I’m starting this at 8:30 PM MST Tuesday, in my eerily quiet house – as Sylvie is sleeping, Diana is teaching, and Giselle sits by my feet, waiting for her next snack. I’ll finish tomorrow morning, as I don’t want to miss a beat – in a rapidly changing world, chock full of Precious Metal bullish, everything-else-bearish headlines. Which I’ll simply start by saying – have no fear, I have not sold a single ounce of Precious Metals! Conversely, I hold more than ever before – at roughly 75% of my liquid net worth, a higher percentage than perhaps 90% of the world’s denizens; and likely, 99% of the Western world. To the contrary, I’ve simply re-organized my portfolio, as I’ve done dozens of times throughout my investment career.
Be it tax considerations, new products, or an updated economic or market outlook, I’ve continually “high-graded” my portfolio to take advantage of what I personally believe to be the most beneficial choices. To that end, I’ve in the past swapped “generic” gold and silver bullion coins for Royal Canadian Mint Wildlife, Bird of Prey, Call of the Wild, and Predator series’; and similar limited edition series’ from the Perth Mint; when the price is right – typically, when new series’ are first issued, yielding prices not much different than generic bullion coins. Additionally, I in 2011 chose to sell my last mining share, in favor of a 100% physical bullion portfolio – in which, I’ve several times swapped gold for silver when the gold/silver ratio appeared, to me personally, to be too high.
And lately – again, with tax considerations as important as anything else, I decided to swap my junk silver and fractional gold coins for one ounce bullion coins, for reasons I personally believe in. Unquestionably, all Precious Metal products will appreciate with spot prices, so it’s really just a matter of, as Miles Franklin’s President and Co-Founder Andy Schectman would put it, personal preference, a la Coke versus Pepsi versus Dr. Pepper or Sprite. And as for my holdings of Bitcoin, they came at the expense of cash – in many ways, given my view that as the global “war on cash” accelerates, even physical cash may no longer have relative value. Just ask anyone in India; Venezuela; or as of today, Greece; whose soon-to-be deposed government, led by the traitorous Alexis Tsipras, out of left field announced a “soft ban” on cash. Which, when reading the details, may well be as sinister, and deleterious, to Greek citizens, as Narendra Modi’s catastrophic, nation-destroying Indian decree.
Sadly, Greece’s horrific capital control announcement – which unquestionably, will accelerate the arrival of the GUARANTEED, CATASTROPHIC GrExit that MUST inevitably arrive – wasn’t even the biggest capital control announcement of the day. No, that was reserved for (who else but) China – which followed yesterday’s year-opening round of draconian capital control decrees by imposing strict reporting requirements on any Chinese citizens purchasing foreign currencies with Yuan. In other words, far worse, a far more draconian outcome than the anticipated announcement of reduced purchasing limits – as no matter what currency one sells Yuan for, the government now wants to not only know what you intend to buy with it, but when. Which is probably why Bitcoin hit another all-time high market capitalization; why Precious Metals rose despite, LOL, a “rising dollar”; and why my article yesterday couldn’t be more apropos – of how the “upcoming, cataclysmic, financial big bang to end all big bangs” I predicted a year ago (i.e., a massive Yuan devaluation) has been personally “upgraded” from inevitable to imminent.
And man, when it rains, it pours – as before I shut my computer for the night, Zero Hedge just reported that China’s main state-owned newspaper just put out an article stating “China may further cut U.S. Treasury holdings in 2017 if needed, to keep exchange rates stable…and the size of the reduction depends on (the amount of) capital outflows and (success of) FX market intervention.” In other words, China’s desperate financial Catch-22 is officially “on the table”; as if they don’t institute dramatic capital controls and “emergency measures” (like dumping hundreds of billions of Treasuries), the offshore Yuan – which subsequently “surged” back to 6.90/dollar – will collapse. And if they do, they will likely eat through their dwindling currency reserves far faster, heightening the likelihood of a full-blown currency crisis. Throw in the “wild card” of the trade wars Donald Trump has all but threatened – with China, Mexico, and essentially everyone else – and the odds of the MAJOR currency volatility I predicted in my year-end predictions increase dramatically. Or, as I described it in September 2014, the “single most PM-bullish factor imaginable.”
Next up, there’s the no-brainer story of the year, just one trading day after it started. Which is, today’s huge crude oil plunge, on news that – DUH! – the huge news story that was ignored last month, that Iraq will likely cheat on its “production cut” quota, has turned out to be true. To that end, NO ONE has been more vocal – and logical – about how the OPEC/NOPEC “deal” was a sham to begin with, from a group of economically dying nations desperate to prolong their mass bankruptcies a wee bit longer. Thus, pretending to forge a “production cut” agreement which has not a chance of occurring; let alone, succeeding, amidst history’s largest, for all intents and purposes irreversible, crude oil glut.
Trust me, the U.S. government, like every other market manipulation, is a primary “architect” of this fraud, too – not only so it and its Wall Street “henchman” can benefit from insider trading and market manipulation at your expense, but to desperately try to save America’s own, historically over-indebted energy industry. Which, like every other sector, is this financially perilous condition principally due to the destructive, greedy policies of Washington and Wall Street. From the beginning, particularly in light of my decade of experience as a Wall Street energy analyst – during which, OPEC meetings were as important to my career as Fed meetings are now – I was 100% positive this “deal” was a fraud; and seeing it start to implode one day into its launch, I am now 1,000% positive the markets will “call it out” – perhaps, violently so – in the coming months, to the detriment of the world’s largest revenue-producing, and debt-infested, industry.
Speaking of U.S. government-led fraud, did anyone see this article today – of how the mining industry’s essentially “lone wolf” fighter against Cartel suppression, Keith Neumeyer of First Majestic Resources, latched onto Deutsche Bank, Barclays, UBS, and others’ hideous silver manipulation admissions, to launch its own class action lawsuit – in which, he is inviting other silver producers to join? In other words, what I predicted last month – or for that matter, earlier this year, when this story first broke –that the parade of follow-on civil suits would be enormous, and the resulting due diligence damning, is coming true. To that end, I give my undying support to his cause – as if just a few major miners recognize, and act, to thwart the manipulation that has nearly destroyed their business, it will likely start a domino chain of events that will tighten up the historically tight physical gold and silver markets dramatically – to the point, potentially, that it catalyzes the Cartel’s inevitable demise.
Then there was the stark, terrifying admission by Texas’ Director of Public Policy Foundation – of what anyone with the slightest financial acumen knows too well; that not only is the now infamous Dallas Police and Fireman’s Pension Fund all but bankrupt, but nearly all pension funds are hopelessly underfunded – in my words, not his, because they are all PONZI SCHEMES based on fraudulent accounting assumptions, on the verge of bankruptcy due to years of zero interest rate policy that have dramatically reduced future earnings expectations (that haven’t yet been recognized); and set them up for collapse if interest rates rise even slightly – which I assure you they will, given that they have been “monetized” to record low levels, amidst history’s largest debt, deficit, and money printing edifice. And equally damaged when Central banks reduce rates in response – like the Fed, which inevitably must join the ECB and BOJ in the devastating, 99%-destroying realm of negative rates, if only to prevent its own, $4.5 trillion-plus monstrosity of a balance sheet – of historically overvalued Treasury and Mortgage bonds (and likely, further trillions of historically overvalued stocks) – from spontaneously combusting.
The great Graham Summers at Phoenix Capital’s “beware of the $52 trillion debt bomb” eloquently warned of what I have been shouting from the rooftops about for years; i.e., the worst imaginable “policy error” in Central banking history will occur if the Fed is stupid enough to raise rates further; with America – and the FED ITSELF – having more debt than any nation in history. Let alone, as its dollar is surging to 14-year highs (due to worldwide political, economic, and monetary fear, NOT “U.S. strength”), all but destroying what’s left of America’s economy and manufacturing base.
This, as Donald Trump attempts to politicize a handful of “job-saving” strong-arm negotiations, which will only cause inflation to explode further; corporate profits to plunge; and global backlash – from Mexico, for example – to occur. Heck, Trump actually put the DHS on alert today of his insane, megalomaniacal intention to actually build a wall across our Southern border today – causing the Mexican Peso to crash further into record low territory, which I assure you will lead to a vigorous, decidedly economically-negative response. Putting Summers’ brilliance in perspective, here’s what he wrote about the “logic” of the Fed raising rates with the dollar already at a multi-decade high, amidst the historic “final currency war” that promises to obliterate all fiat currency purchasing power.
“Indeed, there are few if any benefits to a strong $USD in the current fiat, debt-based monetary system the Fed is managing. Pushing for three rate hikes with the $USD at 102 (my comment – it’s now 103) is like pushing your friend to drink three more beers when he’s already got alcohol poisoning.”
Next up, there’s the Dying Demographic State of Germany – which as I shockingly disclosed this weekend, is actually tied with Japan for the world’s oldest population. Which couldn’t be more ominous, in light of this article about how Angela Merkel’s lunatic open borders policy has caused rising fears of the “Islam-ization” of one of the world’s most historically nationalistic – and brutally defensive – nations. Thus, when I read that sales of Hitler’s Mein Kampf recently surged; along with the popularity of the newly formed “Alternative for Deutschland” political party – which recently dealt Merkel a humiliating defeat in local elections in her home province – you can see how the political and economic situation in Europe’s largest economy could soon go from bad to worse. Germany, the nation which, for all intents and purposes, is holding together what’s left of the imploding European Union with smoke and mirrors – despite its Bundestag politicians and Bundesbank Central bankers vehemently opposing the psychotic QE program the ECB is desperately utilizing to, like the Chinese dumping U.S. Treasuries, prevent all-out, near-term collapse.
Which I assure you, wasn’t helped by yesterday’s news that German inflation surged to a fresh three-year high – which will only engender further ECB divisiveness; and anger within a nation whose historically dangerous “far right” movement is clearly on the rise. Or, for that matter, news that soon-to-be French President Marine LePen’s statement that if elected, she will immediately seek to remove France from the Euro currency, and re-denominate France’s debts in a newly-formed franc. To that end, Merkel’s decision yesterday to skip the hideously globalist Davos boondoggle later this month – where last year, Japan’s “unexpected” NIRP announcement was birthed; as well as the worldwide “war on cash”; is likely too little, too late, to prevent her from being soundly defeated in October’s German elections, and Germany itself from draconian political change.
Then there was the “economic data” the world round, in which “soft” PMI and other “diffusion indices” surged; partly on fallaciously misplaced “confidence” in Donald Trump – who not only won’t accomplish any of his campaign promises; but is actively engaging trade wars that will drive up the cost of living further, whilst catalyzing heightened geopolitical tensions and currency market “volatility” (read, crashes). Of course, the part the “evil Troika” of Washington, Wall Street, and the MSM won’t tell you is that said “diffusion indices” didn’t rise due to exploding demand or activity, but surging prices paid. In other words, higher inflation is what’s driving them higher – which is probably why the dollar subsequently surged to a new 14-year high, taking interest rates with it, under the assumption that the Fed would be forced to raise rates to slow it down. Which as Graham Summers noted above, would only make things worse, given that aside from currently hyper-inflating nations, all other Central banks are aggressively easing monetary policy.
But then, a “funny thing happened on the way to the form” – as the second such data emerged, the dollar plunged, Treasury yields imploded, and crude oil crashed (the Iraqi overproduction news certainly contributed, but the timing of the initial oil plunge was perfectly synchronized with the dollar/Treasury yield crashes). In other words, the same reaction that occurred last week when free-falling home sales were reported; and this morning (yes, I just woke up Wednesday), when it was reported that U.S. mortgage applications fell 2% last week, and refinancing applications an astonishing 22%.
As I wrote in January 2014’s “3.0% – ‘Nuff Said”; and May 2014’s follow-up “2.6% – ‘Nuff Said”, interest rates are approaching levels that, if they rise any further, will annihilate what’s left of the global economy; not to mention, worldwide fixed income and currency markets. Thus, putting the Fed in an increasingly tight box of its own creation; as if they are stupid enough to continue speaking (let alone, acting) “hawkishly,” they will destroy the U.S. economy; and in the process, their own, hideously overvalued $4.5 trillion balance sheet. But if they reverse course, which they ultimately must do, they will lose all remaining credibility. Not to mention, risk the final, inevitable destruction of the gold Cartel that works to “stabilize” the dollar’s value. And the funny part is, that when – not if – they reverse course and launch QE4, the odds are strong, if not stronger, of a continued bond market crash (and simultaneous Precious Metal explosion) than a powerful bond rally (and simultaneous Precious Metal explosion). Oh, the tangled web we weave, when we seek to deceive!
As for markets, Precious Metals rebounded sharply upon the bond markets’ reversal of fortune – but what do you know, after being hit by prototypical “Sunday Night Sentiment” and “2:15 AM” EST raids, their rally was magically “stopped” by the same “Cartel Herald” algorithm that has thwarted every PM rally in the 15 years I have been watching, at exactly the 12:00 PM EST “cap of last resort” time stamp I have been noting for more than a decade. This, despite not a single outside market movement to explain it –whilst of course, the “Dow Jones Propaganda Average” was saved with countless DLITR, or “don’t let it turn red” algorithms; and of course, the equally prototypical “hail mary” at day’s end.
Oh well, today’s started much better for both metals – which hopefully, as I suggested was very possible last week – have for the second straight year, “bottomed in late December.” And even if they didn’t, the “downside” is infinitesimal at worst, in my view, given surging demand; plunging production; and the aforementioned, guaranteed explosion of worldwide currency market instability. Not to mention, what the below, fantastically telling charts by the great Gary Chistenson tell us – of just how incredibly undervalued silver (and by proxy, gold) have become!
Last but not least in my “ominous reflections of 2017’s first trading day,” the fact that WikiLeaks founder Julian Assange, whilst vehemently denying “the Russians” were his source of anti-Hillary leaks, said that if you think 2016 was a big year for WikiLeaks, 2017 is going to “blow you away.” Which I have no doubt is true, as well as a great deal of the dying status quo –and hopefully with it, the heinous gold Cartel!