It’s Monday morning, and I’m on fire; as this weekend’s, article, “down to the wire – for Greece, the global economy, and the Gold Cartel” – couldn’t be more aptly titled. For 13 years, I have watched “TPTB” accelerate the inevitable, nuclear economic implosion they “set in stone” when the gold standard was abandoned in August 1971. The resulting carnage has taken myriad forms – from the hideous, creeping inflation that has relentlessly raised the cost of living in “first world” nations with “reserve” currencies; to the implosion of currencies in where the other five billion or so people live. Wealth inequality, debt serfdom, geopolitical instability, and social unrest have increased sporadically but inexorably. And now that history’s largest Ponzi scheme is its terminal stage, the “holes in the dyke” suppressing the real carnage are not only multiplying exponentially, but leaking dramatically larger volumes.
I’ll get to today’s ALL IMPORTANT topic shortly; but suffice to say, the reason global markets are starting their “countdown to collapse” is decidedly NOT Greece; but instead, the cumulative impact of 44 years of financial, economic, and political “deformation” coming to a head. Of which Greece, which we two years ago guaranteed to collapse, in deeming it “the most likely catalyst of the Big One” – is simply serving as the spark. Or at least, it certainly looks that way, unless something equally dramatic can “usurp” it in the next two weeks.
This weekend, yet another round of “last ditch” Greek talks didn’t just fail, but produced NOTHING but angry rhetoric amongst a group of bureaucrats who couldn’t despise each other more. On one hand, “TPTB’s” European representatives insist on grinding the proud Greek culture – which they destroyed – to dust; whilst the raging Greeks essentially say “we’ll take your filthy blood money, but only if we don’t have to pay it back.” Let’s face it, there’s not a chance in hell of a credible “deal” to avoid a Greek default – and likely, Grexit” – by the June 30th termination of the current bailout scheme. And even if, miraculously, the Troika caves in, it will likely, after a brief PPT-inspired rally, cause the situation to implode of its own weight. In other words, there’s a reason PIIGS interest rates are exploding higher. Or, for that matter, why dozens of currencies are imploding, causing inflation to surge for the vast majority of global denizens – paradoxically, as the CRB Commodity Index is on the verge of breaching its spike 2008 bottom lows, during the worst financial crisis in nearly a century. And that reason is the growing realization that the “end game” has arrived.
And commodity crash it decidedly is – of which, back in October, when WTI crude was still $81/bbl, we loudly warned of the “unspeakable horrors” such an implosion would catalyze – politically, economically, and financially. I mean, it took mere months for the “oil PPT” to lose its strength; whilst the parallel “copper PPT” has all but “disbanded” – if today’s 3%+ base metal implosion is any signal. And just wait till I speak of today’s ALL IMPORTANT topic if you want to realize just how violently bullish this is for silver, by the way. And by the way, for those that still believe the U.S. economy – negative 1Q “GDP,” record low labor participation, and countless other hideous data points notwithstanding – is “recovering,” take a gander at this morning’s economic data. A Fed “rate hike” announcement this Wednesday, anyone? ROFLMAO!
To that end, let’s dot all our economic “i’s,” and cross our “t’s,” for anyone that actually believes last week’s “better than expected” retail sales number – you know, the first positive number in four months – was anything but a government fabricated outlier. To start, the principal component of such “gains” was higher gasoline prices; whilst the only other positive component – auto sales – was due to the largest ever auto inventory increase, following four miserable months of hideous sales declines. Worse yet, nearly all new “sales” were either leases – in which the auto company still owns the car; or financed by subprime loans, as the subprime auto leasing bubble hit an all-time high. And oh yeah, did we mention that the retail sales number was itself “doubly seasonally adjusted,” as we bet our lives it would be? No, the real state of retail sales is as ugly as in 2008 – “1%” luxury items notwithstanding. And trust us, the “retail Armageddon” we predicted in our “2015 predictions” is just getting started.
“Retail Armageddon – In the next few weeks, it is all but certain we will learn of not only the weakest holiday sales since the 2008 financial crisis – perhaps, equally bad – but utterly catastrophic corporate earnings across the sector. Retail sales, particularly on an inflation-adjusted level, have been as bad as I can remember in my lifetime; and now that the expanding recession meets headlong with the dramatic market share gains of online versus brick and mortar purchases – let alone, the looming specter of Obamacare – 2015 may well yield an utter explosion of retail store closures and layoffs; which, by the way, will have the ancillary consequence of collapsing commercial property values. And better yet, the resultant collapse in Federal tax revenues may well usher in, at the least active Congressional debate on, online sales taxes. If 2015 is indeed the year this occurs, it will likely have the same devastating impact on U.S. economic activity as Japan’s catastrophic sales tax increase eight months ago.”
And this, in the world’s so-called “strongest” economy; which, of course, couldn’t be further from the truth – as the only thing “strong” about America is the dollar, against lesser, “non-reserve” fiat toilet paper. Two and a half years ago, we vehemently predicted this would occur, as the “liquidity vacuum” from the biggest financial crisis in centuries would swamp said “non-reserve” currencies first, before eventually destroying the “head of the totem pole” itself, the U.S. dollar.
“Multiple currencies will experience dramatic declines relative to the dollar. The “final currency war” is clearly underway; in our view, catalyzed by the Fed’s 2012 commencement of QE3; the ECB’s 2012 announcement that if needed, it would engage in open-ended sovereign debt monetization; and the Bank of Japan’s 2013 announcement that it intends to double the money supply in an attempt to dramatically weaken the Yen. Consequently, these “big three” Central banks have exported copious amounts of inflation worldwide – as highlighted in “the most important article I’ve ever written.” “Tapering” notwithstanding, the global trend of increased money printing must continue – and eventually, accelerate – as history’s largest Ponzi scheme plays itself out. Consequently, the “race to debase” will intensify, yielding increased worldwide inflation. In time, this “cancer” will rise to the top of the totem pole, destroying the world’s “reserve currency” itself.
That said, the impact of the collapse of said Ponzi scheme has been far more dramatic overseas, as exemplified by this morning’s ugly price action in the sovereign bond markets. I.e., nations backed by “stronger” currencies are watching treasury yields plunge in the expectation of expanded QE schemes; whilst all else – ubiquitously, almost derogatorily referred to as “emerging markets” – are experiencing exploding yields as their currencies implode, with capital outflows surging to their highest levels since the 2008 financial crisis. In other words, the horrific, world destroying trends noted above are entering their parabolic stage; which, if they aren’t “ignited” by an event like a Greek default, will undoubtedly be exploded when Whirlybird inevitably admits defeat, and initiates QE4. And as for equity market; well, let’s just say this. There’s very little we at the Miles Franklin Blog and Harry Dent agree upon. But if there’s two things we do meet minds on, it’s that 1) hideous Western demographics – in the U.S., Japan, and the entire Western world – will hit an already collapsing economy like a ton of bricks; and 2) Central bank fostered equity bubbles will inevitably collapse – perhaps far sooner than most can imagine – more spectacularly than in 1929, 2000, 2008, or…ever.
And now, for today’s “main event” – on a day when global equities are crashing – with the “Dow Jones Propaganda Average‘s” decline thus far capped at exactly the PPT’s “limit down” of -1.0%; as the Cartel desperately, but thus far unsuccessfully, attempts to cap gold and silver’s gains, whilst all other commodities implode. Which is, yet another brilliant piece from the world’s best mining analyst, Steve St. Angelo of SRSRocco.com – confirming what we have said all along; i.e., not only is the PM industry at, or on the verge of, peak production – but a complete implosion that will likely spawn a massive, historic consolidation wave and capital expenditure collapse imminently, unless prices explode higher NOW.
To wit, in Steve’s latest, MUST READ article, titled “Top Primary Silver Miners Q1 2015 Results: Still Losing Money Even With Lower Costs, he demonstrates, unequivocally, how despite plunging oil prices, primary silver miners’ variable cost of production barely budged – falling to just $17.16/oz. And this, for the world’s low cost miners – as opposed to the majority of global producers, which have significantly higher costs. Let alone, the industry’s cost of long-term sustainability – which is unquestionably closer to $30/oz, given how no material discoveries have been made in decades, despite record capital expenditure levels in the 2000s decade.
Scarier still, this was the lowest the industry’s marginal cost of production has fallen, despite oil prices falling as low as $42/bbl; largely, as we have vehemently noted, due to the fact that the largest increases in mining costs are not in commodities themselves – of which, oil is the most cost sensitive; but in permitting, taxes, environmental issues, and the giant pink elephant that is the lack of qualified, young engineers and geologists in an increasingly difficult industry, care of the decades of price suppression that has not enabled PM miners to generate enough profits to attract new talent. Which, by the way, is exactly what happened in the oil industry during its 1980s and 1990s downturn – which I’m well aware of, having worked as a Wall Street energy analyst from 1995-2005, causing prices to permanently stair-step higher in the 2000s.
Worse yet, Steve’s work shows how nearly half the PM industry’s revenues emanate from by-products like lead, zinc, and copper – depicting just how dire the primary silver miners’ situation is. And this, at a time when silver industry depletion is at an all-time high, with the silver-gold production ratio having fallen to a record low of 9:1, from the multi-century average of 15:1. Alas, investor memories are quite short – as few remember that back in 2009, not only did the world’s largest miners – Rio Tinto and BHP Billiton – flirt with insolvency, but even “impervious” miners like Silver Wheaton did so as well.
And the reason, you ask? Not gold and silver price declines; recall, their prices rocketed higher at the heart of the crisis – but lead, zinc, and copper; which as I write, are in free fall. And trust me, when the “big one” hits – perhaps, NOW – the odds of these three “silver production supportive” metals’ prices plunging to their 2008 lows of…gulp…$0.45/lb, $0.50/lb, and $1.40/lb, respectively, are extremely high. At which point, the roughly two-thirds of silver production that emanates as byproduct from such mines will implode – at a time of maximum global demand, with barely any inventory -no more than two billion ounces, little of which would be for sale – to speak of.
In other words, not only are the global economy and financial markets approaching “Defcon One,” but so is the PM mining industry; and particularly silver, NO MATTER WHAT HAPPENS to other commodities’ prices. Which is why, yet again, we implore you to see “what Miles Franklin can do for you,” by simply calling us at 800-822-8080.
Impressive piece today Mr H.
I dont think there is much point in commenting to much on what you’ve written as I think you covered pretty well all the bases, bar the possible implosion of Deutsche banks derivatives book if and when the Greeks default. I remember you getting lambasted by a few people in the comments section a while back when you said you just wanted the whole thing to happen and be over with (paraphrasing)
I know exactly how you feel Andy, it’s like laying under the sword of Damocles which is actually a very fitting metaphor for the current situation.
We don’t know when the moment will arrive, all we know is it is getting closer and closer, and there is something really excruciating about it even though I know personally I’m prepared, but I just look around and know there are so many that are not, and it’s not a comfortable place to be knowing so many will not make it out of the other side of this.
Sadly, I’ve been so enraged by years of gold suppression, I actually look forward to it.
Regarding Greece, it is my understanding that Greece did not meet the criteria for membership to the EU, but Goldman Sachs falsified Greece’s balance sheet to allow them into the EU. I would think that the then leaders of Greece signed off on the Goldman Sachs falsified balance sheets.
Question: Why doesn’t the current Greece PM sue Goldman Sachs and tell the EU to recover the loan money from Goldman Sachs since Greece was snookered?
Goldman Sachs should be held accountable !!!
You are correct about everything.
Only, it wasn’t just Greece that didn’t meet the criteria. NO ONE did, including Germany.
…and if my memory serves me right, it was a certain Mario Draghi who was at the helm of that particular GS project… Oh the irony…
Great piece Andy. I was enraged too… now I embrace it, since I started stacking rather late in the game. the low prices are a blessing from the sky and allowed me to literally double down my holdings in the last 2 years… something I did not dream of in 2012. Obviously it has discouraged many who were in for a quick buck… for those that understand what is in the cards – and you are certainly MOST qualified – embrace it. the low prices are the cure to low prices… we have the BRICS put to make sure that after the fact it will not matter at what point you bought below 1920 or 49 for silver… Yes, it is a crime, but so are the stock markets, the bond markets, the interest rates, the real estate prices, etc etc. The whole system is just one gigantic fraud. Now that I see and understand this I just laugh at it. Laughing is good. We need to be able and laugh now so that we can hopefully still laugh after the fact too, when the world for many will be hurt beyond imagination. I will laugh and DCA to whatever low price they want to take the metals. The lower it goes, the nearer the end is. Thanks again for all you do, all the best to you and to all. x
Thanks, but after 13 years of having my wealth, livelihood, and sanity stolen from me, I no longer “embrace” it. And frankly, I never did.
What they are doing has destroyed the world; and the more they do it, the more people will suffer.
Thus, it gets quite tired hearing of the “blessing” of low prices.
In orthogonally related news:
US & British government resort to making up outright lies in latest Edward Snowden story to stir up tensions against both Russia & China
Following is an example of what Western propaganda journalism has been reduced to. The Sunday Times of London stooge who wrote the lying story repeatedly explains: “I don’t have any details, I don’t have any more clue. I’m just reporting on what the British government told me to print.”
Another great article! I agree with your last comment as I am more than ready for this last cycle of the Ponzi scheme to come to fruition. I work for a government entity as an engineer. Although the pay is limited and the job is actually stressful (odd to say for a government job, but true) I also have the privilege of being associated with some of the most complacent human beings in existence. I take comfort in knowing that I have amassed enough metal to change the future of my two young sons; therefore, I look forward to the end of the fiat scheme and also the opportunity to watch the government officials attempt to run their budgets in the face of a currency / financial crisis. Additionally in regards to the pension funds that so many government workers take for granted- all I can say is if their pension funds are significantly underfunded now, imagine the situation when as you say “Economic Mother Nature” commences with her price discovery process. It’s too bad more of the government pension funds don’t use precious metals as a hedge. Anyway, sorry to ramble on, as my twelve minute allotted break is now over but I will continue to wait patiently for reality to take hold. Please continue with your great work and I look forward to doing business with you guys in the near future.
Andy another excellent piece of work, reads really well, love reading your work.
Can I ask a question though, as I have this theory of last man standing type scenario.
As it appears the US Carbal sociopaths were / are intent on collapsing the whole world for their own ends, what would happen if tomorrow we woke up to the news that the FED had actually jacked interest rates up to say 2.5 %.?
I understand the financial ramifications, but lets just say what “IF”
Lets be honest they have done possibly dire things of late.
Don’t worry about “conspiracies.” That will NEVER, EVER happen – unless in response to hyperinflation fears.
The government will never shoot themselves in the head to spite “goldbugs.”
Andy cheers which was what I figured but lets just say that Hyperinflation starts, wouldn’t the Fed jack rates up then everyone would rush to buy US $ / Bonds wouldn’t they? which would obviously (in the short term) make the $ stronger, it would appear to me that if you had money on this type of outcome you would be very wealthy in a very short time.
As you said yourself it will never happen, but haven’t the Crazies proved that they will do anything and everything?
Maybe we should all take a long on it! 🙂
No! No! No! The Fed will only “jack up rates” after the dollar collapse/hyperinflation starts – which can NEVER be reversed, and certainly not by higher rates when the nation has hundreds of trillions of debt.
Trust me, the Fed CANNOT destroy gold, only itself.
Andy cheers will make my way to the mint!
Or call Miles Franklin at 800-822-8080!
“Yes, we have No Silver, We have no silver today” A play on words from a catchy tune from the 1940s or 50s.
Another great piece Andy, thanks. I too have been waiting since
Thanks. All good.
Love all the posts and info you provide…As I told Sean at SGT, the both of you provide truthful insights as what is going in “the real world”….
I hope more people interview you…that’s definitely your cup of tea…your great in interviews!
Thanks for the kind words; and rest assured, you’ll be hearing plenty from me in the coming months and years!