The past four years of unprecedented Precious Metals price suppression – and heck, 13 years of hitching my personal finances and professional livelihood to gold, silver, and the pursuit of truth – have taught me a lot about humanity; my own, yours, and those I never have, nor ever will, have contact with. For the most part, I am more skeptical of human nature than ever; as ignorance, denial, and at times, blatant disregard for the plight and/or well-being of others are not only prevalent, but appear to be unquestionably immutable traits. To wit, “one-percenters” like NYC money manager Barry Ritholtz – who yesterday, responded to my criticism of his latest interview by on the one hand saying he “loved my column,” but on the other intimating I am but a “monster” spouting “myths and superstitions” who needs to be professionally watched – but not heeded – is a perfect example.
Let’s face it, some people are lucky enough to be charged with investing other people’s money in markets which, whether they know it or not (usually not), the government spends all day supporting, both overtly and covertly. And others, like us – at least for the time being; are on the “other side of the trade,” even if said “trade” is nothing more than blatant government price suppression. Few people listen to the former these days (like Ritholtz) – as evidenced by plummeting MSM readership, highlighted by CNBC’s all-time lowest viewership amidst, for the most part, record high stock prices. Conversely, whilst more and more people listen to “alternative media” like the Miles Franklin Blog each day, the mocking of such “Cassandra’s” from those incented to maintain a virulent, cancerous status quo becomes more vicious, condescending, and propaganda-laced with each passing day.
That said, nothing lasts forever – except death and taxes; and even manipulated stock prices – irrespective of the power of government printing presses, algorithms, and derivatives – are no exception. China’s ongoing, expanding equity crash – maniacal, overt PBOC support notwithstanding – is the current poster child of such failure; but that said, the same phenomenon is spreading globally. Geez, this morning alone, the National Bank of Greece – which I still consider the current “world’s most important stock,” is down a breathtaking 13% to a new all-time low, atop Greece’s hideous PMI plunge from 46.9 in June to 30.2 in July, portending an all too real possibility of a Europe-destroying “Grexit” in the very near-term, perhaps by summer’s end.
As for the United States of “Recovery”; where incredibly, Atlanta Fed President Dennis Lockhardt was trotted out yesterday to yet again misdirect with hints of a “possible September rate hike” – just hours after an historic factory order plunge (excluding government military spending, of course) was reported – only a blatant liar or establishment apologist can continue to pretend equity markets aren’t in “grave danger” of significant declines. I mean geez, Exxon Mobil just broke a 28-year uptrend; Apple plunged below its 200 DMA for the first time in two years; and even the relentlessly PPT-supported S&P 500 is inexorably challenging its own “key technical support levels.”
Of course, plenty of such “liars” are around to cheer lead the government’s manipulative efforts to their bitter end; which certainly on a real basis, and perhaps nominally as well, must inevitably arrive. To wit, none other than Jim Cramer, who may well be responsible for more retail equity losses than anyone in history – that is, when he wasn’t brazenly manipulating markets – is now saying that…drum roll please…what’s going on in the collapsing Greek, Chinese, and worldwide oil markets is great news for equity bulls! That said, even “government henchmen” like Goldman Sachs are starting to overtly question the long propagandized “recovery” – to the point that self-serving drivel like Ritholtz’ “the U.S. economy is improving, as are those of many other countries” is becoming anathema at a rate only “Precious Metal pariahs” like us can appreciate.
Like in Japan, for instance; where, 20-year equity highs notwithstanding – nice job, Bank of Japan! – “Abenomics” has become so despised, the typically passive Japanese citizenry is calling for Shinzo Abe’s resignation. Barely two years after Abe called for the Yen’s supply to be doubled – a plan, we might add, that was “turbo-charged” last Fall – it was reported that Japanese real wages have fallen for…drum roll please…24 straight month, with July’s plunge representing the largest monthly decline in six years. And thus, on a day where the Yen again flirts with decisively breaching a 12-year low – amidst a collapsing real economy; history’s largest debt load; and the world’s worst “demographic hell“; we may well be on the cusp of the commencement of the “real Yen bomb” I first suggested in May 2013; i.e., an all-out currency collapse that will take the Yen back to its pre-“industrial miracle” levels of the mid-1970s, ushering in the first instance of “first world” hyperinflation of the 21st century.
Of course, hyperinflation has already arrived in countless “third world” nations already – and plenty “second worlders” as well; as care of the maniacal, Western led, post-2008 money printing orgy – particularly since Central banks’ cumulative “point of no return” in mid-2011 – the average currency has plunged by more than 50% against the liquidity vacuum-supported dollar; and more than 90% for the four “BRICS” currencies not pegged to said dollar. As long-time readers know, I believe it’s just a matter of time before China’s takes the “final currency war” nuclear by de-pegging the Yuan to “save” its manufacturing sector; and likely, is forced to admit its massive gold holdings in the subsequent currency carnage. Which, by the way, is quite the apropos comment this morning – as last night, the IMF said its review of Yuan “SDR inclusion” will be delayed another year. To that end, I alone said – all the way back in May, when “SDR basket hype” reached a fever pitch – there’s not a chance in hell China would announce the true amount of its gold holdings until forced by the markets (i.e., amidst the aforementioned, inevitable Yuan plunge). And lo and behold, the aforementioned “delay” in the Yuan’s meaningless “SDR basket” review – which frankly, is unlikely to ever be consummated.
But I digress from today’s topic – though “all of the above” clearly falls under the broad categorization of “life being hard.” Which is, that on a daily basis, no matter where one looks, it’s impossible to ignore the trials and tribulations around us. Part of this increasingly obvious realization simply stems from maturity – as the older we get, the more we realize the idealism of our youth is inevitably usurped by the stark reality of a difficult world – personally, professionally, and otherwise. And never more so than during difficult economic times, as NOTHING brings out man’s worst more than recessions; let alone, historic, unprecedented recessions like today’s – in which four decades of unfettered money printing have fostered a record cost of living; unfathomably high, patently unpayable debts; plunging fiat currencies; and an economic “deformation” so unwieldy, it is likely to yield collapsing global commodity prices; employment rates (see this morning’s horrific ADP report); and government stability for years – if not decades – to come. Not to mention, the aforementioned, equally virulent financial market deformation that promises – no, guarantees – horrific losses in real terms, be they via hyperinflation or deflationary crash – for as far as the eye can see.
Like him or not – and long-time readers know I decidedly don’t -Martin Armstrong and I whole-heartedly agree that the global economic collapse, commodity carnage, and subsequent political and social instability, will dramatically accelerate in the coming months. Last night, he said “welcome to the age of deflation – where whatever can go wrong, will go wrong for all governments, everywhere. This is the BIG BANG – the government funding crisis on a global scale.” He was specifically referring to the unmitigated carnage he expected in the global energy sector, but clearly believes, as I do, that the same ugliness will occur everywhere, in every imaginable sector.
What rang so powerfully about this statement – and ultimately, catalyzed this long-time “on hold” article topic – was the concept that “whatever can go wrong, will.” This certainly was the case in 2008; and unquestionably is the case now. Only this time, with the economy significantly worse than 2008 – as exemplified by the CRB Commodity Index falling below 2008’s lows this week; global debt loads dramatically higher; foreign exchange rates dramatically lower; and Central bank monetary ammunition – and with it, credibility – for all intents and purposes spent, there will be no material “respite” from the inevitable collapse of history’s largest, broadest fiat Ponzi scheme.
Of course, where Armstrong and the Miles Franklin Blog part ways is on the subject of Precious Metals’ role during “deflation” – which in and of itself is the world’s most classic misnomer; as accelerating economic collapse must yield exponentially larger inflation of the worldwide money supply, as our friends in Japan have demonstrated in spades. Gold and silver, unlike other asset classes, have been the only substances to display all of “money’s” characteristics throughout time – which is why they have benefited from all manner of crisis scenarios, from Great Depression-like “deflation” (which could never occur in a fiat currency regime) to Weimar-style (or heck, modern Venezuela-style) hyperinflation. And of course, the “pink elephant” in the room – that for some reason, not only the Barry Ritholtzes of the world deny, but the Martin Armstrong’s – is that markets have never been more rigged; and none more so than the ones that have historically been the most rigged, gold and silver; i.e., the Central banks’ cumulative “enemies #1 and #2.”
Last week, I wrote that the “only difference between now and late 2008” is said market rigging; which, as noted above, is badly flagging on all fronts. And nowhere more so than the physical Precious Metal markets – which, with each passing day, are separating more and more from the fraudulent paper markets the government currently controls. Yesterday, I wrote of “rapidly mounting evidence of the inevitable precious metals shortage“; and today, I have two more tidbits of “forensic evidence” to add to history’s most patently winnable case. I.e., that following July’s record U.S. Mint silver Eagle sales – achieved with sales suspended for two of the month’s four weeks; August has started with a flourish, with a whopping 1.1 million silver Eagle ounces sold on the first two days alone! Putting this in perspective, 2014’s record annual silver Eagle sales were just 44.1 million; and thus, the 1.1 million ounces sold in August’s first two days project to an annual rate of roughly 275 million ounces! Throw in the fact that Shanghai Exchange silver inventories have been plummeting anew – as have the world’s gold inventories, on all imaginable fronts – and you can see how the “something’s gotta give” moment is rapidly morphing from inevitable to imminent.
On that note, I cannot wait to see Barrick’s earnings report tonight – to see if its management – and accountants – will be able to “hang on” to the illusion of its massively overstated balance sheet much longer. For the record, I think they’ll “keep it together” for now; but given that PM prices didn’t start really plunging until July 19th’s “Sunday Night Massacre II,” my guess is PM earnings reports won’t get really ugly until the third quarter – and at the latest, when year-end reserve recalculations are mandated.
Well, I guess that’s enough for today. Clearly, “life is hard” is a theme pervading all stratum of our lives – in both the Secular States of America and the “rest of the world.” And not just economically, but politically, socially, and on the most personal of bases. Yes, the Miles Franklin Blog’s “raison d’etre” is educating of the financial aspect of such difficulties; but on a more interpersonal basis, we urge you to be aware of the strains humanity is feeling on all levels, and prepare to deal with them accordingly. To that end, nothing is more valuable than friends, family, and colleagues; and building a strong support structure around them may well be the most valuable means of “protecting yourself” imaginable.