Here’s all you need to know – starting with today’s COMEX gold and silver options expiration. Trust me, it’s no “coincidence” that we witnessed the 56th “Sunday night sentiment” raid of the past 57 weeks and 267th “2:15 AM” attack of the past 301 trading days.
Moreover, TPTB are still reeling from Friday’s rare “key upside reversal” in the PM markets – and more importantly, the Treasury yield plunge that further solidified the “most damning proof yet of QE failure”; i.e., the inexorable decline of bond yields despite the propagandized “recovery,” Fed “tapering,” record debt and real inflation. “All hands are on deck” to reverse these trends ASAP; in the former’s case, before this afternoon’s expiration and in the latter, the FOMC’s Wednesday policy statement. To wit, the Cartel is terrified of the possibility of a physical PM short squeeze, while the Fed is equally terrified of markets “forcing its hand.”
Of course, putting “all hands on deck” on the Titanic doesn’t make the situation any more viable even if a few more hours are bought via a determined “bailing” effort. Moreover, extraneous events like the rapidly escalating Ukrainian crisis could destroy their “best laid plans” at any time. This is exactly why Central banks are printing infinite amounts of money, with no choice but to continually do so at exponentially faster rates. So is the nature of Ponzi schemes – until inevitably, all “passengers” become aware of their fate rendering the additional “bailing” futile?
This is what is occurring right now, across the entire world. In the PM markets – i.e., the “Achilles Heel” of the collapsing fiat currency regime – we last week saw the filing of a massive class action lawsuit centered on the fraudulent “London fix” with associated documentation reading like the gold manipulation primers I wrote three years ago. Simultaneously, a second major lawsuit was filed charging – who else, but Deutsche Bank and HSBC – of manipulating the silver fix as well. And for the coup de grace, the CME itself and several of its principals were accused of not only enabling manipulative high frequency trading programs, but colluding with HFT firms via secret incentive schemes. Moreover, it was alleged that 50% of all Chicago-based CME trades are actually “wash sales,” in which the buyer and the seller are the same entity. If this is even remotely close to the truth, this lawsuit could yield a crisis of confidence in the so-called “price discovery” mechanism of fraudulent U.S. futures exchanges such as the COMEX precious metal pits.
As for the economy itself, no matter where one looks, the “ship” is badly listing. The Baltic Dry Index’s plunge to nearly an all-time defines the reality TPTB are desperately trying to whitewash with money printing, market manipulation and propaganda. On any given day, non-stop “horrible headlines” speak of the same whether its record French joblessness, record low Spanish bond yields, multi-year highs in Japanese inflation, or irrefutable evidence that the average U.S. household’s inflation-adjusted net worth has plunged over the past decade. However, few such headlines demonstrate the magnitude of the economic collapse than the catastrophic unexpected losses Amazon.com announced Friday and an even uglier second half outlook.
For months, we have highlighted how actual economic data has been horrible – as opposed to the increasingly isolated “island of lies,” where fraudulent jobs data and “diffusion indices” suggest “recovery.” Below our tally of such data suggests 2Q GDP was closer to unchanged than the +3.0% consensus estimate to be published Wednesday morning; “coincidentally,” just hours before the FOMC statement. Of course, that’s just the initial estimate, which undoubtedly will be revised significantly before all’s said and done. Recall, the “initial estimate” of 1Q GDP was +0.1%, before settling at -2.9% two months later (actually, -2.96%, but apparently the BLS doesn’t understand the complex art of rounding). John Williams, too, believes a negative 2Q GDP print – following said revisions – is possible; and this morning, Gary Shiller made the same forecast. In other words, the aforementioned Treasury rate plunge is indeed signaling the expectation of “QE to Infinity,” as we have forecast for some time.
We have long written of how Fed-generated inflation initially funnels into “need versus want” items like food, energy, insurance, and the above numbers describe these deleterious effects in spades. To wit, Walmart’s (since fired) CEO just two weeks ago claimed “lower- and middle-income customers appear to have made a number of changes to shopping habits, that were not the best thing in the world for a retailer,” as they “adapt to what has been a difficult macroeconomic situation.” Meanwhile, McDonalds reported its worst sales growth since the 2008 financial crisis. McDonalds actually added bags of ice to its “product line,” selling them well below retail averages in a desperate attempt to increase floundering “same store sales.”
Back to Amazon, this colossus of a company has taken over the “items we want” market in the same manner Walmart dominates “items of need.” To wit, nearly everything one buys on Amazon is of a discretionary nature – in my case, things like Kindle Books, soccer equipment, and gift cards. And it’s not just online where discretionary sales are flagging, per the countless anecdotal data points we have highlighted. Just looking at the dramatically weaker traffic at the golf course in my backyard it couldn’t be clearer America’s cumulative “credit card” is fully charged up.
It’s rare I get to use the analytical skills I spent 25 years culling in the financial sector, so in a morbid way it was fun looking at Amazon’s earnings statement. Today’s Enron-like accounting liberality makes the analysis of such statements nearly impossible, but some things simply cannot be hidden. Fortunately, this article breaks down the horrifying operating results – and terrifying long-term trends – in easy to understand pictures, such as this pitiful depiction of how the world’s leading “want versus need” retailer has done since the propagandized “recovery” commenced.
As Peter Schiff eloquently put it, consumers are “paying more for the things they need, and spending less on the things they want.” Such a lethal economic cocktail is what the 2Q GDP report is facing on Wednesday, and Whirlybird Janet right on its heels. In our view, “Yellen’s Last Stand” is in its final tragic days, as it shouldn’t be long before said universal realization of both the collapsing U.S. economy and fraudulent U.S. financial markets catalyzes the inevitable end of history’s largest Ponzi scheme.
And when it does, if you haven’t already protected yourself from such, it will be too late. As this excellent video by Future Money Trends demonstrates the amount of actual physical metal is in extremely short supply. We could not be more confident that when “the big one” inevitably hits – potentially, far sooner than most can imagine – the accompanying supply shortages will make those of 2008, 2011 and 2013 pale in comparison. There’s a reason why we have put this slide in every presentation we have given since 2008; as being one of the nation’s largest bullion retailers, it has become painfully obvious just how fine the line between physical supply and demand has become.