It’s Friday morning, and prior to commencing my daily labor of love, I considered myriad, equally dire topics. Frankly, I tried to put the upcoming NFP report out of mind; as under the government’s relentless “recovery” propaganda campaign, it has created a “NEW EMPLOYMENT PARADIGM” in which not only are part-time, minimum wage paying, non-benefit receiving food service jobs for senior citizens considered economically equal to full-time, benefits-paying manufacturing positions for people in their prime earnings years (i.e, supporting families); but it literally makes up data according to monthly political whims.
Thus, via statistical gimmickry such as “seasonal adjustments” and – of course – the “birth/death model” (assuming relentless growth of small, profitable businesses, even during recessions); the NFP report has become useless as an umbrella in the desert. I have written of this farce for as long as I can remember; however, since the run-up to the 2012 Presidential campaign, it has taken on a whole new level of fraud. And now that the “half-life” of its effectiveness in deceiving the public is nearing its end, I cannot find a more important topic to speak of. For when the ENTIRE WORLD finally realizes BLS is pure BS, we will likely witness panic selling of dollar-denominated assets; and conversely, panic buying of “anti-dollar” assets like PHYSICAL gold and silver.
Last month, the all-important, GLOBAL ECONOMY-KILLING 10-year Treasury yield had risen to a two-year high of 2.75% – from just 1.60% in May. Economic data was already starting to roll over, so I predicted the BLS would publish a “worse than expected” NFP report – to utilize as cover for the Fed to “turboQE” rates back down. The goal was to continue with the ongoing charade of economic “recovery”; while at the same time, tempering published data enough to build a consensus that “tapering” was not yet warranted.
This month, REAL economic data like durable goods and factory orders have continued to weaken; while recent Gallup polls ominously suggest significantly weaker employment. However, in the true spirit of LYING, the government continued to “alter” ambiguous “diffusion indices” to give the impression of growth; such as yesterday’s “ISM Non-Manufacturing Index,” which “coincidentally” surged just as the St. Petersburg G-20 meeting was commencing. Unfortunately for the CRIMINALS running America, their plans are miserably failing. Sure, they’ve prevented PAPER gold and silver prices from breaking out – although they’ve certainly recovered nicely since the late June lows. However, in the process of naked shorting PMs since April’s “ALTERNATIVE CURRENCIES DESTRUCTION,” they’ve created chronic, worldwide PHYSICAL shortages resulting in RECORD periods of backwardation, negative GOFO rates, and Eastern hemisphere premiums; not to mention, by far the strongest EVER U.S. Mint sales of Silver Eagles.
Worse yet, Treasury bonds have come under intense selling pressure by the Chinese and Japanese governments; i.e., the second and third largest Treasury holders, after the Fed itself. In fact, they offloaded more Treasuries in June – on a combined basis – than any month in HISTORY. Moreover, the Fed has lost hundreds of billions since rates started rising four months ago; and despite last month’s efforts to staunch the bleeding with a bad July NFP report, the 10-year Treasury yield surged to 2.995% at yesterday’s close. Earlier this week, I predicted another “worse than expected” NFP report to aid a new Fed effort to push rates back down; and what do you know, a nuclear disappointment hit the tape at 8:30 AM EST – of course, after PAPER gold and silver had already endured their typical NFP week attacks.
The August data itself was only a “slight miss” versus expectations. However, its internals could not have been worse; particularly, the shocking 516,000 person reduction in the labor force (no, that’s not a typo) – resulting in a 0.2% decline in the labor participation rate, to a 35-YEAR LOW of 63.2%. To wit, an incredible 15 million people have exited the work force since the supposed “recovery” commenced in 2009 – or nearly 5% of the ENTIRE POPULATION. But don’t worry, the BLS reported that the “unemployment rate” actually declined from 7.4% to 7.3%; care of, of course, said plunge in the Labor Participation rate.
However, this morning’s “hit parade” is just getting started; as not only were the supposed 169,000 jobs created in August “less than expected,” but included 90,000 fictional “birth-death” positions; and aside from a measly 9,000 positions in the increasingly SUB-PRIME auto industry; manufacturing, mining, and other goods-producing industries generated ZERO new jobs – as usual. And oh yeah, did I mention the July NFP number was revised downward by a whopping 36% – from 162,000 to just 104,000; yet again, validating my point that such numbers are at best – arbitrary, most likely – worthless, and at worst – fraudulent. Why ANYONE believes such data is beyond me; particularly when it suggests a RECORD DISPARITY with the REAL labor market…
Which brings me to the KEY POINT of this missive; that is, just as we are experiencing a RECORD DISPARITY between fraudulent PAPER PM prices and the realities of the PHYSICAL gold and silver markets, we are witnessing a RECORD DISPARITY between fraudulent government economic data and the realities of a full-blown recession. Or in some places and market sectors – truth be told – depression.
The Fed is now “painted into a corner” by its MORONIC June statement that it intends to start “tapering” QE4 this Fall if economic data suggests sufficient positive momentum; and as I write, the all-important 10-year Treasury yield has just declined to 2.91%. From my vantage point, the economy is, if anything, weaker than when those ill-fated comments were published on June 19th – with far greater weakness to come as the effect of the recent interest rate surge is felt. However, care of government MANIPULATION of select “diffusion indices” – suggesting ongoing expansion – Helicopter Ben may well be forced to address tapering at next week’s FOMC meeting.
And thus, the ultimate game of “chicken” is about to commence; as if the Fed CANNOT push rates sufficiently lower, it may be forced to “taper” Treasury and MBS buying whilst rates are at MULTI-YEAR HIGHS – with ZERO buyers and increasingly aggressive sellers. Conversely, if the government feels compelled to start ratcheting “diffusion indices” lower anew, it risks an all-out panic from Treasuries under a potentially universal assumption that the Fed has LOST CONTROL of the economy (as if it ever had any); and thus, will indeed engage in “QE to Infinity.” And oh yeah, did I mention we may well attack Syria this month; and that by month’s end, Congress will not only have to fund the fiscal 2014 budget, but raise the debt ceiling?
No matter which scenario unfolds, the ONLY possible “winners” will be PHYSICAL gold and silver; whilst the outlook for stocks, bonds, and real estate is middling at best, and catastrophic at worst. And as for PM mining stocks, your guess is as good as mine; speaking to EXACTLY why I don’t invest in them any longer; but instead, simply save my earnings in the form of REAL MONEY. Time is running out quickly; which is why you MUST…