One by one, the propagandist myths about Precious Metals – and their counterparts, the “monies” fiat currency are purported to be – are being dispelled, as the “race to the bottom” heats up, and more and more “money” is destroyed. And with it, the fabric of global society – as this weekend’s Brazilian impeachment vote screams in spades. Not to mention, the “Hobson’s Choice” Americans may be facing this Fall – between a rogue demagogue, and a dyed-in-the-wool socialist. Or the prospect of a UK-less Europe this summer; Grexit this fall; Catalonian secession this winter; an exploding European migrancy crisis; and countless other potential “black swan” events. All of which, will yield the same deleterious government response – of printing money at an ever-increasing pace; issuing draconian edicts unheard of in the modern, “civilized” world; and of course, manipulating markets for as long as they remain “manipulatable.”
Unfortunately, the “powers that be’s”’ best efforts to kick the can the last few inches will be dogged by historic global oversupply, of nearly all industrial commodities; corporate and Federal infrastructure; and essentially everything the economy requires high prices for. That’s what decades of unfettered money printing does – let alone, when leveraged by “weapons of financial destruction”; i.e., the derivatives explosion that “coincidentally” commenced when the Glass-Steagall Act was repealed in 1999. To that end, do you think it’s a coincidence that global economic activity and inflation-adjusted asset prices peaked at that time? Or that debt commenced its largest explosion in history? David Stockman calls this the “Great Deformation”; which inevitably, will yield the most terrifying “reversion to the mean” in economic history.
Fortunately, there are ways to protect oneself from what’s coming. Nothing is guaranteed of course; but financially speaking, 5,000 years of history is enough for me, regarding Precious Metals’ ability to protect wealth as other forms of “money” come and go – particularly when power-hungry government attempt to control society with fiat currency regimes.
To date, close to 1,000 such schemes have been attempted, with not a single one succeeding. To the contrary, every iteration has failed, with the longest they typically “succeed” before dramatic devaluation – either willfully, or by the force of markets – is a few decades; making today’s “dollar standard” extremely long in the tooth, which has only lasted this long due to state-of-the-art manipulation methods. That said, last week’s Deutsche Bank admission of gold and silver manipulation; not to mention, news that Central banks sold less gold in 2015 than at any time since 1988; should tell you all you need to know of which way these trends are heading. Record demand, vanishing inventories, and plunging supply – coupled with historic, exponentially rising money printing – represents the “perfect storm” of bullish Precious Metal fundamentals, never before seen in modern times. Which is why gold prices have surged near, to, or above previous all-time highs in most currencies; and why, here at the epicenter of manipulation, dollar-priced gold (and silver) are amongst the biggest bargains in financial history.
As this historically destructive fiat currency regime experiences its final death throes, the monsters trying to prolong it will attempt every bit of manipulative chicanery in their rapidly depleting arsenal. The last of which, will doubtlessly be an attempt to paint gold as an undesirable asset during the prolonged period of “deflation” the aforementioned industrial oversupply will catalyze. And prolonged it will certainly be; as objectively speaking, commodity fundamentals are dramatically worse than they were before the last commodity bear market, which lasted from 1980-1995.
Generally speaking, the fact that “deflation” is impossible under a fiat Ponzi scheme – er, “regime” – is still largely misunderstood; as “money” supply will, and MUST, be exponentially increased to keep it going. Which unfortunately, yields relentless cost of living increases for the “99%” – whilst corporate profits, government tax receipts, and balance sheets of all kinds go decidedly the other way.
As is the equally ridiculous myth that gold underperforms during times of falling asset prices and economic activity, which history decidedly disagrees with. Heck, during the Great Depression – which following what’s coming, will need to be renamed the Second Greatest Depression – gold not only held its value, but was revalued nearly 100% by the U.S. government itself!
The reason I bring this up, of course, is this weekend’s abysmal failure at Doha, Qatar – in which Iran cancelled its appearance before the oil producers’ meeting even commenced, yielding a chaotic end to the biggest manipulative charade ever witnessed – validating my deeming it the “most over-hyped non-even in economic history” last week. Oh, the powers that be are doing their best to create a manipulative response that will engender hope – such as these abominably blatant attempts to control gold.
However, the sad fact remains that the hopeless oversupply of crude oil – now that the faux producers meeting has miserably failed – will continue to grow, amidst an environment of record inventories; surging Iranian production; and yes, flat (at best) global demand growth. Which will only create more financial misery – and likely, plunge the world back into a horrifying death spiral, a la January/February 2016, at some point in the not too distant future. Which in turn, will cause said “governmental response” – of hyperinflationary monetary policies.
Back to gold’s performance in “deflation” – which when all is said in done, will elevate Harry Dent’s legacy of ignominy to epic levels – here’s how it has done during the past three years of oil price plunges. This, amidst the most violent, blatant government attempts to cap it in financial history.
Last but not least, here’s how gold performed during the greatest deflationary event of the past century; again, amidst (until recently) unprecedented Cartel attempts to prevent its millennia-old function as a financial safe haven from being recognized. Which, I might add, caused the supply of actual, physical metal – both and silver – to completely SELL OUT, on a worldwide basis, in late 2008.
Ladies and Gentleman, “deflation” of the money supply will NEVER occur, as Central banks will NEVER let it happen (hence, Draghi and Kuroda’s “whatever it takes” pronouncements). Meanwhile, the aforementioned oversupply – of crude oil, and countless other things – will dramatically worsen, as history’s “Greatest Depression” unfolds. In turn, Central banks will do everything in their power to “inflate them away” – which in real terms, will destroy the value of nearly all asset classes, led by fiat currencies of all kinds, including the dollar.
Fortunately, real money will not only protect your purchasing power; but due to decades of price suppression, generate a “catch-up” effect that will likely make the upcoming gold and silver (and likely, platinum as well) bull markets amongst the biggest in financial history. Only time will tell if this weekend’s Doha failure will prove to be an inflection point in the war against real money; but for my “money,” I’ll take the “over.”