Recently, the Schectmans were kind enough to give me a day off from writing on Fridays. However, just as financial crises could care less if it’s the “seasonally slow” time of year, major events don’t conspire to take three-day weekends. Thus, I thought it imperative to discuss yesterday’s potentially world-changing events; as frankly, even I’m amazed at how rapidly the global political and economic environment is devolving. Here at the Miles Franklin Blog, we have never been more confident that Economic Mother Nature will have her way; and after yesterday’s events, said confidence has been strengthened significantly.
As long-time readers know, we strive to avoid “conspiracy” discussions at all cost. Not that they aren’t a valuable piece of the overall due diligence process, but our expertise is in the financial aspect of global events – in which facts are king, and speculation frowned upon. That said, some events tend to blur the lines of these typically distinct realms, such as yesterday’s shooting down of Malaysian Airlines flight 17 – en route from Amsterdam to Kuala Lumpur – over Western Ukraine. For those interested in the “conspirators’” point of view, we suggest you read Bix Weir’s early take on the situation. Even we have difficulty arguing some of the “coincidences” he connotes; but again, at this point, such views are pure speculation.
When the Ukrainian revolution broke out in early March, we penned “this is why we do what we do,” to warn readers of how “black swan” events tend to occur more frequently – and intensely – during periods of extreme political, economic, and social stress. To wit, the fact that wars are breaking out in the world’s most dangerous geopolitical hotspots, such as the Middle East and Crimean peninsula, should not surprise anyone. In this case, just months after Vladimir Putin single-handedly prevented America from potentially catalyzing World War III in Syria, the Cold War foes are engaged in another deadly game of geopolitical chess – again, with America playing the “anti-Cold War” role of antagonist, to Russia’s protagonist. Despite constant Western propaganda of “de-escalation” – like its economic equivalent, “recovery” – we opined the Ukrainian conflict not only was far from over, but could very well catalyze global military confrontation.
Since then, we have been proven decidedly correct – about not just Ukrainian “de-escalation,” but the U.S. “recovery” as well; and after yesterday’s events, it should be crystal clear that as regards the former, the world universally agrees. As for the latter, it’s only a matter of time before “Yellen’s Last Stand” is overrun by the reality of a collapsing U.S. economy; which, in our view, will be the “last straw” in TPTB’s ability to control financial markets with money printing, market manipulation, and propaganda.
We’re not about to break our policy of reporting fact, but sometimes, the facts are too strange to be explained by mere logic. For example, what are the odds that not one, but two Malaysian Airlines planes would be involved in mysterious crashes within a matter of months? Secondly, if forces operating in the Ukraine wanted to blow up a commercial airliner carrying 300 innocent people, why would they pick a Malaysian plane carrying mostly Dutch passengers? And finally, what are the odds that such an event would occur hours after the U.S. issues a new round of anti-Russian sanctions? Heck, according to the reports, Putin informed Obama of the crash on a pre-scheduled conference call relating to said sanctions!
Again, we are not concluding anything here, but simply stating the outrageousness of early commentary – from national leaders and the MSM alike – that either Ukrainian rebels or the Russian government would be incentivized to undertake such a hideous act. Sure, Russia has the complicated surface-to-air missile technology that took down Flight 17, but so does America. Unquestionably, the missile launcher was either Russian or American, but only you can decide which was more likely, and why the attack occurred.
As for the timing of the crash, it couldn’t have been more suspect. I was taping my weekly Butler on Business podcast at roughly 12:00 PM EST – one of my best ever, posted here – when gold suddenly rocketed higher. At the time, we were discussing the horrific housing starts numbers behind the morning’s powerful rally in U.S. Treasury bonds. Readers are well aware that we believe plunging yields in the face of the propagandized “recovery” – and Fed “tapering” – are the “most damning proof yet of QE failure”; and thus, it was quite “coincidental” that with the all-important 10-year yield amidst a desperate struggle to hold the key 2.50% level, an extraneous, “black swan” event suddenly emerged to “finish the job.” As you can see, the yield promptly plunged below 2.45%, and sits at 2.47% as I write – in eminent danger of a dramatic breakdown that could ultimately erase all of the past year’s “post-tapering” gains.
As for gold, consider the “coincidence” that the crash occurred within the narrow three-and-a-half hour window of 8:20 AM to 12:00 PM EST constituting the only period PMs are “allowed” to materially rise. Sure, it was at the end of that window; but no problem, as long-time readers are well aware that I deemed 12:00 PM EST the “cap of last resort” nearly a decade ago. And thus, it probably won’t surprise you that gold’s top tick was +$26, or exactly the “2% cap” the Cartel enforces on 99.9% of all trading days. Not to mention, it occurred at exactly 12:00 PM EST, via the prototypical “Cartel Herald” algorithm utilized to stop every PM surge over the past decade-plus. And by the way, do you how many times I’ve seen the “Dow Jones Propaganda Average” capped by such a pattern? None. Zip. Zilch.
What makes the timing of this event that much more suspect is the fact that historically, the Cartel tends to “pre-empt” expected PM surges – for example, when they know a particularly dovish FOMC statement is coming – with vicious paper raids. Well, not only have we seen epic COMEX “commercial” shorting all month – to the tune of $20 billion worth – but “mystery sellers” dumped $1.3 billion and $2.3 billion of gold futures contracts, respectively, on Monday and Tuesday mornings to push prices down a whopping $47/oz from Friday’s Espirito Santo-related $1,339/oz close; which, by the way, is not, and will not be, “contained.”
Even more “mysterious” was crude oil’s plunge over the past three weeks, from above $107/bbl to $99/bbl on Tuesday, whilst other industrial commodities like copper surged along with robust stock markets. This is not the first time crude oil has had suspect plunges, although the nature of such declines is nothing like those of Precious Metals, which invariably occur during the exact same times of day, with the exact same algorithms. Needless to say, oil surged anew yesterday afternoon, and sits this morning at roughly $103.50/bbl. No matter what TPTB attempt, the long-term trend for energy prices has been – and will continue to be – higher; and given that energy constitutes roughly one quarter of mining costs, the inexorable pressure on PM prices will be upwards as well.
Emerging market currencies were also thrown into flux by the attack; led, of course, by the Russian Ruble, which had its biggest one day decline in three years. However, many other currencies fell sharply as well; and thus, the more intense the situation becomes, the more likely global inflation stair-steps higher again. Which will only increase political, economic, and social tension further, making it more and more difficult for TPTB to maintain “control” over the financial markets they rig each day.
Overnight, of course, PMs were attacked for the 263rd time of the past 296 trading days at the “2:15 AM” open of the thinly-traded London “pre-market” session, despite no material change in interest rates, energy prices, or any other market. Clearly, the Cartel will fight “to the death” to hold off the “barometers of bad tidings” that will ultimately be their undoing; thus, presenting smart investors with one of the biggest “gifts” of all time.
hether or not you believe yesterday’s tragedy was a “coincidence” is entirely up to your personal due diligence process. Irrespective, it’s difficult to conceive a scenario in which the purchase of physical gold and silver – at today’s historically suppressed prices, below the industry’s long-term cost of sustainability – is not at the least prudent, and at most urgent. And if you, too, come to this conclusion, we hope you’ll give Miles Franklin a call at 800-822-8080, and give us a chance to earn your business.