It’s Wednesday morning, and where do I start? Obviously, yesterday’s afternoon’s announcement that the U.S. Mint is again suspending Silver Eagle sales is atop my list – which, by the way, emerged while I was editing “first warning signs of a 2008-like silver shortage – which likely, will be far worse.” But frankly, the list of relevant, massively Precious Metal bullish topics is so long, it’s difficult to definitively put said shortage in the “top position”. That said, I I’ll start there irrespective, as said shortage was created by what may well be the biggest silver demand surge since October 2008; similarly, due to an outrageously blatant Cartel paper raid, amidst the most silver-bullish circumstances imaginable.
Back then, fiat currencies were crashing due to a global financial collapse – while today, a financial collapse far worse is emerging, with the marked exception that more sophisticated “weapons of mass financial destruction” are now used today to influence perception and prevent catastrophic losses. Such manipulation is at its most obvious in the PPT-controlled “Dow Jones Propaganda Average,” which is simply not allowed to materially decline, as exemplified by yesterday’s prototypical “dead ringer” algorithm. Which, like this morning’s futures trading, was enacted when the Dow was down exactly 1.0% – i.e. the PPT’s long standing “ultimate limit down” level – amidst the most horrific commodity plunge since 2008; an accelerating, historic Chinese stock market collapse; and oh yeah, that little thing called Greece – which following Sunday’s referendum, is all but assured to not only “Grexit” the Euro, but default on nearly €400 billion of debt, owed principally to the ECB, the IMF, and private European banks – all of which can only meet their share of the resultant “margin call” with freshly printed ECB Euros.
Conversely, paper Precious Metals have been attacked in the exact same manner as always, starting with Sunday’s 105th “Sunday Night Sentiment” raid of the past 107 weeks. And this, mere hours after the unexpected “OXI” referendum result – by far, one of the most fiat currency negative, and real money positive news announcements of our lifetimes. And for those propagandizing said PM declines as “deflation-related,” gold and silver were up Monday (albeit, in blatantly capped fashion) whilst all other commodities plunged; and were flat early Tuesday morning (again, due to blatant Cartel capping) whilst commodities continued to plunge. That is, until the COMEX opened at exactly 8:20 AM, when paper gold and silver suddenly “waterfall declined” for no reason, just as we have witnessed during times of extreme “powers that be” stress points over the past 15 years.
In fact, under similar circumstances in January, when the Cartel was taken by surprise by the dual collapses of crude oil and the Euro, gold and silver prices soared whilst actual commodities plunged. To wit, the table below, which simply depicts a Cartel more “prepared” for this week’s commodity and currency plunge than in January. And by the way, note the utterly massive increase in COMEX silver open interest since January, which dovetails perfectly with this week’s Comptroller of the Currency report that Citibank and JP Morgan’s commodity – and particularly, Precious Metals” – derivative exposures went stratospheric during the first quarter (and man, I can’t wait to see the second quarter report).
Yes, the biggest silver demand surge I can recall; in which, in just the first 2½ days of the month, the U.S. Mint sold an incredible 2.6 million ounces of Silver Eagles; causing not only the suspension of Silver Eagle sales for at least two weeks, but yet again, revealing just how little silver inventory the U.S. government holds. Putting the 2.6 million ounces sold in just 2½ days into perspective, 2014’s record sales – again, for the entire year – were just 44.0 million. This year, as paper prices have been forced to new multi-year lows, the U.S. Mint is on a pace to sell more than 48 million ounces, 150% more than the 19 million sold during the 2008 financial crisis. That is, if it can actually find enough metal to do so! And, as noted yesterday by Steve St. Angelo, India, the world’s largest silver consumer, is on a pace to blow away last year’s record import volumes; whilst China, which doesn’t report silver imports, is clearly on a similar tack, given its gold imports are on a pace to not only shatter its own annual record, but potentially, take up as much as three-quarters of all global production!
And just like 2008, silver physical premiums have started to rise, with the typically front-running “junk silver” market leading the way. To wit, no junk silver has been produced in 51 years, and never will again; so typically. Thus, it is typically the first market to show significant premium surges when silver supply tightens. In this case, we have seen junk premiums over paper spot prices surge from $2.00-$2.50/oz prior to Sunday’s Greek referendum, to spot plus $5.00-$6.00 today. In other words, those holding paper silver – or other “paper PM Investments,” such as mining shares, which have been utterly annihilated – have experienced tremendous, potentially irreversible losses; whilst those holding physical silver, experienced little, if any, decline. Only time will tell when such shortages will go “nuclear” – as in 2008, or perhaps worse. However, given the most bullish demand – and supply – fundamentals of our lifetimes, as history’s largest, most destructive fiat currency regime implodes, it’s difficult to believe we’ll have to wait much longer.
Regarding said fiat implosion, it’s equally difficult to believe the gaping cracks in a dam held together entirely by money printing, market manipulation, and propaganda won’t violently explode by year-end – if not sooner. To wit, the world’s Central banks have destroyed the lives of billions of people since bilaterally abandoning the gold standard in 1971 – with most of the damage coming since the system irreversibly broke in 2008, fostering an unprecedented money printing orgy that has brought four decades of financial and economic “deformation” to light, yielding the worst economic activity; largest debt accumulation; and highest global cost of living ever, amidst a Ponzi scheme parabolically accelerating – and thus, assured to expand all the aforementioned hells exponentially, until said scheme inevitably, spectacularly, implodes.
Yes, the world’s Central banks – which cumulatively, have brought the world to the edge of the abyss; into which, it must plunge, as the only hope of recovery hinges on the repudiation of said debt; the unwinding of said deformations; and a return to honest money. Which, of course, will take a long, long time to occur – perhaps, measured not in years, but decades. To that end, I have spent years discussing how all that prevents the system from collapsing now – like any Ponzi scheme – is confidence in its purveyors; in this case, the Central banks entrusted to print money, fix interest rates, and in recent years, manipulate all manner of financial markets. One by one, as the currencies (and increasingly, markets) they are charged with stewarding collapse – as well as their promises of full employment, price stability, and economic growth – the worldwide social mutiny will increases in breadth and tenor; until eventually, “the bums” will be first discredited, then ignored, and ultimately, kicked out.
I mean, today alone we have a top Bank of Japan governor claiming “tapering” of its historic QE and money printing program is not possible before the scheduled, economy-killing sales tax increase in 2017. And likely, despite Abenomics having already pushed Japan into its worst economic depression since World War II – said scheme will be expanded. Then you have the PBOC, which fostered the greatest credit, real estate, and construction bubble of all-time; and with it, amidst the weakest Chinese economy in 40 years, a margin-fueled equity bubble of equal size, in just ten months’ time. Well, following last night’s 5.9% bloodbath – which would have been far worse, if not for overt PBOC intervention, and the freezing of trading in 54% of all Chinese stocks – the outlook for China’s economy and financial stability has never been worse. Not to mention, for global commodity demand; as by far, China has been the world’s largest commodity importer for at least the last decade.
And then there’s the Fed, which a few hours from now will release the (unquestionably doctored) “minutes” of its June 17th meeting; in which it’s difficult to believe it won’t be incrementally dovish – perhaps, dramatically so – given the palpable fear China, Greece, Puerto Rico, and the aforementioned “deflationary” commodity crash have since caused. To that end, since the Fed pretended to end QE eight months ago (as I write, its published balance sheet size is at an all-time high), we have been relentlessly propagandized that economic “recovery” makes it likely the Fed will imminently raise rates. All along, I’ve all but screamed that, to the contrary, the opposite will occur; when inevitably, collapsing markets cause Janet Yellen to abruptly reverse her feigned hawkishness, in not only reducing rates to negative territory, but launching a massive, unprecedented QE4 scheme. It’s only a matter of time; and when it occurs – potentially, later this year – I have an article title all queued up, of “Ding Dong, the Fed is Dead.”
Last but not least, there’s the ECB; which at the tender age of just 17 years, is on the verge of implosion. Ironically, just three years from when its chief – a former Goldman Sachs partner, no less – claimed he would do “whatever it takes” to save the Euro. Which, as it turns out – ironically – meant diluting it into oblivion, and monetizing every worthless sovereign bond on the continent (but don’t worry, the ECB values the hundreds of billions’ worth of PIIGS bonds in its portfolio – including Greece’s – at par).
And here we are, on the edge of the abyss caused by the massive failure of five years of Greek bailouts – in which all of Europe’s toxic debt issuance and ownership has exploded; whilst its economies have plunged, unemployment mushroomed, and anti-Euro sentiment ballooned. To wit, the ECB is so weak, it actually has less capital than the tiny, inconsequential nation of Greece owes it. And thus, it’s quite conceivable that not just the ECB’s credibility, but its very existence, is in imminent, well-deserved danger.
By the way, as I edit, I see that, incredibly, just three days after the Greek people loudly voiced their desire to end the bailouts and austerity, Alexis Tsipras – clearly, terrified of imminent Greek anarchy – has submitted a new bailout proposal, austerity and all – to the ECB-led Troika. I find it difficult to believe such a proposal will ever be ratified – unanimously, as required by the EU charter; let alone, by Greece’s Syriza-led Parliament. However, it is possible that propaganda will spin such discussions as “bullish” for a few days or weeks. That said, the time remaining until global central banks experience a “complete, permanent loss of credibility” – likely, starting with the ECB – has never been shorter. And thus, particularly given the objective evidence of exploding Precious Metals demand yesterday’s Silver Eagle sales suspension purports, what on Earth would keep a sane person from at least partially insuring their hard earned savings with the only assets that have consistently proven themselves throughout history?