In what could be the most ominous statement regarding the global economic future of all time, Chinese President Xi Jinping this morning said “this summer’s Yuan devaluation was needed to defuse systemic risks.” In other words, not only proving how vulnerable the world is to even the slightest alteration of the cancerous status quo – in suggesting a mere 5% devaluation was required to stave off collapse; but demonstrating how utterly clueless the “leaders” of the world’s most powerful (and in most cases, insolvent) financial entities have become.
To wit, there’s a reason I predicted said Yuan devaluation – both four months prior, and that very day – would be the “upcoming, cataclysmic, financial big bang to end all big bangs.” And trust me, despite the PBOC’s comical lies statements to the contrary, the first 5% was just “jacks for starters”; as a desperate China does everything in its power to “win” the “final currency war” I warned of nearly three years ago, by devaluing the Yuan into oblivion. Heck, even China’s own state-owned agencies are assuming a 20% devaluation in their forecasts. And if said “systemic risks” were assuaged by a 5% devaluation, why did the head of the state-owned China Banking and Regulatory Commission this morning espouse “the current situation is more severe than the 2008 financial crisis?” And trust me, when the Chinese do inevitably devalue – by at least 20%, likely in the next 6-12 months, as the global economic collapse accelerates – you’ll know exactly what I mean by “cataclysmic,” regarding financial markets; commodities; currencies; and political, geopolitical, and social unrest.
Of course, the fact that devaluing one’s currency not only doesn’t “increase manufacturing market share”; but to the contrary, makes matters much worse – will be forever ignored by the Keynesian Keystone Kops and power hungry financial and political sociopaths running our nations, until the bitter end when they are usurped by dangerous demagogues and freedom-destroying totalitarian states.
I mean, the “Land of the Setting Sun” has been at QE, ZIRP, and all other means of currency destruction longer than anyone else. And following 2½ years of Abenomics (it was supposed to last only two, but of course will never end), Japan now sports the largest trade deficit in the nation’s history, getting worse with each passing month. Throw in the “demographic hell” I first wrote of three years ago, which clearly is dramatically accelerating, and the case I’ve long made that Japan will be the first “first world” nation to experience 21st century hyperinflation couldn’t be stronger.
Not that that same case can’t be made for every nation on the planet – which in due time, is guaranteed to occur. Heck, the Brazilian Real has collapsed below 4.0 to the dollar this morning – depicting the “Death of the BRICS” I have vehemently warned of for the past year; not to mention, last week. My friends, more than a quarter of the world’s population lives in these five terminally cancerous economies; and with the exception of China, which will join the other four (Brazil, Russia, India, and South Africa) shortly (when it devalues the Yuan further), every one of their currencies is trading at an all-time low.
As are the “Fragile Five” nations of India, Indonesia, Brazil, Turkey, and South Africa – who, rightfully so, were feared two years back of being candidates for major currency crises. Not to mention, every “commodity currency” on the planet – including “first worlders” like Canada, Mexico, and Australia. And oh yeah, the world’s “financial leaders” in Europe and Japan – whose currencies aren’t yet at all-time lows, but will be shortly. And last but not least, the “top of the totem” pole – i.e., the last “reserve currency” the world will see for generations – will ultimately be usurped by items of real value like gold and silver, as faith in the Central bank that has destroyed it dies completely, permanently, and irreversibly.
Which is clearly occurring as we speak; and particularly, following last week’s pathetic FOMC display – when not only did Whirlybird Janet make it crystal clear that ZIRP to Infinity was possible (nota bene, guaranteed); but one FOMC member went so far as to forecast a negative Fed Funds rate in 2016. The fact that 82% of economic “experts” last month predicted a September rate hike (and for that matter, that “smart money” is longer the stock market than at any time in history) should tell you all you need to know of how stupid, compromised, or both the status quo-protecting financial establishment has become. As clearly, anyone that believed the Fed would raise rates amidst an historic revenue recession; near record high sales/inventory ratio; nearly 40-year low in commodity prices; an all-time low in global currencies; record, skyrocketing worldwide debts; and oh yeah, plunging financial markets; is a certified LIAR or IDIOT, with no qualifying statements.
Sure, the Fed wanted to raise rates by an infinitesimal quarter point to – LOL – “prove” QE “worked.” However, the only way it was going to be able to accomplish such a (meaningless) feat was by using every remaining weapon in its money printing, market manipulation, and propaganda “arsenal” – to try and create a false impression of strength. And guess what? Despite all such tools being used simultaneously, at full force, they not only failed, but decidedly so. As clearly, we are back amidst a 2008-like crisis, with the only difference – other than the tens of trillions of additional debt; dramatically expanded industrial overcapacity; collapsing commodities and currencies; and exploding political and social unrest – being the relentless support of “favored” markets like stocks and bonds, and the suppression of “unfavored” ones like gold and silver. Or, as I like to call them, the “barometers of bad tidings.”
Yes, my friends, the “Big One” has unequivocally, irreversibly commenced – which is why the time is NOW to protect yourself, while you still can. And not with PAPER investments of any kind – which are rapidly dissolving into the ether – but the only assets proven throughout history to maintain purchasing power in times of crisis. Let alone, when said crisis is the collapse of history’s largest, most destructive fiat currency Ponzi scheme – at a time of record high physical gold and silver demand; record low above ground inventories; and the bleakest production outlook in perhaps centuries.
To that end, today’s extremely important principal topic; as amidst yet another comically blatant paper raid, as the entire financial world crumbles around us, and Miles Franklin’s demand approaches its all-time high level, the “rapidly mounting evidence of the inevitable Precious Metal shortage” I wrote of last month has dramatically mounted. That was also when I first wrote of the burgeoning retail silver shortages we sensed here at Miles Franklin – which have since significantly worsened as well, with physical premiums at their highest level since 2009, and delivery delays as extended as same. Which is why my belief that the financial “story of 2016” will feature the Precious Metals “end game” of supply shortages; delivery defaults; and surging physical prices – irrespective of what manipulated paper prices do.
To wit, I have been presenting indisputable evidence of “peak” gold and silver for years now – which have both decidedly arrived, right NOW, in 2015. For today, however, I’m going to stick to silver; which, given its far tighter supply/demand balance, is clearly the “Achilles Heel” of the Cartel’s suppression operations.
I’m not going to write today of exploding supply; or even vanishing inventories, which are no more than two billion ounces to start with – the vast majority of which may never be for sale. Certainly, not at prices close to today’s historically suppressed levels – and possibly not until a new, sound monetary system is established in the coming decades. No, for now I’m just focusing on future silver production; which, with each passing day, makes the forecast I made on last year’s “Miles Franklin All-Star Silver Panel Webinar” – of a potential 25%-50% decline in the coming years – looks more and more realistic.
To wit, let’s start with a chart of the world’s ninth and tenth largest silver producers, the U.S. and Canada. As you can see, the trend is not only down, but disastrously so. I mean, geez, Canada’s first half of 2015 silver production is down a whopping 20% year-over-year! And now that the North American mining industry is not only on the verge of bankruptcy, but hasn’t made any material discoveries in decades, there’s not a hope or prayer of rising silver production for decades to come. Moreover, as roughly half of all silver production – worldwide – is they byproduct of copper, lead, and zinc mines, many of which are on the verge of mothballing or total shutdown, there is a real possibility of dramatic silver production declines as soon as 2016.
Again, we are talking about historic oversupply and overcapacity in the base metals space – per what I discussed in January’s MUST READ “direst prediction of all.” Which very likely, will keep base metal prices under pressure for years to come; potentially, below the 2008 spike lows of roughly $1.50/lb for copper, and $0.50/lb for zinc and lead, respectively. Throw in the likely, potentially imminent bankruptcy of the world’s largest “commodities trader” – Glencore – which likely, is long billions of dollars’ worth of collapsing base metals futures contracts; and oh yeah, an accelerating global economic and financial collapse – and it wouldn’t surprise me one bit if those prices are witnessed by early next year. Which means that, aside from the imminent production-destroying consolidation of the precious metals industry, the same is about to occur for the base industry as well. Perhaps more so, as at some point the Precious Metal Cartel will be destroyed, yielding surging gold and silver prices. Whilst, to the contrary, I’d rate the odds of surging base metal prices in the foreseeable future – other than due to hyperinflation –below “slim to none.” And consequently, the odds of plunging silver production couldn’t be higher.
Last night, my good friend Steve St. Angelo of the SRS Rocco Report put out yet another bombshell article regarding plunging silver production – in this case, discussing the incredible 28% plunge in first half silver production from Australia; i.e., the world’s fourth largest silver producer. In fact, within the report, he shows how the world’s top five silver producers fared in the first half of 2015 – with #1 Mexico down 5%; #4 Australia down 30%; and #5 Chile down 6%. Number two Peru is up 3%, and #3 China unchanged, so the top five are running at an incredible year-over-year decline rate of 7%. And this, before any major miners have been bankrupted, or major mines shut down. In other words, I am now “upgrading” my belief in a 25%-50% silver production decline from “possible” to “likely.” And frankly, it wouldn’t shock me one bit to see it by 2018.
As for today’s title, it’s in reference to the blizzard of “theories” circulating the internet about the what, how, and why the paper and physical Precious Metals markets are separating so sharply – from “analysts”; “conspiracy theorists”; and establishment apologists alike. Whom frankly, are rarely challenged critically by the handful of “good, smart people” that still exist.
That said, the Miles Franklin Blog can only espouse what it has always espoused – in true Spock-like logic. Which is, just as in 2008, exploding demand in the face of plunging supply always produces physical shortages, no matter how hard the “powers that be” attempt to mask it. In this case, with unprecedented money printing, market manipulation, and propaganda. In fact, this is no different than the historically precarious situation the entire global economy and financial infrastructure currently faces – as history’s largest fiat Ponzi scheme spectacularly collapses. “Occam’s Razor” claims the simplest explanation is usually the right one; and from my 13½ years of Precious Metals experience, NEVER have I been surer of what’s going on – as well as where it will inevitably end. All that remains is the how and when; and I assure you, when “it” arrives – perhaps far sooner than you can imagine – if you haven’t protected yourself already, it will already be too late.