As it’s still 1:30 AM MST, I’ll reserve judgement on the title, and principal theme, of today’s article until after the June NFP jobs report five hours from now. Given yesterday’s miserable June ADP employment report – featuring a big “miss” versus expectations, ZERO manufacturing job growth, and a significant downward revision of May’s numbers; coupled with the nearly across-the-board declines in June economic “hard data” to date, there’s a good chance the June NFP report will be disappointing, too. Even if, generally speaking, the correlation between these two, putting it mildly, “statistically flawed” reports tends to be low.
If it is indeed weak – according to their rigged statistics, that is; it’s going to be very difficult for the Fed, which markets already give just an 18% chance of raising rates in September, to continue purporting “economic strength” and “inflation fears” – particularly now that their own big mouths have catalyzed what could be the start of a significant market correction. To that end, Jim Rickards boldly predicted, yesterday, that by then, Whirlybird Janet will have already experienced the “ding dong, the Fed is dead” moment that must inevitably arrive; when she is forced – not by declining economic data, which she’s been ignoring all year – but plunging financial markets, against the best efforts of the Fed’s “open market operations; to admit the economy is declining, and concede its “tightening” cycle is over after 21 months – of only raising rates to 1%, and reducing its $4.5 trillion balance sheet by nary a penny.
“The Fed’s latest failure will cause policy to shift to ease before September in the form of forward guidance of no further rate hikes this year. Just one more failure in a long list. It’s time to load up on gold and cash. The Fed may be the last to learn about deflation, but when they do, the policy response could be instantaneous and markets could suffer whiplash.”
Typically, per the below chart by the great Dmitri Speck, gold’s historic seasonal strength starts now. However, since the infamous “alternative currencies destruction” Cartel raid of April 2013 – one day after Obama’s “closed door meeting” with the top too big to fail bank CEOs – this pattern has been reversed. In other words, instead of bottoming mid-year and topping at year-end, Precious Metals have bottomed at year-end, and topped mid-year. I wrote of this in December’s “gold bottoming in late December for the second straight year” – in which, I espoused that the principal reason was the Cartel’s recent, sinister tactic of demoralizing money managers holding large “paper PM investment” positions, in the hope they will “give up” on the sector the following year.
Unfortunately for them, prices have surged in early January every year since – followed by the Cartel viciously attacking at mid-year, as they have again this year. Ironically, commencing with the Fed’s “hawkish” FOMC statement three weeks ago; when, despite massively negative economic data – including a horrific retail sales report the very day of the statement – they continued to pretend “all’s well”; as if, being “more hawkish than expected” is bad for Precious Metals in the first place; particularly when the Fed’s “worst case scenario” involves a single quarter-point rate hike in December – and potentially the very, very tentative beginning of unwinding its balance sheet. Not to mention, its “most likely case”; i.e., to continue waffling, under the weight of inexorably weakening economic data, that will certainly not be helped by the rising interest rates – and falling stock and commodity prices – that their reckless “hawkish” chatter catalyzed.
Either way, if the Cartel attempts to push PM prices down much further, they will unquestionably be supported by their “ultimate downside protection”; i.e., the fact that the PM mining industry is an ongoing state of collapse, which will unquestionably accelerate if prices continue to trade below the industry’s all-in cost of production; particularly gold, where reserves have been plunging for years, and production is forecast to fall more than 20% by the end of the decade. A decade, I might add, in which global money printing must itself accelerate, now that we’re in the terminal stage of history’s largest, most destructive fiat Ponzi scheme.
That said, for all the hype about said “hawkishness” – utilized expertly by the Cartel to create FUD (Fear, Uncertainty, and Doubt) within the PM community, particularly following massive, blitzkrieg paper raids; the benchmark 10-year Treasury yield has only risen from its post-Election-Day low of 2.12% – registered the day before the June FOMC meeting level; to this morning’s 2.38% – which is still below the 2.50% top I predicted back in January, under the premise that anything higher would destroy what’s left of the global economy. At the time I made that prediction, the 10-year Treasury yield was also 2.38% – and since that time, economic data has plunged; “Trump-flation” died; and until three weeks ago, gold had surged from $1,180/oz to $1,295/oz; and silver, from $16.60/oz to nearly $18.00/oz.
Which brings us to today; when the financial markets are finally showing the first signs of fear; particularly commodities like crude oil; which, with few exceptions, are screaming recession as loudly as possible. Yet, in response to the Fed’s lunatic “hawkish” chatter, global bond yields have surged to 52-week highs; to the point that “competing” Central banks are starting to panic – like the Bank of Japan, which last night announced it would purchase unlimited JGB’s, or Japanese Government Bonds, at a 0.11% yield; i.e, just above the 0.10% “line in the sand” it established late last year. As God forbid, it briefly traded at 0.105% yesterday, before being pushed back below 0.10% by last night’s BOJ’s desperate, Yen-destroying announcement.
Anyhow, what is so intriguing about the coming day’s events is that last night – at just about the time the BOJ was preparing its hyperinflationary monetary actions, the Cartel unleashed a massive blitzkrieg attack; principally on silver, amidst one of the most illiquid times of the trading day, with no other markets budging from yesterday’s New York closing levels. To wit, in a move eerily reminiscent of May 2011’s “Sunday Night Paper Silver Massacre” (see below), they catalyzed a 10% silver plunge in one minute – by dumping 50 million ounces worth of paper silver on the market, with the sole goal of smashing prices. Prices recovered most of those losses immediately; but were capped by the 869th “2:15 AM” attack of the past 991 trading days when they attempted to go back into the black.
Putting this into perspective, the COMEX’s entire available-for-sale physical silver inventory is just 38 million ounces. Quite intriguing, given COMEX “commercials” have supposedly been covering their (naked) shorts en masse in recent weeks; and as blatantly illegal as anything I’ve ever seen. And quite enticing from an investment perspective – as not only is the silver/gold ratio hovering near an all-time low; amidst the aforementioned, historically PiMBEEB fundamental backdrop; and extreme “oversold” technical readings. As, in an environment where – as the Bank of Japan showed us last night – Central bank money printing is on the verge of going parabolic, silver, like gold, care of unprecedented Cartel suppression, is trading its lowest-ever inflation-adjusted price. Consequently, the potential for a crippling physical shortage hasn’t been this high since said “alternative currency destruction” raid four years ago; which, ironically, commenced a four-year propaganda blitz regarding the “tightening” the Fed has still not materially commenced; and likely, per what I discussed above, is on the verge of ending – potentially, per Rickard’s comments, in dramatic fashion.
On that note, I’m off to the gym – to return in time to report on the NFP jobs report; any significant developments at the beginning of the G-20 meeting that might arise; and the “market” reaction to such events. Hopefully, you realize just how hard I’m working to keep you apprised of the TRUTH of what’s going on in financial markets; and that, in return, if you are considering the purchase, sale, or storage of Precious Metals, you give Miles Franklin the chance to earn your business.
Well, it’s an hour after the NFP report; which yet again, proved just how blatantly rigged – and arbitrarily calculated – U.S. financial data has become. I wish I could find the article David Stockman wrote a year or so ago, describing just how arbitrary the process of calculating the NFP “headline number” is. Of how, aside from the fictional “birth/death” model, which contributed 93% of all of the past decade’s jobs (103,000 in May) despite the fact that more small businesses have “died” than been “birthed”; it is calculated utilizing the responses of a tiny – likely, upwardly biased – sampling, before countless goal-seeking adjustments, to generate exactly the number the government wants; enabling it to project the exact message its “Ministry of Truth” fabricates.
To wit, last month, the ADP report massively beat expectations; two days before the NFP massively missed, including significantly downward revisions of the prior two months’ data. Fast forward to this week, when the ADP report massively missed expectations; one day before the NFP “headline” number – of 222,000, versus “expectations” of 170,000 – significantly beat expectations; whilst the prior two months’ data were upwardly revised. The fact that real wages rose just 0.15% versus the 0.30% “expectation”; whilst last month’s 0.20% was revised down to 0.10% is being ignored, of course; despite the fact that, even if said “jobs” were actually created – which given the freefall of “hard data” throughout the entire month, is highly unlikely; they are clearly not paying enough to support a family. Let alone, pay off historically high debt levels – or heaven forbid, save for a rainy day; or secondary education, healthcare needs, retirement, or something to leave one’s children.
The “unemployment rate” inched up from last month’s LOL, post-Financial Crisis low – but either way, Donald Trump will undoubtedly claim the “strong” jobs reports is his doing; despite the fact that not a single piece of economic legislation has been passed under his tenure (which likely, is for the best); and that one year ago he called the unemployment rate “one of the biggest hoaxes in politics.” And as for the “job” makeup, it won’t surprise you that the biggest hirers were healthcare, government, and “waiters and bartenders.” In other words, minimum wage paying “gigs” for the majority; and for the lucky few, useless, resource-draining jobs funded by the taxpaying public. So again, for the hundredth time, even if you believe the lie that is the “headline number,” the internals are as verifiably ugly as ever.
As for Precious Metals, they spent the first half hour after the report inching higher – to the point that gold was nearly positive, and silver less than a dime away. Yet, despite interest rates, the dollar, and stock futures sitting at exactly the same levels, the “Cartel Herald” showed up “out of the blue” to “cap and attack” prices; as clearly, last night’s blitzkrieg attack was a signal of what was to come, irrespective of the “jobs” numbers.
Which, as maddening as it is to endure, hasn’t changed the fact that the real economy is in recession at best, and Depression at worst. To that end, rigged jobs data won’t have a whit of impact on the real economy – unless the Fed is stupid enough to raise rates as a result; whilst brutal price smashes will have a significant, long-term impact on Precious Metal production; and consequently, prices, given that the aforementioned mine production chart has nowhere to go but down, unless significant price appreciation occurs.
Thus, I simply advise you to consider the reality of what’s around you; the reality of the political, economic, and monetary outlook; and the reality of Precious Metal prices trading at their all-time inflation adjusted lows, whilst government-supported stock prices sport “dotcom valuations in a Great Depression Era.”