As history’s largest, most destructive credit, construction, and asset bubble inflates to unprecedented levels, the disconnect between asset valuations and time-honored, irrefutable economic laws has widened beyond any semblance of sanity. Joseph Goebbels infamously stated that “if you tell a lie big enough and keep repeating it, people will eventually come to believe it”; and nowhere is this more obvious than (PPT-supported) “market responses” to Central banker comments. Or heck, even rumors of such comments, irrespective of how unfathomably wrong Central bankers have been in essentially all they’ve predicted.
To wit, this (Monday) morning’s “top story” from MSM lackey Yahoo! Finance trumpeted “world stocks gain after Yellen signals gradual rise in rates” – referring, of course, to her “conveniently” timed speech Friday afternoon, just 15 minutes before the NYSE close, in which she said…wait for it…absolutely nothing incremental. Let alone, the secondary byline that “Chinese stocks soared on hopes for more economic stimulus measures.” Not to mention, according to Zero Hedge, a false PBOC rate cut rumor – which, as usual, didn’t reverse the markets’ gains when it was proved so.
To the contrary, care of the most manipulated markets in history, gold and silver investors have been subjected to “rumor-based” waterfall declines hundreds of times over the past decade; which not only didn’t pan out (such as the countless “bid Laden captured” and “IMF to sell its gold” rumors in 2003-09), but wouldn’t have been “bad news” anyway – as frankly, “gold bearish” news is simply not possible in the terminal stage of a fiat Ponzi scheme. Highlighting the point, when bin Laden was actually captured in May 2011 – assuming the official story is true – “dollar-priced gold” was $1,500/oz, en route to an all-time high of $1,920/oz just four months later. Not to mention, when the IMF finally sold its (likely double-counted, perhaps non-existent) 200 tonnes of gold to India in November 2009 for $1,040/oz, not only did the gold price not budge downwards, but a year later it breached $1,400/oz. In other words, the game of manipulating the prices of “favored” assets higher with “positive” rumors – and “un-favored” assets downward with “negative” rumors – has been going on for more than a decade.
Of course, the most comical aspect of such manipulations – which, per today’s article’s namesake, “even Sherlock Holmes would laugh at” – is that even the most jaded establishment apologist would have to agree that the supposedly “incremental” information that potential rate hikes will only be “gradual”; let alone, new Chinese monetary and economic stimulus, are about as Precious Metal bullish as one could imagine. Not to mention, on a weekend when the only material headline was that the Euro Group essentially laughing at the “details” of Greece’s latest “reform” proposal, calling it “vague” and “piecemeal.” And oh yeah, escalation of the Yemeni hostilities we warned of Friday, and news that the Australian government is proposing to tax bank deposits, taking its beleaguered monetary system one step closer to “NIRP-dom.”
Here in the States, we’re told that yet another perma-bullish think tank, the “National Bureau of Economic Research,” expects 3.1% (fraudulently calculated) GDP in 2015, despite an horrific first quarter in which the Fed’s own tracking model is currently predicting 0.2% growth. Yes, 3.1% – despite, nearly across-the-board, the worst economic data since the 2008 crisis, including this morning’s pathetic, less than expected consumer spending report, depicting a paltry 0.1% increase in February, following a 0.2% decline in January. Not to mention, the Dallas Fed Manufacturing Index plunging from -11.2 in February to -17.4 in March, despite being “expected” to have improved. Where such 2015 “growth” is going to come from is beyond me; as doing simple math, if first quarter GDP turns out to grow by the Fed’s projected 0.2%, a 3.1% result for the full year would require average growth in the final three quarters of 4.2%, compared to the full-year 2012, 2013, and 2014 growth rates of 2.3%, 2.2%, and 2.4%, respectively. Let alone, that such “growth” is fictitious in the first place, per this weekend’s Audioblog, “Sunday Night Sentiment” and “2:15 AM” EST algorithms as always) on expectations the Fed will raise rates from zero gradually – if at all; or that the Chinese government is preparing to print money like drunken sailors.
I mean, what part of Whirlybird Janet’s comical press conference
last week could even be remotely interpreted as “gold negative?” Or, for that matter,
“Just because we removed the word patient from the statement, it doesn’t mean we’re going to be impatient. Moreover, even after the initial increase in the target Funds rate, our policy is likely to remain highly accommodative.”
Again, the reason we discuss such lies, inconsistencies, and blatant manipulations so often is to disseminate a truth you won’t receive from biased mainstream sources – who so desperately want to believe “Economic Mother Nature” can be defeated; and at that, an extremely angry, scorned woman. Only by understanding such truth can you act to protect yourself from the mathematical certainty of what’s coming; such as a broken “New York Gold Pool,” yielding an unprecedented gold and silver price surge. To wit, as PPT-supported stocks soar to valuation levels not seen at the 1929, 2000, or 2007 tops, dollar-priced paper gold prices continue to be capped at multi-year lows. Meanwhile, year-to-date physical withdrawals from the Shanghai Gold Exchange, which Koos Jansen (easily, the top Eastern Hemisphere gold analyst) uses as a proxy for overall Chinese demand, are not only 7% above last year’s record levels, but 33% above 2013’s then-record levels.
Conversely, evidence of the “peak gold” we wrote of last month – and heck, Goldman Sachs last week – gets stronger each day; as exemplified by a study released this weekend, validating my assertion of 19 months ago (when gold and silver were $1,300/oz and $21/oz, respectively), that a 10%-20% gold production decline may wind up being conservative when all is said and done. I urge you to read said article from August 2013 – i.e, “junior mining – and future production – death“; as well as said study, describing 589 public Canadian miners with less cash on hand than the C$50,000 minimum listing requirement, and cumulative working capital of negative C$2.2 billion. As far back as 2012 (as you’ll read in my article), I predicted more than half of Canada’s then 1,800 junior miners would be bankrupt within 12-18 months. Effectively, they are; and by this time next year, it’s entirely possible that more than three-quarters of the original 1,800 will have died, with the remaining few having extremely limited capital – and oh yeah, no one to sell a discovery to even if they miraculously make one, given that the massively unprofitable, highly indebted majors are on the cusp of a massive consolidation/cost cutting initiative themselves.
To that end, this weekend’s news that “evil personified” itself, Barrick Gold – which as of now, is anticipating production to fall by a whopping 40% from its 2014 high by 2020, and lower thereafter – has hired Canada’s former Foreign Affairs Minister, John Baird, and none other than former U.S. House Speaker Newt Gingrich to its “international advisory board.” Certainly they’re not there to institute financial discipline, given they have absolutely zero experience in cutting costs. And neither is the Board Chairman that appointed them, John Thornton; who, after being assuming that role less than a year ago, gave himself a 30% raise in 2014 – to a whopping C$12.9 million – despite the company having lost C$550 million, C$10.6 billion, and C$2.9 billion over the three years he served on its board. John Thornton, by the way, was co-CEO of Goldman Sachs in 2003-04 (after having developed its European M&A business in the 1980s and 90s); whose raison d’etre – aside from manipulating markets, buying politicians, and destroying sovereign governments – is generating M&A fees. Thus, the combination of one of Goldman’s top M&A executives taking over Barrick’s Chairmanship, and the hiring of senior U.S. and Canadian politicians, in my view, couldn’t make it more obvious that Canada-based Barrick, the world’s largest gold miner, is again in discussions with U.S.-based Newmont Mining, the world’s second largest. And when they do inevitably merge, the entire cash-starved PM mining sector will likely follow suit, ASAP, triggering a capital spending – and potentially gold production – wave rivaling the historic oil consolidation of the early 2000s.
Back to the lies even Sherlock Holmes would blush at, I see that Treasury Secretary Jack Lew – whose esteemed resume includes being the Chief Operating Officer of Citigroup in 2006-08, whilst it received the biggest taxpayer bailout in global history – this morning claimed “it is critical that China continues to move to a more market-determined exchange rate and a more transparent exchange rate policy.” And this, just three weeks after the White House that employs him posted an official press release that the “strengthening dollar is a headwind for U.S. growth.” Let alone, from a government whose “Exchange Stabilization Fund” – charged with covertly “dealing in gold and foreign exchange to stabilize the exchange value of the dollar” – is perhaps the least transparent “currency management agency” on the planet.
Or how about Germany’s Finance Minister, Wolfgang Schaeuble – after Mario Draghi, Europe’s second most powerful banker – making the shocking statement this weekend that “we have too much Central bank money around the world, and too much debt” – but “nevertheless, this is not a criticism of the ECB’s monetary policy, which has to defend its inflation target.” Not a criticism, you say? Well what part of “too much Central bank money” is not self-incriminating – when Germany, by far, has the most influence over ECB policy?
Well, at least he was telling the truth; which is more than our newest Fed Chairman turned public advocate – Helicopter Ben himself – was doing when his blog debuted this weekend, claiming he was “concerned about those seniors” he threw under the bus by lowering rates to zero in 2008, and keeping them there for his entire chairmanship. And as for Janet Yellen, in her supposedly “gold-bearish” press conference Friday afternoon, she actually made the jaw-dropping, massively PM-bullish statement that “cash is not a convenient store of value.” Frankly, I have no idea what she really believes, other than what she is told to believe by her masters in Washington and on Wall Street.
With all this in mind, today’s key takeaway should be that you can only fool so many people for so long – like, for instance, blaming horrible February data on “the weather,” but reporting surging home sales in the regions with the worst weather patterns. At some point, there’s no one dumb enough to be fooled; at which point, the only way TPTB will be able to avert instantaneous economic and market implosion will be the unprecedented, overt”QE to Infinity” that all fiat Ponzi schemes inevitably succumb to. At the pace the lies – and debts – are escalating, it’s difficult to believe that time is far off. And when it arrives, if you haven’t already protected yourself, it will certainly be too late.