It’s early Wednesday morning, with markets “quiet” ahead of what, in my very strong view will be, per the title of yesterday’s article, the “Fed’s last rate hike.” (ACTUALLY, THEY’RE NO LONGER “QUIET” AFTER THE HORRIFIC RETAIL SALES AND CPI PRINTS THAT JUST CAME OUT – DESCRIBED AT THE END OF THIS ARTICLE – JUST BEFORE I HIT SEND).
The reasons I believe so are explained in said article, so I’m not going to reiterate them here. Then again, it doesn’t take an “expert” to realize raising rates into an environment of “dotcom valuations in a Great Depression Era” is as suicidal. Not to mention, hubristic; as the only reason the Fed is crazy enough to believe such a counter-intuitive action could be pulled off without reeking massive economic – and potentially, financial market – destruction, is the Fed’s misplaced belief it can “counter” such actions by perpetually controlling financial markets, against the desires of millions of market participants, and history’s most egregious mis-valuations. Trust me, people are starting to understand this – as frankly, I am hard-pressed to remember a day, outside of the post-BrExit aftermath – when so many people inquired about immediate gold and silver purchases; and even platinum, per Monday’s “Platinum, the forgotten Precious Metal.”
Nevertheless, despite the past week’s relentless Cartel attacks; in my view, to desperately defend gold and silvers’ 5½ year downtrend lines – of $1,274/oz for gold, and $16.30/oz for silver; and 200-week moving averages – of $1,240/oz for gold, and $17.75/oz for silver; and “set the tone” for today’s FOMC meeting – the very strong likelihood, for anyone with an objective view, is be that today will represent a key inflection point in U.S. monetary policy history, given that it’s all but impossible for the Fed to continue to purport “all’s well,” when nearly all economic data is plunging; the fiscal stimulus and tax cuts it anticipated aren’t happening; and financial valuations are at all-time highs.
A record amount of Fund Managers believe equity valuations are overvalued – more so, than even the peak of the late 1990s tech bubble! Throw in the fact that market-based interest rates are near 52-week lows, whilst the yield curve is dramatically flattening, and the case for further rate hikes is essentially zero. Which, I might add, is what the money markets are predicting – giving just 23% odds of a September rate hike, and 38% in December.
By December, I’ll be shocked if negative GDP numbers have not yet been printed; or at the least, that the realization of imminent recession won’t have become mainstream. Frankly, the amount of things that can “go wrong” by then has never been higher – politically, economically, and financial market-wise; from collapsing economies and currencies, to dramatic political and/or geopolitical events; to draconian, fiat-currency destroying decrees, as I predicted in December would be a major 2017 theme. Or perhaps collapsing oil prices, as validated by yesterday’s “death cross” technical breakdown – preceding last night’s crude oil plunge, following another horrific inventory report. You know, the polar opposite of what’s occurring in Precious Metals, and will continue to do so ad infinitum; i.e., plunging supply, and surging demand.
In yesterday’s article, I discussed the economic reasons why today’s rate hike, which is expected with 95% certainty, will be the Fed’s last. However, there are equally powerful political reasons as well – starting with the fact that within the next 12-18 months, Donald Trump will not only have the ability to replace Janet Yellen and Stanley Fischer as Fed Chairman and Vice-Chairman when their respective terms expire, but several other FOMC positions.
During Trump’s Presidential campaign – as is the case with all political hopefuls – he “fibbed” about his true beliefs and intentions. Such as, that the pre-Election unemployment rate was grossly understated – and the NFP jobs report a “big joke”; which he now claims to have fallen to a ten-year low due to his own policies, despite no actual policy having been enacted. Or that he’d “drain the swamp” – before appointing a cabinet of sundry billionaires and crony capitalists; not to mention, former Goldman Sachs employees as Secretary of Treasury, head of the National Economic Council, and head of the SEC. Heck, National Economic Council head Gary Cohn, who mere months ago was Goldman Sachs’ Chief Operating Officer, is apparently Trump’s top choice to be the next Fed Chairman!
And last but not least, that the Federal Reserve had fostered a “big, fat, juicy bubble” – which, after the maniacal, PPT-orchestrated post-Election stock rally, based on a fraudulent meme (“Trump-flation”) that has decidedly NOT occurred, he now claims to be entirely due to his Presidential “success.” This, despite 60% of Americans now “disapproving” of Trump’s actions – not that any other outcome was possible, given the historic economic mess he inherited, and political conflagration his election ignited.
However, the one personal belief I knew he’d be true to, is his personal need for ultra-low interest rates. Not that everyone in the status-quo-maintaining government and banking system isn’t addicted to historically low rates already, given that history’s largest, most destructive Ponzi scheme requires accelerating monetization and historically low rates – in Europe and Japan’s case, below zero – to be maintained. However, as discussed in my “turning on Trump” Audioblog two days after the election -and no, I am not “against” Trump, as discussed here; NO ONE in America is more levered to ultra-low interest rates, given that Trump’s personal fortune is largely tied up largely in heavily levered, high-end, extremely illiquid – in many cases, dramatically “bubble-ized” – real estate properties; not to mention, the dotcom-valued stock market. I mean, this is the man who proudly calls himself the “King of Debt.”
Thus, I found it very interesting that mere weeks after Inauguration Day, after specifically vilifying Janet Yellen for her bubble-creating policies for the past year, he suddenly claimed she was “doing a good job” – and thus, would be considered for re-appointment when her term expires early next year. And even more so, that just days ago – ahead of what may be an historically dovish FOMC policy statement – Trump personally met with Whirlybird Janet, to “tell” her (wink, wink) he is confident she is a “low-interest rate person,” just like himself.
Frankly, I think this “meeting” has as powerful political implications as any Trump has had thus far; which of course, couldn’t be more bearish for the dollar’s outlook, nor bullish for time-tested stores of value like physical gold, silver, and platinum. Not to mention, Bitcoin, per this amazing podcast by the great Andreas Antonopoulos – of how crypto-currency will usurp the destructive, archaic fiat monetary regime, whilst gold and silver – as always – retain their timeless roles as unparalleled stores of value.
In just a few hours, we’ll have our answer – as to how much more risk the Fed is willing to take, in attempting to promulgate a catastrophic policy of raising interest rates further, when the global economy and financial markets could collapse any day, under the sheer weight of the historically ugly current situation, and future outlook.
My guess, with very strong confidence, is that the Fed’s “low interest rate people” are at the end of their four-year lie about future policy tightening – which to date, has not reduced the Fed’s $4.5 trillion balance sheet one penny, and only “raised” interest rates from the ZERO level they’d been at since 2008, to the piddling, statistically insignificant level of 1%. Which, when the smoke clears, may well be the biggest clarion call for Precious Metal investment in years – at a time when gold and silvers’ supply/demand balances have never been tighter, as the aforementioned long-term resistance levels represented by their 200-week moving averages and 5½ year downtrend lines are on the verge of being decidedly breached to the upside.
To that end, if you’re considering the purchase and/or storage of Precious Metals, we hope you’ll give us a call at 800-822-8080, and give us a chance to earn your business.
P.S. WOW, WOW, WOW! As I’m about to hit send, May retail sales were reported to be negative 0.3%, versus the consensus estimate of positive 0.1% – whilst the Consumer Price Index was reported to be negative 0.1%, compared to the consensus estimate of zero. In other words, the most dovish pre-FOMC data imaginable – which frankly, doubled everything I said above, in terms of my new policy statement “expectations.”