These past two weeks rival any I’ve seen in my 14½ years of minute-to-minute PM watching – during which, the Cartel has relentlessly suppressed prices amidst an unrelenting blizzard of “PM bullish, everything-else-bearish” news flow. Using cover of the two slowest trading weeks of the year, they have aggressively pushed prices away from the indisputable “breakout levels” of $1,370/oz for gold – representing the “downtrend line” created by September 2011’s “Operation PM Annihilation I,” December 2011’s “Operation PM Annihilation II,” February 2012’s “Leap Day Violation,” and April 2013” Alternative Currencies Destruction” raids; and $20.45/oz silver, representing its 50-month moving average.
Yesterday was particularly egregious; as with interest rates barely higher, and for much of the day, flat or lower, paper gold and silver were bombed; after having barely been allowed to rise Monday, when interest rates – “hawkish” Yellen and Fischer comments notwithstanding – plummeted. To that end, the benchmark 10-year yield, closed yesterday – and remains today, after an “in line” ADP jobs report – at exactly the 1.58% yield it was at the moment before Janet Yellen’s speech Friday, just 25 basis points above the lowest yield in the nation’s 240-year history. In other words, for all the propaganda of how Yellen’s speech, and Stanley Fischer’s follow-up comments, portended “imminent rate hikes” – as if rate hikes are “PM negative,” given that PM bottomed the day the Fed raised rates last year – it was, in actuality, a non-event.
Not to mention, when considering the massively hyperinflationary speeches at Jackson Hole’s Saturday sessions; and oh yeah, the unending torrent of “PM bullish, everything-else-bearish” news flow since. In the big picture, this entire, late August “summer doldrums” period – when the entire world is trying to “rest,” amidst an horrific year of political, economic, and social instability that promises to go parabolic this Fall – was about the powers that be using a low volume environment to “paint” perceptions, ahead of what promise to be a series of violently volatile, potentially historic, events.
Before I get to today’s very important topic, I thought I’d highlight a handful of news items and articles of the past 24 hours – which cumulatively, help one to realize just how dire the global financial situation has become; and just how reckless and destructive the powers that be’s’ responses will be – starting with this Jackson Hole parody from Tim Price; possibly, the most humorous anti-Central banking piece I’ve ever read.
Next up, the one and only David Stockman – who is on the record anticipating a major stock market crash, and gold surge, centered around the first Presidential debate in late September. In this dead-on article, he describes how egregious the current, Central bank (and PPT) fostered equity bubble has become – using none other than Facebook as his focal point. Or, as he aptly describes this societal blight, “a sinkhole of lost productivity and low grade, self-indulgent entertainment.”
Next, this gem from the great Graham Summers of Phoenix Capital – of how, in simple, understandable terms, he describes the economic catastrophe created by Alan Greenspan, Ben Bernanke, and Janet Yellen. And this, from the brilliant Jeffrey Snider, highlighting the lunacy of Jackson Hole speaker Olivier Blanchard – like Larry Summers and Ken Rogoff, holding a Frankenstein-like resume of high level government and academic positions – who actually blames “gloom” for inexorably falling interest rates, and an imminently inverting yield curve; rather than the truth of Central bank monetary policy he helped create, plus unprecedented official and “unofficial” intervention. To that end, on the topic of out-of-touch, sociopathic, Central bank crony capitalists, these amazingly arrogant, thoughtless, and comments from Fed Vice Chair Fischer himself – in claiming that the historically low interest rates created by his policies are justified by higher stock prices, even if the net effect has been to destroy the global economy; the purchasing power of dozens of fiat currencies; and the savings of hundreds of millions – if not billions – of “ordinary” citizens.
Then there’s this article – in advance of Friday’s “all-important,” likely massively rigged, NFP jobs report – explaining how, like the U.S., Japan’s official “unemployment rate” is at a two-plus decade low, whilst the “Land of the Setting Sun” literally sinks into an economic morass it will never recover from. To wit, not only is Japan’s economic data blatantly rigged, too – but its “demographic hell” serves as a blaring signal of the economic misery the entire Western world is about to experience. At the expense, I might at, of “hated” Middle Eastern cultures which have the best imaginable demographic trends. Hence, the “migrancy crisis” which is likely to be one of the most devastating geopolitical trends of the 21st century – even here, in the “Exceptional” States of America.
Which, I might add, will be compounded “a hundredfold” by crashing oil prices. Which, per last night’s latest API inventory bombshell, are facing the weakest supply/demand fundamentals since oil was first commercially used a century ago. As just like April’s propagandized, and miserably failed, attempt to prop prices with rumors of the “production freeze” that never happened, the September 26th oil producer meeting in Algiers will “produce” absolutely nothing; and frankly, be “over before it starts.”
Sadly, care of the “Great Deformation” I highlighted in my must read article from January 2015, the “direst prediction of all,” nearly all commodity markets are hopelessly oversupplied – and will be, for years to come. Including, for those who believe “farmland” will be a safe place to invest, most agricultural commodities. Which, like oil, copper, and most industrial commodities, have been massively overproduced due to a combination of cheap Central bank money, predatory financing, and “weapons of mass destruction” financial engineering. Long time readers know I have discussed the developing agricultural glut for some time now – and this article describes it in spades.
Since I’ve already written two pages, I’m not even going to discuss the acceleration of gold withdrawals from the world’s most fraudulent “custodian” – the New York Federal Reserve; record low COMEX registered silver inventories; or even the Finnish government’s announcement that it will shortly embark on a “helicopter money” drop on economically challenged citizens. No, it’s about time I revisited the giant pink elephant in the room, of the rapidly approaching “cataclysmic financial big bang to end all big bangs.” Which is, the upcoming, massive devaluation of the Chinese Yuan.
In April 2015’s “ugliest economic data I’ve ever seen,” I espoused that China’s March 2015 import/export data was so horrible, it would likely foster a near-term Yuan devaluation. That said, after viewing China’s July 2015 data, I “upgraded” the urgency of my Yuan devaluation call with my ominously titled August 10th, 2015 article, “the upcoming, cataclysmic, financial big bang to end all big bangs.” As it turns out, it took just 24 hours for this to occur – as on August 11th, the PBOC launched a 6% devaluation, which was undertaken over roughly two weeks’ time. Financial markets crashed, Precious Metal prices surged, and only the most maniacal Central bank intervention since early 2009 enabled markets to recover. That is, until such intervention was stepped up dramatically in February, when a second round of Yuan devaluation – in response to a surging dollar, caused by the Fed’s late December rate hike, nearly took down financial markets, and the Gold Cartel, yet again.
Well, six more months have passed, and the global economy has sunk further into said morass. Led by the implosion of China’s historic, government-fostered financial and economic bubbles – which shortly, the entire world will be fearful of, when it realizes China cannot possibly be “growing” by 7% per annum, when its actual, real-world economic activity is declining by at least that much. To that end, it’s been barely a week since I published “the ugliest data I’ve ever seen, Part II” – after viewing Japan’s hideous July 2016 trade data, depicting a 15% plunge in exports, and an otherworldly 25% free fall in imports; in the former’s case, principally due to plummeting Chinese demand.
In other words, the “Red Ponzi,” as David Stockman mockingly calls it, is at the end of its rope. Thus, making said “upcoming, cataclysmic, financial big bang to end all big bangs” more imminent than ever – particularly if the Fed were dumb enough to continue jawboning the dollar higher by lying about economic recovery and the prospect of imminent rate hikes, in an attempt to “prove” the Obama Administration should be continued four more years, through the election of Hillary Clinton. Let alone, if they were actually crazy enough to try it – as unquestionably, markets would crash far more violently that last December, with far less Central bank “cushion.”
To that end, if such a suicidal, economically unjustified, and aggressively confrontational act were actually undertaken, I might actually be pushed to agree with “conspiracy theorists” claiming the system is being purposefully taken down from within. As, per what I discussed in Monday’s must listen podcast with Elijah Johnson of Finance and Liberty, if the Fed actually undertook such a blatantly disruptive, and destructive, act, the dollar would unquestionably explode against all other fiat currencies – whilst commodity prices would plummet; and ironically, rates would plunge in anticipation of NIRP and QE “to infinity”; and – following the initial, Cartel-aided paper plunge – Precious Metal demand surged.
To that end, if the dollar surges, guess what fiat currency would surge with it? Yep, the dollar-pegged Yuan – which would, with in my view 100% certainty, drive the PBOC to take the “final currency war” thermonuclear, with a far more aggressive Yuan devaluation than last summer’s 6%. Which, in turn, would serve up a second, far more dramatic deflationary shock than a mere 25 point Fed rate hike. Which, for the record, I don’t believe will occur, unless “the powers that be” actually seek to destroy the global economy – right in front of the Presidential election, no less!
Which is exactly what financial markets are starting to anticipate – per this article, published this morning, after I considered today’s article topic – of how the PBOC has uncharacteristically started to walk the Yuan down ahead of this weekend’s potentially historic G-20 meeting in Hangzhou, China. Historic, in that – according to Jim Rickards – it will be China’s “coming out party,” in advance of the Yuan’s October 1st inclusion in the IMF’s SDR currency basket. To that end, Rickards believes this event – while not guaranteeing immediate financial market turmoil – spells the beginning of the end of seven decades of U.S. dollar hegemony. That said, if pushed by a kamikaze Fed to devalue the Yuan – which it will inevitably do anyway, to protect its collapsing economy (at least, according to flawed Keynesian theory); or, if it decides to use said “coming out party” to “establish” its new found dominance with draconian announcements – such as, for instance, the true amount of its massive gold reserves; September may literally begin with a “bang.” Which ironically, will be significantly more likely if the BLS follows through with its most likely course of action on Friday – which is, to report a blatantly fraudulent, Hillary Clinton campaign-boosting, jobs number.
If not, the hideous “summer doldrums PM raids” will reverse on a dime, igniting a massive gold and silver rally that will likely not look back for the rest of 2016, and beyond. However, if the BLS does in fact report a “much better than expected” number, it may well set off a chain of economically devastating monetary and geopolitical dominoes – of which, the aforementioned “cataclysmic financial big bang” will ultimately be the focal point. Which, if it is indeed the case – via a fraudulently strong NFP report, dramatic G-20 proceedings, or otherwise – would be quite ironic, given that the current Precious Metals “bear market phase,” too, commenced on a Labor Day weekend. In that case, in 2011; when, after dollar-priced gold hit an all-time high of $1,920/oz, a terrified Cartel went into “point of no return” suppression mode – ironically, mere hours after one of the most violently PM-bullish events of our lifetimes. I.e., the Swiss National Bank’s pegging of the Franc to the dying Euro, destroying the credibility of the world’s last remaining fiat currency “safe haven.” I.e., the biggest oxymoron ever uttered.
Either way, history’s largest, most destructive fiat Ponzi scheme is rapidly approaching its hideous end. Which, when it finally “blows,” you will either have protected yourself from beforehand, or never get another chance. As when the dust settles; likely, many years from now, the greatest wealth transfer in human history – from worthless “paper assets” to real items of value, like physical gold and silver, will have taken place.