It’s Wednesday evening, and I can’t help pondering what the world will like when TPTB lose control of “last to go” markets like the “Dow Jones Propaganda Average” and paper gold and silver. Care of the “weapons of mass financial destruction” unleashed by Wall Street and London’s “City,” never before has “Economic Mother Nature” been pushed this far. Consequently, when the final “detonation” occurs, her wrath will be historic. Aside from the Cartel’s suppression of Precious Metal prices amidst record global demand, there’s no better way of depicting the madness of money printing and market manipulation than the below charts – of earnings and cash flow multiples at all-time highs, amidst the worst economic environment, and outlook, of our lifetimes. Not to mention, the highest levels of subprime lending since the 2008 peak; and accounting rules enabling banks to further obfuscate their insolvency.
To that end, Yahoo! Finance’s brain-dead “top story” this morning claims “world stocks near all-time highs after Fed (easing) signals”; suggesting that, because Janet Yellen delivered the “most unequivocally dovish FOMC statement in memory” yesterday, it’s clear sailing in the global stock markets – irrespective of how weak economic activity gets; how strained geo-political tensions become; how viciously the “final currency war” escalates; or how overvalued stocks and bonds have become.
In our view, yesterday’s abrupt end to any remaining rate hike expectations, atop last week’s uber-dovish “minutes” from the Fed’s January 28th meeting, presage the inevitable “Yellen Reversal” I predicted five months ago. That is, when Fed “waffling” morphs into all-out, fear-induced money printing – in the form of a gargantuan, overt QE program. And lo and behold, as I predicted, the typical pre-Yellen interest rate goosing failed yet again, and miserably so. I.e, from a peak of 2.17% before said “minutes” publication last Wednesday, the 10-year Treasury yield plunged to 2.11% before Whirlybird Janet’s Congressional testimony commenced yesterday morning, and 1.96% as it ended this afternoon. Per this amazing chart, global interest rates are now at their lowest level in the 5,000 years since interest was invented; and trust me, you ain’t seen nothing yet!
I mean, how terrifying is it to see mortgage and refinancing applications at multi-decade lows despite record low rates? Let alone, home building sentiment that refuses to die despite plunging home sales and new construction – particularly in the all-important single-family residence category. To wit, my neighbors’ house – with a finished basement, no less – just sold for 11% below the level of a similar home four houses down, with no finished basement. Of course, the latter home was sold at the market’s peak in mid-2013, when neighbors were actively discussing home prices, a la 2007’s historic peak. And wouldn’t you know it, take a guess which commodity is now freefalling? Yep, lumber – down 16% since year-end, and 27% from the eight-year high set in – what do you know – mid-2013? It can’t be coincidence that the stock of a company called Lumber Liquidators was “liquidated” to the tune of 26% today, can it?
Speaking of ominous commodity trends, what more can be said of the burgeoning crude oil catastrophe, that hasn’t been already? Yet again, API and EIA inventories exploded to all-time highs; for the third straight week, well above expectations. Not to mention, as global production hit a new all-time high as well, plunging rig counts irrespective. Consequently, for the third straight week, the “oil PPT” I have exhaustively written of saved the day; yet again,defending WTI crude at the $49/bbl “line in the sand” they have obviously drawn, in their quest to manipulate yet another physical market with unbacked paper vehicles. At least Zero Hedge finally got around to noting what I have been saying for weeks, including on yesterday’s Audioblog…
“Will the ‘oil PPT’ be able to repeat the blatant support of oil prices it executed the past two weeks, in both cases preventing oil from falling below $49/bbl after equally massive inventory builds, in both cases to fresh 80-year highs? I guess we’ll see tomorrow morning, when the EIA inventory numbers are published.”
By day’s end, said “oil PPT” had yet again goosed prices back to $51/bbl; after touching a low of, I kid you not, $48.90/bbl after the EIA inventory explosion was reported. However, “have no fear” crude bears; as the difficulty of manipulating Precious Metals down amidst ragingly bullish fundamentals is nothing compared to holding up the vastly larger, massively oversupplied crude oil market.
Let alone, trying to hold up all of Europe, which teeters precariously on the crumbling fulcrum of Greece; currently, by nothing but a fraudulent bailout “deal” that is already is under fire by everyone from Greek citizens, to Germans Central bankers, Fitch Investors Services, and the financial markets themselves. Yes, just “one day later,” Greek markets are badly listing, led by what I once deemed “the world’s most important stock” – and yesterday, the “world’s most insolvent financial institution” – the National Bank of Greece. In other words, the “countdown to Grexit” may well have just four months remaining; not to mention, the entire ill-fated Euro experiment.
And then there’s the Ukraine, where one of the world’s most dangerous geo-political hotspots is on the verge of going nuclear…literally. Last year, we warned the Ukrainian crisis wouldn’t go away any time soon; and today, not only has the baseless “de-escalation” propaganda been put to rest, but the odds of all-out war have never been higher. Clearly, both sides are preparing for “full-scale war“; although “both” may not be the appropriate term, given that countless other nations are likely to be sucked into the Ukrainian vortex.
As I write, Ukrainian natural gas is being withheld from Eastern regions where rebel strongholds are based, amidst the dead of winter; prompting Vladimir Putin to accuse the Ukrainian government of “genocide,” and retaliate by shutting of gas pipelines that would eventually reach European end-users. Better yet, the Ukrainian hyrvnia has now completely collapsed, igniting a hyperinflationary hell that is destroying everything in its path – other than gold, of course.
In other words, wherever one looks, the ominous specter of economic and financial collapse looms; and conversely, the re-monetization of the only real money the world has ever known – i.e., physical gold and silver. To that end, I have been asked to address yet another fear-mongering call by Larry Edelson; who despite having decisively called gold’s bottom last June, now believes gold will bottom “below $1,000/oz, later this year” – before turning higher, and eventually hitting $5,000/oz. In other words, the same newsletter writers’ game I have observed for more than a decade; of following the prevailing winds; enticing readers’ to risk hard-earned capital in short-term trades; whilst “hedging” their commentary enough to take credit for subsequent market movements, be they up or down. To wit, the “short-term bearish, long-term bullish” newsletter writer’s mantra since Precious Metals bottomed at the turn of the century.
Actually, I agree entirely with his views in this video, as pertains to commodity prices in general. To wit, the combination of relentlessly growing, hopelessly unpayable debts and massive, Central bank fostered industrial overcapacity will undoubtedly yield massive deflationary pressures for years to come. That said, I couldn’t disagree more with his views on gold; which frankly, don’t hold a candle to the perverse logic behind his expectation of Dow 31,000.
In today’s world of endless financial propaganda – particularly TPTB’s war on gold – I am continually amazed by calls for gold (and silver) to plunge due to “deflation”; when not only have Precious Metals been historically the best assets to own during deflation, but were so during the 2008 financial crisis. To wit, whilst endless commentary of gold’s (Cartel-induced) crash in the Fall of 2008 is espoused, no one seems to point out that gold was the only asset class to rise for the year – or for that matter, that physical premiums over silver’s fraudulent paper price surged to nearly 100%. Moreover, when stocks hit their final low in March 2009, gold had already recouped nearly all its losses. And then there’s gold’s Depression-era performance, which also put all other asset classes to shame. Care of government decree, gold was fixed at $20.67/oz until 1933, when Roosevelt “revalued” it to $35.00/oz.. And as for gold mining stocks, they were indisputably the best performing asset class, whilst nearly all others collapsed.
Yes, I know this isn’t the 1930s, but I’m just making the point that Precious Metals are just as valuable during times of “deflation” as “inflation”; although, of course, the sad tragedy of today’s fiat dominated world is that crashing currencies are causing just as much inflation of things we want as deflation of things we need. To that end, the reasons to own Precious Metals are dramatically more powerful today; as back then, the gold standard ensured “dollars” were backed by real assets – whereas today, all currencies are backed by NOTHING, and being hyper-inflated in historic fashion.
To that end, the average currency is down an incredible 42% against the world’s “reserve currency” since the U.S. government lost its triple-A credit rating in mid-2011; and in response, commenced history’s largest inflation exportation scheme – euphemistically named “QE.” The resulting global currency wars typify the terminal phase of a Ponzi scheme; and when it inevitably implodes, if you haven’t already protected your net worth with real money, it will already be too late. But hey, if you want to believe Larry Edelson that “deflation” will take gold and silver below $1,000/oz. and $12.50/oz, respectively – to levels insuring the complete destruction of the Precious Metals mining industry – go right ahead.