My plan for today was to write a very basic piece hitched to the one written yesterday “the money has to go somewhere”. The plan was to point out that gold (and silver) will be the final destination for monies dislodged from crashing markets all over the world. Along came the Q1 figures for U.S. GDP, a disaster on many levels. So switching gears, let’s look at the first quarter, how quickly the economy has deteriorated and what it means in the future and in relation to the past. I do plan to tie this together at the end because no matter how you look at it, gold is a magnet for what will be shaken loose.
Q1 GDP came in at .2% growth, this was a whopping $6 billion worth of growth for the quarter . This number was an obvious disappointment as estimates were around 1%+. Of course the apologists were immediately out in full force to remind us of how terrible the winter was and “weather” was to blame. I would ask, isn’t that what “seasonal adjustments” are for? Steve Liesman of CNBC even posed the question why seasonal adjustments are “not working”. The obvious answer is because you can only stretch, massage and outright lie about economic numbers so far before you cannot any longer …because even the blind will see it.
Breaking the quarter down and looking under the hood, were it not for the biggest inventory build of any quarter in history, the quarter would have shown a negative 2.6% growth rate . What exactly does this mean? It means the consumer or final user has shut off their purchases. It means “stuff” was produced but wasn’t sold. The inventory build number was over $120 billion, can this happen again in the 2nd quarter? And what if the end buyer keeps their pocketbook shut again? Something must give, either the inventory gets sold or the producers must cut back production drastically.
It is worth mentioning that QE 3, the “final QE” ended in the fourth quarter. Is this an example of the economy convulsing because the juice was taken away? And let’s not forget, today (yesterday) was a Fed meeting and announcement, can they possibly even hint about raising rates and actually withdrawing some of the previous “juice”? Another “blame” is being pinned on the strong dollar, can the Fed really raise rates and put a further bid under the dollar?
What does this mean for the future of the economy and more importantly the financial markets? The markets are at record high valuations, the news of an economy going in reverse can only augur for lower earnings. The strong dollar can only augur for a Fed who doesn’t want a stronger dollar. The leverage in the financial system is so thin already, can the risk be taken that something will snap? I don’t believe so, I also believe it will not be long before QE 4 gets floated seriously and then implemented.
As I wrote yesterday, “the money has to go somewhere”. It looks to me like some sort of come to Jesus moment is close in both the economy and the markets. If you have been awake, you understand the economic and financial systems, are dichotomized yet so intertwined, a spark anywhere means a fire everywhere! Literally hundreds of $trillions will be shaken, some of it “shaken loose” and will look for a safe place to hide.
All the gold ever mined in history is worth some $6 trillion, what do you suppose will happen when $10’s of trillions seek the safe harbor of gold? No matter how you look at it, the Fed is in a box of their own making, any action or inaction has the possibility of shaking the tree and dislodging capital, forcing it to look for safety. The result will be your “no offer” moment in time. As capital floods toward the only monetary asset that cannot default, owners will pull their wares off the shelf and withdraw their offers. This only makes sense because the movements will be so large and so fast, no one will even know what various assets are worth or where they will settle until after the dust clears.
I leave you with this thought, if you need to build a fire or light a cigarette, how much would you pay for a BIC lighter? The same could be asked about “money”, if one needs to put capital somewhere that cannot ever default (which is gold only), what is one ounce of gold worth? It is crystal clear to me, when this question gets asked, it may take some time for the physical market to clear and give an answer! The true value of gold will shine as a vortex of defaults occurs.
You’re right on target, it will drive them to PM but the problem will be compounded with lack of PM supply, this morning Goldcorp one of the top mining company had a poor result (small profit, it’s been the case also with Barrick and Yamana).
Gold got smack like $25 over a more positive initial jobless claims! we had a slew of bad economic data this past few days and PM got smashed over one or 2 more positive number? I knew that gold would be smash this week: 1) was over 1,200 line in the sand 2) up 2 days in a row 3) it was even up Monday, that’s unusual it almost always raided on Sunday between 2 and 3 AM.
Thanks whoever is shorting comex gold future for allowing me to buy physical gold at a cheap price, just bought 2 more ounces of 2015 Maple gold this morning.
just keep stacking!
Why I am NOT spending. The longer the Fed keeps trying to manipulate the economic landscape and paint a rosy picture of denial, the more I recoil and do not spend.
Many Americans do not spend because they are tapped out. They have no money, nor can they borrow to spend.
I have money and no debt, but decline to spend because I have zero confidence in the future. Every time the Fed extends their zero interest, or adds another layer of QE, or the USGOV refuses to address our deficit, I retract even more.
I believe that most Americans see right through the Fed and the USGOV appetite for spending. Those who have discretionary dollars are circling the wagons in preparation for a total collapse of the US economy.
Until the Fed backs away and allows a true bottom, I will continue to hold on to my money. The Fed will not win.
File in your FWIW drawer:
I find your missives compelling, cogent and insightful; no “dented” logic in your analyses. I will certainly keep reading. Thanks!
thank you so much Matt!
As always….Financial poetry! People understand the situation more when painted on a colorful canvas.
Keep up the great work..
Love your writing style..
Bill, I try and read your work every week and
enjoy your honest and plain speaking approach.
I also read Dave Kranzler (hope I spelled that
correctly) and thought I would share this article
with you. Looks like T.P.T.B. have some agenda
going forward and we might not be invited.
Dave does excellent work.
Right on schedule! Both gold and silver smashed down this morning after two days of rising prices. The manipulation has become so predictable, the perps don’t even try to hide it any longer! This wash, rinse, repeat cycle, will continue as long as there are still players in the CRIMEX. Sorry COMEX.
The system won’t ‘crash’ until the BRICS and their close associates have all their ducks lined up. They are close, but not quite ready yet. The rug is slowly being pulled out from under the USD and has been for some time now. To gain access to the SDR for the RMB (yuan) the Chinese must un-peg from the USD. If this happens too quickly, the RMB along with the global FX market will be damaged. Possibly terminally. The Chinese know this and are attempting to avoid it.
The timing of the ‘crash’ is anyone’s guess, but it looks like the consensus is as early as June, or September. Certainly by January 1st, 2016 when the inclusion of the RMB into the SDR basket is tentatively set to occur. The western oligarchy will fight this all the way. They are at present losing. Badly!
foreigners also “see” what is going on.
Bill,thanks as always.
Thanks for the reminder. I need to stock up on wooden matches that I will vacumn pack in mylar.
Your words ring true,I have been witnessing this unwind for a few years and we truly are in the quickening phase.Like Andy says “It’s monetary mother nature”.
In reference to the global awarness that will occur after the collapse of the true nature of gold and silver and its value as money, Jim Sinclair once stated “it will be the last bubble that never pops”.We can only hope.
don’t forget a BB gun for squirrels and such!
Bill, how does the de-pegging of Chinese yuan to USD & announcement of their own QE fit into this equation? Do they act before grandma fellen goes overt QE? Would QE4 bring the value of the yuan down due to its peg? Way too many moving parts. Things are truely mad. Waiting on the spark. Cheers
many moving parts, I am not so sure that a QE4 wouldn’t spark a panic on its own.
if one needs to put capital somewhere that cannot ever default (which is gold only), what is one ounce of gold worth?
What will happen to Silver does it DEFAULT ?
of course not, silver “is”, just as gold “is”.
as always enjoy hearing your thoughts, I value them. On a macro worldwide level, there will be other future investments that aren’t tied to the dollar. In fact, some may not even accept USD investments AIIB for one and most anything Sino-Russian. That’s the next boom unfolding.
As far as your question about Bic lighters, I bought 2 cases just in case.
BIC lighters, was going to say “probably” but the reality is, CERTAINLY better than money in the bank
A question for you, Bill: Didn’t Keynes propose the theory that when production slowed or was not being moved at the consumer level, the Government was to start buying all kinds of things, by increasing the money supply, to keep people working and getting paid so they could buy things? Isn’t this one of those times when they should act?
I’ll present it to you to describe the problem with this theory now that we are in a “global” economy where people who produce don’t live here, and are reluctant to accept “printed pieces of paper” in payment- what happens next?
yes, and wars are what have been used as “stimulus”.
If you have not already done it you likely will be doing it soon.
Doing what you say.
RUNNING FOR COVER.
Banks all over the world are putting in Capital Controls.
Governments are taking steps to control how much money we have, where we are storing that money.
Soon you will not be able to move any amount of money without them knowing about it.
With that will come the ability for governments to seize any monies anywhere they see fit.
All they need to do is challenge your ability to prove that this money was not obtained by illegal means.
From there we are just a stone throw away from becoming slaves to our money.
Do we not have enough mental illness in the world that Governments and bankers must find more ways to drive us off the deep end.
I have to say that those people living off the grid in Alaska might have it made in the shade soon.
Is gold and silver the answer……
Frankly, the only real answer is to limit your exposure to Fiat..
If you fail to do this and also fail to see some value to own physical you will loose.
When the masses finally clue into the realities facing us it will be too late because we are seeing things progressing very quickly now.
One morning possibly soon we are going to awake into a nightmare.
no Mile, ALREADY you cannot move any amount without them knowing about it. Do not try to hide anything.
Thank You Bill..
I understand that they already have the ability to know everything.
Nothing to hide here.
The only thing that has been hidden is the truth from society by those that write and control the rules.
But as we have said here over and over this is the end game but it is unfortunate that most are not even aware that we have passed through HALF TIME.
The world is about to get real ugly and we have only ourselves to blame for allowing it to happen.
“we” are not to blame, this was foisted on us.
Thanks again for an uplifting but not over the top all inclusive “rocket trip story” for gold & silver.
Maybe G&S won’t have industrial value (if there is little industry)
Maybe G&S won’t have monetary value if currency goes digital and most simply think of them as some color that once was in the Pre-Facist Crayola Box.
But without a doubt they will always be a reminder to some of a pre-synthetic world, and that will be priceless in another way.
Best of luck to you and all here that may have dreams with meaning!!
…and best of luck to you Po Po. You should sell all of your metals now, before they “default”?
No thanks, mine can’t default, won’t ever be worthless to me!!!!
Want to sell the part that you might have any doubts about??? (have to be cheap, ha ha)
Maybe a misunderstanding, I wasn’t talking about the money value.
Thanks Bill. I just read this morning that central banks are expressing interest in joining LBMA. Rush Crowell wrote that “the role of the central banks in the bullion market may preclude ‘total’ transparency, at least at public level,”
What are your thoughts on this?
“transparency”? This would be like using GoPro during a burglary.
Well, precisely at 08:34 AM eastern (right on time) some entity with DEEP pockets dumped almost $600 million of gold futures on the market, slamming the paper gold price down.
Same old. Same old. Of course the silver price was not left out and it’s price was slammed down also. Almost every morning (you can set your iWatch by it) you see the same illegal, criminal, behavior, that the regulators just ignore.
I suppose I shouldn’t complain too loudly, since their actions provide a physical gold and silver price that is a bargain! You may be assured that the Chinese and Indian gold markets fully recognize this and are taking full advantage of this bargain basement price for both gold and silver. Keep stacking.
it will all change like a light switch.
And it’s amazing the coincidence that as the dollar fell off the cliff, gold went down with it. Say it ain’t so Joe, uh, I mean Janet.
Bill, can someone find that light switch and kindly flip it….like right now.
if you know what the endgame is, patience.
Did you see when the negative construction number came out at 10:00am EST and gold violently went up $5-6 in seconds and the PPT put their short algos on and knocked the gold price down below $1173. They are painting the charts as usual and keeping below $1173 is to keep forcing it down.
They are intent on keeping it below $1173. These peeps are something else.
The best part and the worst part will be the same.
When the switch does get tripped we will feel vindication, with that vindication will come chaos for many and that will be the bad part.
Either way we need to bring some logic and repair to those we have harmed in an effort to stay on top.
If you have not watched this you need to:
Good documentary film.
Just curious if you have seen Richard Duncan’s YouTube video titled ‘QE is Debt Cancellation?’ His logic seems flawed, basically saying everything can go on like this forever.
have not seen it, if he is saying QE will make currencies worthless and thus the debt worthless then he is correct to a large extent.
Duncan sums up his contentions as:
QE is debt cancellation
It’s free money
We should take advantage of it
We would be very foolish not to
Basically, keep going like we are and don’t worry. Nothing is going to collapse. Ever.
keeps going until it doesn’t.
I am new to your writing and am playing catch up to many of your readers. I spent several hours reading the last three months of postings. Than you for writing in terms the “average investor” can understand. I have several questions.
1. Who do you recommend I speak with about including gold in an IRA?
2. Many of your columns caution about having any money in the banks. Mine is in a regional bank with a very low Texas Ratio ( I recently learned about that measure). Do you think even that low ratio is insufficient to prevent its collapse? IF even this bank isn’t safe, where do you hold emergency funds…or is that a moot point?
3. I’m confused when people say to be in “cash”. I read an article that Mohamed El- Erian has most of his funds in “cash”. Where do you hold “cash”?
Thank you for your guidance.
welcome to the blog! call one of the brokers at Miles Franklin, they can help you. “Cash” is actual dollar bills as far as I am concerned and will “spend” for a short time in private transactions. If the entire banking system closes, you will not have access to your “cash” even in a regional bank.
IT’S BEAUTIFUL IF YOU LOOK UNDER THE MATTRESS.