highest “seasonal adjustment” factor in a decade.
- As always, the job “quality” was horrific. Essentially ZERO goods-producing jobs were created, compared to 38,000 government workers, 43,000 in healthcare, 66,000 waiters and bartenders, and 18,000 temps.
- The Labor Participation barely budged from its 40 year lows; and the Employment-to-Population rate continued to decline, given that the economy requires more than 200,000 jobs each month just to keep up with population growth.
In other words – like last month – a pure farce, perpetrated to “save” the Fed, the Clinton election campaign, Janet Yellen’s re-appointment chances, and the gold Cartel. Which likely, will have a “shelf life” of weeks at best, and days at worst. How long will it be before the “BS NFP Attack” fails, just like the “FOMC Minutes Attack” – and countless others – before it? I’m betting sooner rather than later, which is why yesterday’s Cartel smash is an outright gift for those that haven’t yet protected themselves.