One day, when I’m much “richer” – and the world much scarier – I’ll look back at this age of “financial Nazism” with fond memories. I’m being facetious, of course but as they say, many a truth is said in jest. What I’m referring to is my belief that today’s “sea of lies” will appear to be petty white lies, compared to what’s coming in the inevitable, post-dollar world. And by “post-dollar,” I mean the end of all the world’s currencies, as we have known them for the past four decades. Some have already collapsed – or are in various stages thereof (such as the Venezuelan Bolivar and Ukrainian Hyrvnia); but eventually, the world’s 180 fiat currencies will all join the 599 that failed before them. And how many have actually succeeded, you ask? That would be a big, fat ZERO!
This weekend alone, no less than a half-dozen massively PM-bullish, fiat currency bearish news items arose; and perhaps, in more “normalized” markets, I could wait 24 hours to write in depth about each. However, with the “horrible headlines” flowing hot and heavy, we’re doing our best to keep up with the daily news flow; as ultimately, the Miles Franklin Blog aims to keep you apprised of all items relevant to your due diligence process.
I could easily have written an entire piece on incremental, Ukraine-related developments including additional Russian attacks, the Crimean annexation, the splitting of the Hyrvnia currency in two, announced Ukrainian bail-ins and oppressive gasoline taxes, heightened Western sanctions, and Putin’s forceful promise to retaliate and the potential expulsion of Russia from the G-8 – the latter of which has not yet occurred, but may well in the coming weeks. The “evil troika” of Washington, Wall Street, and the MSM purposefully characterize the Ukrainian crisis as an isolated event, in their eternal quest to prevent investor panic. However, we view it as an obvious symptom of the underlying financial cancer that is money printing – which first destroys “weak links” like the Ukrainian Hyrvnia and eventually all fiat currencies.
In this particular case, it involves a hyper-sensitive geo-political conflict, yielding a potential East versus West showdown in which key players like China and India have decidedly sided with Russia. Anyone that believes the potentially imminent Sino-Russian “anti-Petrodollar” trade agreement – discussed this morning by Bill Holter – was not pushed to the front burner by the aggressive, overbearing American response to the Ukrainian crisis is simply ignoring reality, in our view. Or, for that matter, Russian comments from this weekend’s China Economic Development Forum; wherein, the head of Russia’s largest bank said, “China’s Yuan may become a third reserve currency in the world in the future.” “Black swan” or not, the Ukrainian dispute is widening with each passing day, threatening to engulf the world in financial and/or military war. And even if it doesn’t, its impact will linger for years to come, to be joined by countless other “economic fires” throughout the world – and potentially, military ones – as the terminal phase of the dying fiat currency regime progresses.
Then you have the unraveling of the Chinese credit/real estate/construction bubble, replete with collapsing “shadow banking” credit; plunging industrial commodity prices, like copper and iron ore and even the Yuan itself – as the PBOC further escalates the world’s “final currency war” in a last ditch, misguided effort to steal jobs amidst a dramatic, expanding global slowdown. This morning’s announcement that the Chinese manufacturing PMI dropped to an eight-month low of 48.1 in March – deeply in recessionary territory – puts an exclamation point on this alarming trend; and word that Chinese real estate investors are starting to become militant about sudden, catastrophic losses poses an ominous portent of what’s to come. For countless Chinese, speculative real estate investment has become as rampant – and leveraged – in recent years as U.S. retail investment in internet stocks circa 1999. And thus, when the duel collapses of the Chinese economy and real estate market hit in full force, one can only guess what the worldwide impact will be.
To wit, we have for months written of collapsing global retail sales. However, nowhere is this more obvious than the United States of “Recovery” home of Walmart, the world’s largest retailer. Amidst the worst retail environment since the 2008 crisis, Walmart is commencing a “Black Friday-like” event to lure consumers from competitors which ultimately, will severely depress margins across the entire industry. Worse yet, Walmart is launching an online price-matching tool – enabling consumers to receive refunds (in the form of Walmart store credit) if they can find any product cheaper, anywhere.
Items we “need versus want,” of course, will continue to rise in price until the fiat regime inevitably collapses. To that end, I just received my new homeowners’ insurance quote for 2014 – up 21% from last year’s level, and 110% from when we bought our house seven years ago. However, the expanding recession will continue to eat away at prices of everything else, putting thousands of companies out of business; yielding expanded layoffs, increased demand for government entitlements, and reduced government tax revenues – in turn, yielding expanded deficits, increased borrowing needs, and ultimately, more QE to fund such largesse.
And again, we cannot emphasize enough that such issues are global; with perhaps the worst of all worlds currently unfolding in Europe. With record unemployment, exploding debts and expanding civil unrest, it’s only a matter of time before the ECB launches the long-awaited OMT, or Outright Monetary Transaction, QE program. This event will be matched in desperation only by the inevitable expansion of Abenomics – likely this summer, after the national sales tax increase obliterates what’s left of the Japanese economy; and ultimately, the initiation of “Yellenomics” here in the States, when the last vestiges of hope of a sustainable “recovery” die – potentially, in the second half of 2014.
To that end, we have for years written of how political “unions” forged during better economic times would ultimately collapse when things got bad enough – such as my August 2011 article, “Unprecedented.” And nowhere is that more obvious then in Europe, per what I wrote in the aforementioned article – when the European unemployment rate was 9.8%, versus 12.0% today; and youth unemployment 21.5%, versus 24.5% today…
The Eurozone is comprised of 23 countries, each of which had its own currency, language, and culture centuries before creation of the Euro in 1999. When economic times were good in the early 2000s, the ruinous fiscal policies of the PIIGS were obscured by more responsible members such as Germany, Finland, and the Netherlands. Germany’s obsession with creating a unified monetary system clouded its judgment, allowing the PIIGS to rot the system from the inside out, and now that economic times have turned bad (is that an understatement, or what?), they are realizing just how blinded they allowed themselves to become.
–Freedom Watch, April 11, 2013
The Eurozone and Euro currency are just 15 years old; and to this date, essentially every economic criterion initially agreed upon has been violated – and then some. The EU’s political leadership is in chaos – which will be a “front and center” issue when May’s European Parliamentary elections arrive; and across Europe, the likelihood of EU expulsions and/or secessions have never been higher (case in point, the Crimea). We have for some time predicted the inevitability of Greece being the first to go – potentially, yielding a collapse of the entire, decrepit European banking system. However, it now appears that other, significantly larger nations like Spain and Italy are nipping at Greece’s heels. This weekend alone, the city of Venice passed a referendum – by an 89% margin – to secede from Italy; while in Spain, tens of thousands of protesters took to the streets of Madrid – in what have been deemed the “Dignity Marches” – to protest everything from government corruption to poverty to the economically depressing ramifications of EU-imposed “austerity” measures. Simultaneously, the IMF published a paper recommending a UK “mansion tax,” in yet another attempt to “steal from the rich” – as continent-wide, the seeds of dissension are being sowed at an alarming rate. In other words, the reasons to arm yourself with a “golden life preserver” are multiplying with each passing day; which, in turn, is why the aforementioned “financial Nazism” has been escalated to historic proportions.
Frankly, even I have trouble digesting just how blatant – and insidious – TPTB’s attempts to buy time via market manipulation and propaganda have become. To wit, we learned this weekend that Chinese PHYSICAL gold demand for the first three months of the year is up 29% versus 2013’s historic rate itself, roughly twice the previous record level, set in 2012.
“Coincidentally,” Goldman Sachs published what I view as the most horrific collection of anti-gold LIES in financial market history; again, calling for gold to fall to the fabled $1,050 level due to expectations of a stronger U.S. economy (LOL, due to “better weather”); a de-escalation of the Ukrainian crisis and the fact that – get this – a Chinese economic slowdown will be bad for gold demand. In fact, they even went so far as to try and link China’s 2013 gold demand to so-called “China Commodity Funding Deals,” which collateralized its shadow banking bubble – suggesting that the unwinding of this bubble could yield surging Chinese gold sales. Of course, they conveniently neglected to discuss how the opposite effect – i.e., exploding gold prices – didn’t occur last year, when the shadow banking bubble was in its final, blow-off stage.
As this piece describes, the reason gold prices didn’t surge in 2013 was manipulation of the PAPER markets and dishoarding of much of the remaining Western PHYSICAL stash – as viewed through record deliveries from the COMEX, LBMA and Shanghai gold exchanges – and the GLD ETF – among others. Not to mention, this interview with the great Andrew Maguire, describing the real state of Chinese gold demand. And if you want to see just how the MSM movement is to discredit the only asset to survive throughout the ages, consider that this vile article was titled “Peter Schiff gets destroyed on TV during debate about Inflation.” Such a sensationalistic headline naturally got my attention, so I felt compelled to watch – particularly as Schiff is amongst the best debaters about this topic. As one might expect, the “debate” was held on CNBC but once you watch it, you realize that in actuality, Schiff was the one doing the destroying.
As for today’s “markets,” I simply don’t know how to describe such lunacy. First, Asian markets rose following the horrific Chinese PMI report – whilst European equities started roughly 0.5% lower, rightfully so, amidst the aforementioned “front and center” issues in the Ukraine, Spain and Italy. As usual, “Dow Jones Propaganda Average” futures were higher whilst PMs were treated, incredibly, to their 30th “Sunday Night Sentiment” attack in the past 31 weekends and 193rd “2:15 AM” raid in the past 215 trading sessions – as signaled by the blatant $5/oz. takedown in the last ten minutes of Friday’s PAPER trading session.
At 8:30 AM EST – i.e., ten minutes after the COMEX open -the Chicago Fed National Activity Index printed at a pathetic 0.14; in-line with expectations and further validating the case for a flat-lining economy. Dow Futures, of course, sat still at +25 or so; and two minutes later, after having sat idly as well, gold suddenly free-falled $6/oz. in a matter of seconds, as Goldman’s “partners in crime” did their best to “validate” their vile piece of propaganda. Then, at exactly the 10:00 AM EST close of the global PHYSICAL markets, the Cartel attacked again, with yet another waterfall decline; in this case, as the massively PM-bullish event of a mini-NASDAQ crash simultaneously commenced and Treasury yields plunged – presumably under the expectation of an imminent end to the Fed’s “tapering” propaganda scheme.
Think about the insanity of the aforementioned “manipulation statistics” – such as silver having at least a 2% intraday decline on 60% of all trading days, and gold declining at the 2:15 AM EST open of the London paper markets 90% of the time – considering both metals are up for the year!
Anyhow, the point we’re making is that the global movement into PHYSICAL gold is, empirically speaking, expanding with each passing day. The calamitous spread of nation-killing, currency-destroying political and economic events can only worsen in the coming months and years, until the time-honored, cataclysmic path of the global fiat currency regime plays out. Amidst the veritable “sea of lies,” only a “golden” (and/or “silvery”) life preserver will enable you to survive what’s coming – as it’s only a matter of time before TPTB’s “can-kicking” games of money printing, market manipulation and propaganda are swamped by the onrushing, tsunami-like forces of economic reality.
And for the record – per below – gold’s “golden cross,” in which its 50-day moving average rises above its 200 day moving average for the first time in a year, will likely occur in the next day or so, with silver shortly behind. The past six days’ maniacal PAPER raids – amidst unyielding PM-bullish news – have simply pushed both metals toward the bottom of their technical trading ranges; in both cases, at levels well above the June and December lows.
In your opinion, can the Cartel push prices much further below gold and silver’s respective costs of production, amidst an environment of massively bullish fundamental and technical factors, and record PHYSICAL demand? And more importantly, can you afford to “bet” on it?
Andy, I understood logically what it meant when people told me the gold price is manipulated.
But until the last two weeks, I didn’t quite grasp the extent to which is done.
In that time I carefully watched the price and news headlines very closely and yes, the manipulation is so obvious it is hard to believe that it has been going on for as long as it has.
I have two questions:
1. Why do gold miners and dealers keep selling for the “official price”? If the market is so obviously rigged, don’t the mining companies just dig in their heels and demand, say $2000/oz right now?
2. If TPTB are able to so easily manipulate the PM prices downwards amid the myriad of PM bullish news we’ve had over the last two weeks, what is preventing them from just continuing this practice indefinitely?
Riding on Francois question, when they knock gold down by selling short are those contracts taking physical possession of gold? Do these shorts have to actually find , buy and deliver on those contracts? Such as to china? Or are the contracts just delivered by paper money? Curious if they keep slamming gold down does that cause inventories to deplete?
Thanks Andy , I read the blog religiously
great article . Sdrs from IMF will be the next world reserve currency (cleanest balance sheet in the world)almost all IMF members hold SDRs on reserve (Canada swapped most of their gold for SDRs,almost 10 billion SDRs)but most importantly that the G20 countries will implement the IMF 2010 Reforms without the US if Congress doesn’t pass the required legislation by April.
“It was agreed that in the absence of progress by the United States on the 2010 package by the April meeting of the IMF and G20, that there will be formulated a list of ‘bad options,’ which will allow to move forward in this matter, excluding the opinions of the United States.”
I strongly urge you to read this 5 min article as i think it would give you clarity on this matter
I noted your home owners increase of 21% and I then thought what does that 21% mean. I had in mind the letter from my and my wife’s Long Term Care Insurance. The letter told me there would be a 21% increase this year and also a 21% increase for 2015 and then again a21% increase for 2016.So I predict you will have an added 21% increase for most years to come. Of course, the 21% for 5015 and 2016 will be an increase of more money each year in dollars than the 21% increase for 2014.
These increases are not going to be limited to insurance alone, but everything that people buy that is needed.
What is going to happen when the people are not able to pay these future increases????
I heard Jim Rickards mention SDR’s after the Dollar falls but I can’t believe all the world governments and people around the world are going to accept any more monopoly money. I hope thats not the case. I want to see a gold backed currency and clean out the rot. They will have to accept SDR as payment for taxes to make people accept it as a currency. IMF keep your garbage, reset gold to 10k an oz, oh no there is no gold in US anymore. Going to be interesting for sure.