The Miles Franklin Blog’s primary goal is to encourage long-term thinking, regarding the “big picture” of what’s going on in the global economy and financial markets. However, as we are currently amidst one of the most chaotic trading environments of our lifetimes – certainly, since the 2008-09 crisis – it’s difficult to avoid discussion of what’s going on each trading day. I do my best to tackle both areas – as readers’ need to have a few of market movements to create a comprehensive “mosaic” of “what’s going on.” Moreover, given the recent desperation of “manipulation operatives” mandated with “stabilizing” markets – and more importantly, maintaining the cancerous, fiat currency-dominated status quo – it’s particularly relevant to observe how “successful” their efforts have been. Or lately, haven’t.
Before I get to the past few days’ (largely unsuccessful) efforts to delay the “unstoppable tsunami of reality” with all-out, unabashed support of “favored” markets like stocks; and equally blatant efforts to suppress “public enemies” like gold and silver; I’m going to prove, unequivocally, what we have said all along. First, of the reality of exploding PM demand; and second, that “deflation” has nothing to do with monetary commodities like gold and silver – other than in fraudulent paper markets, where the government’s “bullion bank” henchman have naked shorted so relentlessly, for so long, physical demand is hitting new record highs; whilst inventories are vanishing; and production, on the verge of an historic, catastrophic collapse.
To wit, as the PPT was rescuing the “Dow Jones Propaganda Average” with a 500 point rally in the last three hours of trading – just as it was about to turn negative, and strike the fear of god into global markets – the CRB Commodity Index was simultaneously plunging to a 40-year low – at which, it had only traded for a few brief days in 9/11’s wake. Good thing the Chinese finally figured out the “Hail Mary” algorithm as well; as following a two-month, 43% plunge – including 26% in the last week – China’s “national team” was on the verge of failing to capitalized on the U.S. PPT’s laughably blatant efforts. And then, Voila! A 6% surge in just over an hour’s time. Hallelujah!
Of course, the above manipulations simply demonstrate short-term noise – in a long-term battle that “Economic Mother Nature” will inevitably win. And frankly, in essentially all but “last to go” markets like the Dow and paper gold and silver, she already has. As for said “long-term,” take a look at the CRB Index’s plunge from its all-time high of 435 in May 2008, to yesterday’s close of 185, down an astounding 57% in just seven years’ time. Next, take a look at the chart of the sum total of silver demand from the three largest. transparently publicized silver demand sources; i.e., U.S. Mint Silver Eagles, Royal Canadian Mint Silver Maples, and Indian Imports. As you can see, not only has it grown at a 20% compound rate whilst the CRB Index was imploding; but this year, appears likely to grow at nearly twice the 2008-2014 rate.
Moreover, since India’s psychotic, inflation-loving government – since deposed by an equally evil group of financial “wolves in sheep’s clothing” – raised silver (and gold) import tariffs in response to the Rupee hitting an all-time low of 66/dollar in August 2013, from 2% to today’s 10%, a massive black market has developed. Thus, even the below depiction of surging official imports – anticipated to rise nearly 40% in 2015 -understates what is likely actually entering the country. And thus, to those that claim – some fraudulently; some due to reliance on propaganda; and some, plain old ignorance – that silver is down due to “deflation” – we rest our case. And oh yeah, guess where the Rupee is today, following two years of supposedly “deficit-reducing” gold and silver import tariffs? Yep, 66/dollar, back at its all-time low!
And, while still on the topic of silver, the Miles Franklin Blog has another pleasant surprise in store for you – as tonight, I plan to tape another “special podcast” with our President and co-Founder, Andy Schectman; to give you a detailed update – replete with historical background – of today’s ultra-tight physical silver market.
Back to “financial markets,” how fitting is it that the blockbuster news of China selling $106 billion of U.S. Treasuries – or 8% of their total holdings – in the past two weeks was confirmed today, as the vile, taxpayer-funded Jackson Hole Central Bank symposium commenced? At which, the comically moronic debate as to whether the Fed should raise rates by a measly eighth of a percent rages on. To wit, demonstrating just how clueless Central banks are, Bloomberg claims the PBOC needs to “raise dollars to support the Yuan, in the wake of a shock devaluation two weeks ago.” Wait, let me get this straight. The PBOC is trying to devalue the Yuan, but are so concerned that it will fall, they need to raise dollars to support it? And by the way, since the Yuan/dollar rate is fixed by the PBOC, why would they need to “support” the Yuan in any circumstance?
Unless, of course, they’re implicitly referring to the “offshore” Yuan – a/k/a, the “non-deliverable forward” market, where investors traders can speculate on the Yuan’s future, without actually being able to take delivery. You know, like the COMEX gold and silver markets – where investors traders government henchman can not only bid on metal they have no intention of taking delivery of, but naked short “sell” metal that doesn’t exist, on massive amounts of margin. In other words, the Chinese government is more fearful of what the “paper” market for non-deliverable Yuan forecasts, than the actual peg they determine! And thus, believe it necessary to build as much “cash” as necessary to manipulate this paper market, to the end of creating a false perception of control. Yes, my friends, this is what Central bankers do with their time – and your money.
Again, let’s get this straight. Said manipulators – in the U.S., led by the President’s Working Group on Capital Markets (stocks); the Fed (bonds); and the Exchange Stabilization Fund – i.e., the “Cartel” (currencies and gold) – think there’s a chance they can raise rates when commodities are hitting all-time lows; the weighted average dollar index an all-time high; and, amidst the weakest global economic conditions in generations, the world’s second largest Treasury holder actively selling bonds? And better yet, they think they can reverse the massive, hyper-deflationary unwind of global equity, credit, and commodity markets by simply “tripling up” on money printing and market manipulating algorithms, without alerting the whole world to what they’re doing? Let alone, without formally announcing their scheme – i.e., QE4 – as the PBOC, BOJ, ECB, SNB, and countless others have done?
As for Precious Metals, the most consistent of all the Cartel’s long-term “rules,” is its insistence on violently suppressing Precious Metal prices when dramatic, PM-bullish events occur – so as to prevent them from being recognized as the true safe haven assets they are, and always have been. This year alone, we have seen this blatantly obvious stratagem at least a half dozen times (such as intermittent stock, commodity, and currency collapses; the breaking of the Franc/Euro peg; and the exploding Greek crisis, to name a few) – with its “tell” being that when first announced, gold and silver’s initial reactions were to rise.
In extremely terrifying situations – like this week’s stock collapse, it sometimes takes a day or two for the Cartel to “gain control”; as it did this time, after gold rose during Friday’s 530 point Dow plunge, and barely declined (despite every Cartel naked shorting algorithm imaginable) during Monday’s 590 point bloodbath. As always, they went into “Cartel hyper-drive” to make up for lost time on Tuesday and Wednesday. And thus, by Wednesday afternoon, with the Dow not far from its lows; European and Asian stocks in freefall; and commodity indices at 40-year lows; the Cartel “miraculously” managed to take gold down by nearly $50/oz from its highs, and silver $1.50/oz. Let alone, on what “coincidentally” turned out to be a COMEX options expiration day; during which, as long-time readers know well, the Cartel attacks with 100% certainty.
Of course, such historic manipulations guarantee the manipulators’ inevitable demise, by creating massive, unsustainable economic and financial “deformations.” In Precious Metals, the rapidly tightening – and thus, extremely vulnerable to short squeezes – silver market appears highly likely to experience a 2008-style shortage situation, if prices don’t rise significantly from today’s ridiculous prices, and quickly. To wit, the HUI mining index essentially closed at a 13-year low yesterday (0.5 points above the actual low, set earlier this month), with the average miner down a whopping 6%; and many, by much more. Care of 15 years of price suppression, the mining industry is now a “dead man walking”; and at current prices, I fully expect the year-end (or sooner) reserve revisions to catalyze countless bankruptcies, starting with the entire South African mining industry; which, ironically, will catalyze inflationary chaos, as the Rand is already at an all-time low – crashing nearly daily, in freefall mode. And LOL, South Africa is one of the “BRICS” that was supposed to lead the global economy into the 21st century.
For once, I feel a bit speechless, as I watch the combined “manipulative operatives” attempt to kick the can one more day. That said, such feelings typically don’t last too long; and often, as today, something “new and exciting” emerges before finish editing. To wit, demonstrating just how clueless the PBOC is – and equally ominous, how desperate the entire world is for zero interest rates to infinity; a top PBOC official just claimed China’s Yuan devaluation was due solely to the Fed’s supposed plans to raise rates, even if by a mere eighth of a percentage point.
Moreover, it “altruistically” claims Fed rate hikes will injure “emerging market” nations further – when in fact, the only “emerging market nation” it is concerned with is itself! In other words, following up on what I wrote above, the PBOC wants to gradually weaken the Yuan, but is fearful a (mere one-eighth percent) Fed Funds rate increase will cause the aforementioned “offshore Yuan” to crash. I mean, I thought the Twilight Zone analogy was relevant yesterday; but that doesn’t hold a candle to this version of Central banking lunacy!
- CHINA CENTRAL BANK OFFICIAL SAYS CAN’T BLAME YUAN DEVALUATION FOR GLOBAL MARKET TURMOIL
- U.S. FEDERAL RESERVE SHOULD DELAY RATE HIKE, COULD PUSH SOME EMERGING MARKETS INTO CRISIS – CHINA OFFICIAL
Oh well, that’s enough for now. I need to rest up, and prepare for tonight’s special podcast with Andy Schectman. That is, if he can find a second to breathe, in between manic calls from clients trying to buy silver; and to our distributors, trying to source it.