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Holding more than 90% of my liquid net worth in physical gold and silver – of which, barring an extreme, unforeseen emergency, I anticipate holding “to maturity”; daily, and even annual, price changes have little impact on my standard of living.  No doubt, there is an ongoing “wealth effect” that causes me to spend more when prices rise; as aside from higher net worth, my business – and thus, earnings prospects – improves simultaneously.  However, for the most part, the financial “fear of failure” instilled by my mother causes me to, irrespective, live a relatively thrifty lifestyle.  Here at the Miles Franklin Blog, we offer no “financial advice.”  However, one can never be too conservative about money, particularly in a historically weak labor market.

The most important reason we hold our savings in gold and silver is protection from inflation, which inevitably destroys all fiat currencies; and in today’s dangerous economic environment, where the global monetary system is breathing its collective final breaths; such inevitability could easily become imminence.  Thus, I think less in terms of my PM holdings “appreciating,” as opposed to maintaining value whilst all else depreciates; although, given the massive level of price suppression over the past decade, it’s quite obvious that even a modicum of loss in control by TPTB will result in dramatic – potentially unprecedented – appreciation.  Irrespective of such conflicting philosophies, we’re only human; and thus, aside from desiring our purchasing power to increase – as after all, life is too short – we’d like to be proven right after so many years of deliberation.  Not to mention, in a world where, despite PMs having been the best performing asset since the turn of the century, “goldbugs” are ignored by everyone from the mainstream media to our dearest “family, friends, and colleagues.”

In 2008, the global financial system permanently broke, under the strain of 37 years of inflation and capital misallocation caused by the worldwide break from the Bretton Woods agreement.  Essentially all economic metrics stair-stepped lower, to a new, dramatically lower “plateau;” likely permanently so, until the fiat based monetary regime is replaced.

In the ensuing three years, it became crystal clear that the post-financial crisis market surge – caused by a then unprecedented money printing party – was failing to revive the global economy.  Consequently, TPTB had a terrifying realization that the Ponzi-esque nature of their fiat currency regime had reached its terminal, cancerous phase.  In other words, the world’s “credit card” was fully charged up; the “diminishing returns” on incremental money printing were on the verge of turning negative; and the “inflation genie” was not only out of the bottle, but spreading its “charms” like the Ebola virus.

Until that time, “manipulation mechanisms” like the President’s Working Group on Financial Markets (stocks), the Federal Reserve (bonds), and the Exchange Stabilization Fund (currencies and gold) had been used with increasing frequency, particularly after the system demonstrated its first “chinks” during the 2000-02 tech wreck.  However, after 2008 – but particularly 2011, when the aforementioned realization that money printing would only make things worse – government market intervention ramped up to levels unseen in financial history.  Led by the world’s military, economic, and financial leader (“you’re either with us or against us”) – and more importantly, owner of the “reserve currency” – TPTB initiated an historic campaign of money printing, market manipulation and propaganda.  Essentially, it was deemed that propping up any and all financial assets – to the benefit of “the 1%” owning the majority of them – and suppressing real items of value like Precious Metals was “job one.”

No doubt, they hoped for a financial miracle; but at the least, assumed it would buy some quality “can kicking” time.  As for the former, they hoped for miracle has instead been an economic nightmare; but yes, they did buy themselves a few more years to get their personal houses in order.  Graphically, there is no better way to describe how the global economy was broken in 2008 than the near parabolic growth of the U.S. money supply and collapse of European loan creation…

Loan Creation Adjusted

…and concomitant real economic situation…

Labor Unemployment Chart

To that end, there is no chart that better describes the extent of market manipulation than this one – compiled by James Turk – depicting how stocks were “encouraged” to benefit from Fed money printing, whilst gold was determined to be “no longer allowed” to do so.  Essentially, when “gold fever” started to take hold in late 2011 – simultaneous with “dollar-priced gold” achieving an all-time high on September 6th – TPTB decided that no matter how much global inflation it catalyzes, how much permanent devastation in causes the mining industry, and ultimately, that China and Russia will be afforded the means of 21st century financial domination, they decided that all possible efforts would be mobilized to keep real money in check.

Fed Reserve Assets

All one needs to observe is the last two days to realize how this works; when at exactly the 10:00 AM EST close of the global physical markets, the COMEX was raided with naked shorts to drive prices down.

And the “news” accompanying these attacks, you ask?  Yesterday, it was simultaneously reported that the Chicago PMI unexpectedly plunged from 59.8 to a seven month low of 55.9; while today, the PMI Manufacturing Index unexpectedly declined from 57.1 to 55.5.  Throw in Japan’s catastrophic Tankan sentiment Survey this morning, as Japanese wages fell for a 21st straight month; “Whirlybird Janet’s” uber-dovish comments yesterday morning, another major Chinese bankruptcy last night and rising speculation that the ECB will hint at and/or announce a QE program at Thursday’s meeting, and it becomes quite clear that the past two days’ rise in stock prices – and Precious Metals plunge – was entirely paper-based, and entirely fabricated.

24hr Gold Charts

Frankly, one needs to look no further than COMEX open interest to realize the entire world is slowly realizing how fraudulent such “trading” is; as not only is open interest down nearly 45% during a three-year period in which the fundamental reasons for owning gold have skyrocketed – but the last time open interest was this low was in May 2009, when gold was barely above $900/oz.  Even Ted Butler has finally admitted that silver suppression will not stop until it is permanently ended by an inevitable metal shortage; whilst Harvey Organ has essentially “thrown in the towel” in his daily COMEX analysis, concluding the data has become so fraudulent, it is hardly worth reading anymore.  In any other market, such a narrow – in this case, practically non-existent – margin between registered inventories and amount demanded for delivery would have long ago created a short squeeze.  But not at the COMEX, where the name of the game – all day every day – is government-funded naked shorting.  This is how “JP Morgan” and the other TBTF banks generate “profits” every single day, as opposed to 51% on a good year in free markets past.

Comex Gold Open Interest

And thus, it makes me chuckle that the MSM has spent the past two days asking, “Is the market rigged?” following the supposed blockbuster 60 Minutes interview with Michael Lewis this weekend.  Titled “The Market is Rigged,” Lewis – the author of “Liar’s Poker,” the “Big Short,” and other anti-Wall Street books – describes how high frequency trading is used to steal from stock market investors.

He couldn’t be more correct, but high frequency trading is but a symptom of the problem, not its cause.  In other words, high frequency trading is not the end, but the means; and thus, the 15 minutes of fame this interview will afford will focus entirely on the wrong issue which, of course, is the fact that ALL markets are currently manipulated, as part of the aforementioned effort to “kick the can” of a dying fiat currency regime as long as possible.  If anything, the MSM is part of the government’s “team” in disseminating such propaganda; and thus, the fact that CNBC has its own “manipulation expert” (MUST HEAR) – Jim Cramer – speaking of it, only proves our point in spades.

Back to what I started today’s article with it doesn’t matter how long-term a view one has, watching the Cartel attack paper precious metals so relentlessly couldn’t be more frustrating.  For me personally, I have fought them with every ounce of my heart and soul – and every penny in my wallet – for the past 12 years; and even I become visibly angry from time to time.  We’re only human, after all, right?

However, as I wrote nearly three years ago in “The Waiting,” this is not the first time the Cartel has temporarily gained the upper hand; inevitably, yielding the same result of new highs after their near-term suppression strategies lose their strength.  For example, I remember well when gold hit an interim (cartel-created) peak of $700/oz. in May 2006, falling as low as $570, or nearly 20%, before finally reclaiming $700 (for good) in September 2007, 16 months later.  And then you have 2008’s Global Financial Crisis attacks, which took gold from a high of $1,015/oz. in March 2008 to a low of $700/oz. in November 2008, down 30%, before it finally reclaimed $1,015/oz. (again, for good) in September 2009, 18 months later.  Today, amidst the all-out, unprecedented attacks noted above, dollar-priced gold peaked a whopping 19 months ago at $1,920/oz.  However, in the process of holding prices below the cost of production for so long, TPTB have created a global rush for PHYSICAL metal unprecedented in history – while simultaneously, all but destroying the mining industry; perhaps, for decades to come.

More importantly, per the other key point I started with, our gold and silver holdings represent insurance against the very issues TPTB have irreversibly created.  The global fiat Ponzi scheme can only grow larger before it inevitably implodes; and whether via “black swan” – such as the Ukraine, for example – or simple market forces, the end game of collapsing fiat currencies must, and will occur; likely sooner rather than later.  And when it does, be it this month, later this year, or sometime in the (not too distant) future, if you haven’t already protected yourself, it will be too late.


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