It’s amazing how things have gotten so ugly, each day I feel like I’m writing – or orating -of “the” financial apocalypse. Frankly, it’s difficult to get through a single day without the addition of wave upon wave of hideous, world-destroying “horrible headlines”; to the point that simply figuring where to start has become a chore in and of itself.
Call it what you want – but given that in any real financial community, my call last Monday morning, of an imminent Yuan devaluation that occurred barely 12 hours afterwards, would be granted “legendary” status. To that end, I want to rehash some of the key themes I have been forecasting in recent years. And no, not the kind of “short-term market predictions” made by “newsletter writers” – and vehemently avoided by the Miles Franklin Blog – which today’s government-rigged financial markets toss aside with a laugh and a shrug. To the contrary, I’m referring to big picture macroeconomic themes with historic, far-reaching ramifications on not only your finances, but those of future generations- the world round. And by the way, today’s “writing strategy” is not just evolving on a whim; but rather, as each and every theme discussed is front page news this morning.
Starting, of course, with the global commodity crash I first warned of in September 2014 – with the CRB Commodity Index at 285, barely below its July 2014 (and, for all intents and purposes, four year) high of 315. Moreover, given my experience as a Wall Street energy analyst from 1995-2005, when I saw WTI crude plunge from $106/bbl in June 2014 to $81/bbl in October 2014, I emphatically warned that crashing oil prices would portend “unspeakable horrors.” Moreover, as I read more of David Stockman’s “Great Deformation” thesis – i.e., that four decades of unfettered global money printing and financial engineering have created the unprecedented oversupply of everything from commodities to corporate and municipal infrastructure on the physical side; to overvalued currencies, bonds, and equities in the “paper” world – I realized that what was oncoming would hit the world like a speeding, runaway train.
Hence, my January 2015 article, “direst prediction of all” – predicting an all-out commodity crash that would take years, if not decades, to work through. When that article was published – my first of the New Year, written in an Arizona indoor playground whilst Sylvie frolicked away – the CRB Index was 230, compared to the 2008 spike bottom low of 200; today’s level of 195; and the 40-year low of 185. And given how ugly the fundamentals appear, it’s difficult to believe it won’t only slice through 185 like a hot knife through butter; and ultimately, plumb levels not seen since before production costs of all types skyrocketed when post-gold standard money printing caused fiat purchasing power to plummet. And oh yeah, before the low cost “low hanging fruit” in everything from copper, to gold, to crude oil was depleted.
In other words, a collapse of epic proportions of the world’s largest revenue and jobs producing industry – commodities production; in an era of unprecedented, exponentially exploding debt; as worldwide money printing, amidst the cancerous, terminal stage of history’s largest, broadest fiat currency Ponzi scheme, goes parabolic. Let alone, as we are just days past the entrance of the world’s largest, most dangerous Central bank – the People’s Bank of China – into the “final currency war” I first predicted in January 2013. Which, following its third Yuan devaluation in three days last week, I facetiously claimed to be a “charm, if charm is defined as collapsing commodities and exploding currency wars.”
Which is exactly what we’ve seen since, as the aforementioned global commodity collapse went hyperbolic in the devaluation’s wake – featuring sub $42/bbl WTI crude, free falling base metal and agricultural prices; and yes, the free falling lumber prices I have continually noted despite the so-called housing “recovery” the “evil Troika” of Washington, Wall Street, and the MSM attempt to fool the world with. Of course, secular Americans – the majority of which are too apathetic to look beyond their own personal situations (getting worse by the minute – if Walmart’s hideous earnings report this morning is any indication); and too clueless to understand global economics if they tried; don’t realize the real global carnage is going on in currency markets, where the average currency is down more than 50% since Western banks passed their collective “point of no return” during mid-2011’s Global Meltdown II; and cumulatively, went all-in with history’s most politically, economically and socially destructive – and wealth disparity-creating – scheme of money printing, market manipulation, and propaganda.
Not to mention, currencies of the “Fragile Five” nations where one quarter of the world’s population resides – which are down 60% against the dollar during that period. And the four (non-pegged) BRICS, which were supposed to be the world’s “growth engine” of the 21st century; which, on average, have seen their currencies collapse by 64%; or, drum roll please, 124% excluding the Indian Rupee, which is only down 45%. That said, the Rupee, too, is on the verge of the all-time low achieved in mid-2013, just before its since deposed government launched the maniacal gold and silver import tariffs (under the flimsy guise of “strengthening India’s trade deficit) that have since been run over by “Economic Mother Nature” – yielding all-time high Indian gold imports, much of it in the explosive, uncontrollable “black market.”
Of course, the reason the Rupee – used by nearly a quarter of the world’s (most gold-loving) population is only down 45% is because it is not a “commodity currency” like fellow BRICS Brazil, Russia, and South Africa; and “Fragile Fivers” Brazil, South Africa, and Indonesia; which, per my above comment, constitute the largest component of global currency usage, as commodity production is easily the world’s largest “business.” To that end, I constructed my own “commodity currency index” this morning – of 17 countries, constituting 20% of the global population; which, drum roll please, is down a whopping 87% since that fateful summer of 2011; when the Fed initiated “Operation Twist” (shortly followed by QE3); the Bank of Japan prepared to launch “Abenomics”; the ECB laid the groundwork for its own, historic QE program; and of course, the PBOC printed, printed, printed to maintain its ill-fated dollar peg, whilst the Swiss National Bank did the same to preserve an equally ill-fated, equally suicidal peg to the Euro.
At the end of 2013 – i.e., two years ago – it became patently clear “the Big One” was approaching. Consequently, as occurred in 2008, I anticipated a global “liquidity vacuum” to develop, in which terrified global capital would flee to the dollar. Not due to U.S. economic strength – LOL – but superior liquidity as the worlds’ reserve currency. Thus, when everyone was all but screaming of an imminent dollar collapse – remember, the Fed was deeply amidst QE3 at the time – I contrarily predicted the dollar would explode against nearly all currencies, in December 2013’s 2014 predictions. Which it most certainly has – in nearly all cases, to levels far higher than the height of the 2008 crisis. And again, I cannot emphasize enough that said prediction had nothing to do with gold and silver – i.e., real money – but the floating rates of the world’s myriad fiat trash. To wit, the fact that gold and silver are lower as well has NOTHING to do with fundamentals, and EVERYTHING to do with said “point of no return” manipulation; which, consequently, has yielded record physical demand, vanishing physical inventories, and collapsing physical production.
Fast forward to today, when it’s been decidedly proven that the past four years only made the issues that caused the 2008 crisis exponentially worse. And now that nearly all currencies have horrifically crashed and burned – with no end in sight – the most “expensive” currencies have become those that were printed the most; i.e., the “reserve currencies” of the leading Western powers – whose Central banks’ cumulative profligacy will shortly be “re-imported” with a vengeance. In other words, we have reached an historically hellish crossroads, where any currency that’s “pegged” – like the Yuan, for example – will be forced to revert to its “equilibrium” level by the aforementioned “final currency war” (yes, the Yuan can easily fall 50% if de-pegged, unless the Chinese feel compelled to announce their true gold holdings). And once that “housekeeping” is out of the way, the “end game” – of the collapse of the “tops of the totem pole,” such as the Yen, Euro, and dollar – will arrive, as the global fiat cancer “comes home to roost.”
Speaking of China – where last week’s “unexpected” devaluations were just “jacks for starters” – their moronic Communist government is losing all semblance of control of the historic economic and financial Ponzi scheme it created. To wit, David Stockman couldn’t have said it better this morning, in claiming “China’s 20-year frenzy of digging, building, constructing and producing based on a 56X explosion of fiat credit is the root cause of chronic overcapacity worldwide, from shipping, to steel, chemicals and solar panels. And now that global trade is once again shrinking it is only a matter of time before desperate price cutting eviscerates the profits of global corporations.”
Clearly, the unprecedented economic bubble China spawned (aided by willing “partners” at other major Central banks) is in all-out collapse – with terrifying ramifications to reverberate for decades to come. However, the imminence of such ramifications is what scares me most, now that its second – and far more deadly – equity bubble in eight years is collapsing as well. Yesterday, I noted how the PBOC publicly admitted what astute market followers have known all along; i.e, it has not only been propping the Chinese stock market with unlimited, printed money; but – like the Japanese and Swiss Central banks before it – intends to continue doing so for years to come. And yet, right afterwards – i.e., last night – the Shanghai exchange collapsed another 6.2% (with more than half of all stocks halted, limit down); bringing its two-month losses to a whopping 27%, and calling into question if the PBOC can slow down the “unstoppable tsunami of reality” rapidly washing over China – and oh yeah, 23 other global stock markets. Which, given China’s status as the world’s “growth engine” of the past two decades, has catastrophic ramifications for the entire world – starting with the aforementioned, historic commodity collapse that’s just getting started.
Frankly, there are just too many “horrible” topics to cover today – and given how many more will likely arrive by tomorrow, I may have to cheat slightly with my daily three page limit. Particularly as I want to keep the “heat on” regarding my ongoing, stronger than ever view that not only is a “Grexit” from the European Union “guaranteed” – followed by a swarm of equally angry PIIGS – but far more imminent than most can appreciate.
Just last week, propaganda was rife of how popular Alexis Tsipras was – despite having dramatically betrayed his people and sentenced Greece to debt serfdom. I vehemently maintained this could not be possible; and what do you know, it turns out it was all a big lie in the first place! And thus, just as the German “liquidation sale” of Greek assets commences; with a Greek “bail-in eligibility date” set for year-end; and the “world’s most important stock” – and “most insolvent entity” – the National Bank of Greece, trading at an all-time low; we learn that we are likely mere days from a “no confidence vote” that may not only sweep Tsipras out of office – just six months after being elected – but potentially plunge Greece into the same, world-threatening chaos that befell the Republic in Star Wars/Clone Wars, when Chancellor Valorum was ousted by the same “no confidence” vote that put Senator Palpatine – i.e., the evil Emperor – into power, creating the tyrannical First Galactic Empire. No, I don’t expect Greece to threaten the world militarily. But trust me, the political, economic, and social ramifications of the essentially guaranteed breakup of the Euro will be as traumatic as anything the world has experienced. And don’t for a second forget that Spain’s Presidential election is in December; Portugal’s in January; and the UK “Brexit” vote expected sometime in 2016. Likely, followed by heightened Catalonia, Spain secession efforts; and inevitably, well-supported efforts by France and Italy to exit the European Union (and currency) as well.
And then there’s the United States of Economic “Recovery” – which, when accounting for its unparalleled combination of all-encompassing market manipulation; economic data fraud (MUST READ); unprecedented debt; and the complete evisceration of its once dominant manufacturing industry – is perhaps, ironically, in worse shape than any global economy. Particularly when regarding the historic overvaluation of its currency, due to the aforementioned, accelerating “liquidity vacuum.” To that end, how anyone actually believes the Fed is even considering tighter monetary policy in a world where all economies are simultaneously collapsing – including America’s – is beyond me; and frankly, a tribute to the U.S.’s unparalleled “manipulation operatives” – i.e., the Fed, PPT, ESF, and gold Cartel, among others.
Even “Fed mouthpiece” Jon Hilsenrath, of the Wall Street Journal – who has whole-heartedly supported the fraudulent “tapering” and “imminent rate hikes” propaganda scheme cooked up in early 2013 – shockingly wrote this morning that “Central banks” (yes, that includes the Fed) have essentially ‘ran out of ammo’; and thus, are being forced to think about their “backup, backup plans.” In other words, suggesting exactly what I wrote last Friday – that we are rapidly approaching the “end of belief that Central banks can save us.” Perhaps that’s why yet another Goldman Sachs alumnus was appointed President of the Dallas Fed yesterday; as clearly, the world’s top market manipulators are being recruited to kick the can those last few “precious” feet.
In other words, what I inferred in last month’s “the only difference between late 2008 and today” – has never been truer; i.e, a rapidly weakening ability of said “powers that be” to prevent panic from enveloping the Western world with historic, unprecedented market manipulation – particularly in “last to go” markets like paper gold and silver and the “Dow Jones Propaganda Average.” Frankly, it’s getting so egregious – today, I feel like screaming with rage and frustration – it’s difficult to believe anyone can’t see it anymore. And more importantly, anyone with significant financial resources to protect. Frankly, I can’t wait to see how tomorrow’s July 29th FOMC “minutes” are doctored; as clearly, said powers are terrified of having to purport their ongoing rate hike fantasy with global commodities, currencies, and equities in free fall mode.
Which brings me to the last – and for Miles Franklin Blog readers, most important – topic du jour. Which is, the upcoming Precious Metal shortage that with each passing day, draws nearer; particularly in the far tighter silver market, so much so that I felt compelled to publish a special “silver supplement” last week, titled – in the words of Miles Franklin’s President, Andy Schectman – “supply is at a 1.5 or 2.0 out of ten” – and one of the potentially last great silver opportunities.”
Well, since published, demand has tightened further – starting with the U.S. Mint itself, which not only sold nearly a million silver Eagles yesterday alone, but is on a pace for August to be its best August ever; following its best July ever; and, assuming supply doesn’t run out, what will clearly be its best year ever. In fact, regarding said “last great silver opportunity,” I personally purchased one of the last lots of available Great Horned Owls from the Royal Canadian Mint’s last “Birds of Prey” series – at which point, I was informed that shortly, nearly all distributors will be forced to suspend silver Maples sales indefinitely, due to soaring demand. This is exactly what I suggested was coming in the aforementioned article. Not to mention, what I have screamed all along about “junk silver” – i.e., the “ultimate fear asset” – which fellow bullion dealer Steve Quayle loudly validated this morning.
No matter where one looks, Precious Metal demand is exploding; inventories are vanishing; and the production outlook is historically horrible. And nowhere more so than silver, given that roughly half of all global production is the byproduct of copper, zinc, and lead mines; which, given the historic base metal price collapse that is only just starting, may well cause the conclusion of last year’s “Miles Franklin Silver All-Star Webinar Panel” – i.e, that silver production could fall up to 50% in the coming years – to approach reality.
Sorry so wordy today, but extraordinary times call for extraordinary commentaries. That is what the Miles Franklin Blog provides for FREE – to which, in return, all we ask is that if you do anticipate buying, selling, or storing Precious Metals, you simply call us at 800-822-8080, and give us a chance to earn your business.
Hi there Andy,
Another great piece of truth. I have a question. I’m just trying to understand the devaluation process better, how do they intentionally devalue the currency? My understanding was that they are in hyper inflation is this correct?
They sell the Yuan they printed to push the exchange value down; thus, driving up the cost of living for all Chinese. Not hyperinflation yet, but inevitably. Until, one day, they admit how much gold they have – likely, out of necessity due to a plunging fiat Yuan.
Great update. When it doesn’t seem possible for it to get worse, it does!
In the 1980’s I saw a cartoon that went as follows:
When poop (not the word used) becomes of value, the poor will be born without butt holes (not the word used).
I can’t remember the author, but it would not surprise me if the author was the Central Bankers.
It seems that we have almost arrived at that point.
OK Andy, you are scaring me, stop it LOL
Fantastic!!! You & your blog are one of the reasons I get up in the morning — The Man ,the Myth, THE LEDGEND!!!!!!
I’m way old enough to recognize how much you know and truly understand what is going on (down) in this world.
You and David Stockman are Top Writers in the economic world.
And the beauty is that everything you say is true and
comes true… thanks again
Thanks so much. The best comment I could get!
Ditto, I hit it almost every day. And bonus when Holter throws his 2 cents in.
“in Andy we trust”
Love your articles and interviews. I’ve been in the PM community since the early 1980’s and have worked at a couple of local coin shops in the past. I have never seen such a “perfect storm” set up like we have today. Just the “official” US national debt figures are beyond comprehension. Most people are so clueless about their reality due to being hooked on TV, video games, social media and a belief that our government will never let that happen here in the good ole US. I fear that very soon there will be an epidemic of “deer in the headlights” look in sheeple’s eyes across our once great country. Thanks for all you do in spreading the truth!! Mark
Agreed 100%, and thanks!
I like the daily cartoons. I don’t know who is responsible for them, but please pass it along to keep it up!
You are just great Andy. I look forward to your facts each day. Keep up the good work. It keeps me preparing and in reality which isn’t always pleasant lol.