Today, I’m going to demonstrate, in spades, why the Miles Franklin Blog is such a valuable, FREE resource – and consequently, why “all bullion dealers are not commodities.” I try to do this every day, and this October, will mark my five-year anniversary at Miles Franklin. However, it’s in “times of need” like today – when “the powers that be” are doing their best to prevent you from protecting themselves from the death of the historically destructive monetary paradigm they themselves created – when truth tellers like us are of maximum value. Not to mention, that when purchasing, selling, or storing bullion – as with anything in life – “you get what you pay for.”
Unfortunately, the Cartel “won” the current battle for short-term price control – in finally, with the aid of a lie as egregious as the “we killed bin Laden” card utilized to quell the 2011 silver price spike (i.e., June “rate hike” propaganda) – getting perpetually stupid COMEX “specs” to pitch their positions, causing the Precious Metal bull market to “correct.” This, amidst the most “PM bullish, everything-else-bearish” news flow to date. To that end, someone I have great respect for just wrote an extremely cynical article of the past week’s proceedings, titled the “end of the Precious Metal fake rally” – opining that we have returned to the PM “hostage market” of the past five years.
In my view, he is failing to see the forest through the trees – as the unequivocally modest price declines were achieved at great intermediate-term cost. For one, the prices of both gold and silver are now far closer to “oversold” than “overbought” – and this, with neither having come close to their 200 day moving averages of $1,162/oz and $15.18/oz, respectively. Heck, even after this week’s monstrous Cartel raid, they are barely below their 50 day moving averages of $1,251/oz and $16.25/oz, respectively.
More importantly, in the bigger picture, such blatant machinations have exposed their desperation to the entire world – in taking their unquestionably “naked” shorts to all-time high levels, despite dollar-priced gold and silver prices having barely risen off their bear market lows. And the reason I say “dollar-priced” gold and silver – per the title of a 2012 article of the same name – is that just no more than 10% of the global population utilizes dollars as their primary currency; as opposed to the “other 90%,” who use currencies that have devalued far more dramatically since the system broke in 2008. To that end, my friend Paul Brodsky wrote today of how the monetary system, care of ZIRP, NIRP, and QE, has been diluted by an incredible 47% since then – which is probably why gold has been the world’s best investment of the past decade; and why institutional PM demand has finally returned.
More importantly, what has been the physical cost of this reckless paper gambit – in igniting record gold and silver demand, atop levels that were already at all-time highs? Which is no more obviously witnessed than in the historically tight physical silver market; starting with the U.S. Mint itself – which, despite unprecedented rationing, is on a pace to sell 22% more Silver Eagles than last year’s record amount…
…and the Royal Canadian Mint, whose data is published with a one quarter lag, but purports a projected 2016 sales level (of Silver Maple Leafs) 24% above 2015’s record level; including 11% above the third quarter of 2015, during which, the retail bullion industry experienced its most acute silver shortage since the 2008 financial crisis…
Of course, gold and silver are just the “sideshow” to the “main event” of the collapse of history’s largest, most destructive fiat Ponzi scheme – as starkly evidenced by the renewed plunge of most global currencies. Which, I might add, accelerated significantly when the Fed was stupid enough to pretend it might raise interest rates in June. But nowhere more so than in the center of the historic economic bubble – CHINA – where last night, the PBOC, as I predicted, took the Yuan/dollar exchange rate below the August 2015 lows; i.e., the initial stage of the cataclysmic devaluation that is just getting started.
The Yuan/dollar – and now that the PBOC is targeting other currencies as well, the Yuan relative to the IMF’s “strategic currency basket” – is the epicenter of the final, thermonuclear battle of the “final currency war.” For those who haven’t been watching, the PBOC has been quietly devaluing the Yuan for several weeks now, in response to its collapsing export market. However, since the Fed was dumb enough to unleash last week’s anti-gold propaganda offensive, the PBOC has “stepped up” the devaluation, as highlighted by pushing the Yuan/dollar exchange rate below the August lows last night. To that end, the more the Fed plays this “losing card” – which will undoubtedly “come to a head” at the June 15th FOMC meeting – the more it risks a market de-stabilizing, and Precious Metal-bullish, currency shock. Which will come anyway, likely sooner rather than later, irrespective of what the Fed does next month.
Of course, the bigger issue is not the short-term movement of financial markets – unless of course, they significantly “de-stabilize” – but the longer-term destruction of global economic activity, living standards, and social stability. When reading this article, for instance, describing just how much of a failure 25 years of Japanese monetary policy easing has been; and seeing the below chart of the horrific economic fate of American millennials; it’s difficult to ignore the terrifying political and economic changes that are coming. Exponentially rising money printing – not to mention, historically ominous demographics – are causing a parabolic, worldwide surge in the cost of living, which will only worsen as the fiat currency paradigm completes its terminal stage.
Thus, for those worried that the Cartel will be able to drive Precious Metal prices back down to their lows – and “kick the can” several more years – I would advise you to sit back, take a deep breath, and look around you, no matter where you live. Nothing’s “easy” about the death of a global paradigm – particularly when said paradigm will result in the greatest political, economic, and social changes in generations, none for the better. Not to mention, the greatest “wealth transfer” – from unbacked paper, to real physical assets – in history.