Three months ago, I wrote “2008 is back, with one temporary exception”; which, in hindsight, parallels May’s “most damning proof yet of QE failure” as the most important articles published in the past year. The latter refers to the abject failure, based on plunging interest rates, of the Fed’s comprehensive market manipulation and propaganda scheme – starting in April 2013, seeking to fool the world into believing QE had successfully revived the U.S. economy, and was easily reversible under the Fed’s expert custodianship. That said, the aforementioned “temporary exception” – of PPT-goosed equity markets – has successfully prevented the all-out collapse that will inevitably destroy the towering debt pyramid erected during 44 years of unfettered money printing.
Unfortunately, the ever-widening “chasm of destruction” between collapsing economic activity and rigged financial markets is becoming too great for even the world’s best “weapons of financial destruction” to control. And thus, even “policy tools” like the “Dow Jones Propaganda Average” are starting to buckle under the pressure – like the blowout preventer at the Macondo well, when BP drilled into the “well from hell” four years ago. Just a week into 2015, the horrifying trends I wrote of three months back have mushroomed dramatically; with, for instance, WTI crude plunging from $90/bbl to $48/bbl, and the 10-year Treasury yield from 2.45% to 1.95%. Think about it. Three months ago, I was saying “2008 redux” had arrived; i.e, before the cataclysmic oil plunge that will unquestionably catalyze financial implosion on a par with, at least, the 2008 mortgage collapse.
Now that economic implosion is spreading like an uncontrolled wildfire, even the “doubt” the Fed’s scheme attempted to cast is dissipating; and thus, for the foreseeable future, global economic indicators have only one way to go – STRAIGHT DOWN. Given that the oil price plunge only started in early October, fourth quarter data will only be partially affected; which in and of itself is terrifying, given how essentially all economic data, the world round, has been freefalling. Heck, just look at this morning’s mortgage and refinancing data – which despite the collapse in mortgage rates, plunged a whopping 9% last week alone!
However, you “ain’t seen nothing yet”; as once the first quarter rolls around, the full impact of collapsing oil prices and commodities – such as collapsing rig counts; the aftermath of a horrifying holiday spending season (hint – one of my 2015 predictions is “retail Armageddon”); and oh yeah, the earnings-destroying impact of the dollar’s historic surge will be front and center issues. Throw in the risk of an expanding pool of potential “black swan” events – like the January 22nd ECB meeting; the January 25th Greek elections (which just yesterday, we learned the “pro-default” Syriza party is expected to win by a landslide); or geopolitical events related to the Ruble’s expanding collapse, to name a few – and it’s difficult to imagine the “unstoppable tsunami of reality” being held in check much longer, no matter how hard the Fed, PPT, ESF, and gold Cartel work to fool “Economic Mother Nature.”
Not that it has been “kept in check” in the majority of the world, where collapsing currencies are catalyzing catastrophic economic decline (see today’s record high Italian unemployment print); geopolitical tensions (Cold War II, anyone?); and social instability (like the French terrorist attack, for instance). Let alone in the “United States of Recovery,” where real employment is at its lowest level since the 1930s, and more than half of citizens rely on government printing presses for salvation. But don’t worry, as Whirlybird Janet, at last month’s FOMC meeting, deemed falling oil prices and “other factors” to be “transitory.” And just last night, following my discussion yesterday morning of the pied pipers of CNBC, Jim Cramer discussed why we “shouldn’t worry” about plunging oil prices.
Speaking of CNBC, while at the gym this morning, I looked up from the Stairclimber to see a Wall Street portfolio manager being interviewed, espousing his belief the Fed is “on track” for a rate hike in the second half of 2015. Really? I mean, less than a month ago, Janet Yellen specifically said the Fed expected to raise rates by its second meeting of the year; i.e, March 18th. It’s truly amazing how anyone still listens to what Wall Street says; but then again, as noted yesterday, CNBC’s ratings hit an all-time low in 2014. Thus, only a handful of sleep-deprived gym rats like myself are even awake to see such drivel.
Anyhow, the Fed’s message on December 17th was that, essentially, they were “on track” to raise rates by March 18th. For the moment, ignore the fact that they lie about everything, in the name of economic cheerleading; and oh yeah, at that very same meeting, the mean expectation of FOMC governors for the year-end 2016Fed Funds rate plunged from 2.9% to 2.5%. Anyhow, if they were truly “on track” to raise rates in March, how did said “track” shift to the second half of the year so quickly? Could it be that plunging oil prices – and “other factors” – aren’t actually “transitory”? Or that a collapsing economy – or INTEREST RATES – don’t jibe with rate hikes, particularly as the national debt is exploding? I mean, how stupid do they think we are!
Which brings me to the “panic mode” TPTB have been forced into; as the U.S.’s hegemonic “Achilles Heel” – plunging oil prices – is rapidly destroying all remaining shards of the aforementioned “tapering/recovery/upcoming rate hike” scam of the past two years. As noted above, the tsunami of 2008-like data is set to crash upon U.S. shores in the first quarter (i.e, when the Fed had hoped goosed stock markets would enable it to raise rates a measly quarter-percent). And thus, today’s FOMC minutes publication – at 2:00 PM EST – will undoubtedly be surgically doctored (replete with simultaneous market manipulating algorithms) in a desperate attempt to mitigate, if just partially, the expanding global economic and financial market implosion. Heck, just look at this morning’s trade deficit data; at a whopping $39 billion in November, incorporating the lowest net crude oil imports in 20 years. Next year, as the U.S. shale industry completely implodes, U.S. crude imports will go parabolic. Consequently, the trade deficit – and national debt – will explode further; and this, at a time when global demand for American products simultaneously implodes. Recall, just last week the U.S. national debt increased by $100 billion in a single day; which, as Bill Holter noted yesterday, roughly equals the entire global production of gold, in an entire year!
Yes, the FOMC minutes publication – which since TPTB’s “point of no return” roughly three years ago (in committing to all-out market manipulation), has become a “key attack event” for Precious Metals, like clockwork. No matter that NOTHING incremental ever emerges from the minutes; as anything material was revealed at the FOMC press conference a month earlier – and all else, via countless speeches given thereafter by the various Fed governors. Or, for that matter, the Fed’s abysmal track record of economic forecasting.
Basically, “minutes” publication has simply become another market manipulation tool; and this morning’s “trading” – similar to the lead up to last month’s FOMC meeting – could not be more blatant. When I awoke, oil was down to $47.50/bbl; the 10-year yield was 1.95%; and currencies the world round were crashing – starting with the Euro, whose Greek-led collapse is accelerating at breakneck speed. And yet, following yesterday’s comical “hail mary” rallies, “Dow Jones Propaganda Average” futures were 100 points higher! Gold, after yesterday’s gains were capped at EXACTLY 1.0% – via prototypical “Cartel Herald” algorithm at EXACTLY the 12:00 PM EST “cap of last resort,” despite oil prices and interest rates closing at the day’s lows; was again attacked this morning – again at the Cartel’s new “line in the sand” of $1,220/oz.
After three failed attempts this morning, TPTB haven’t even managed to get oil above yesterday’s five-year close of $47.90/bbl close. However, despite an utterly laughable ADP employment report, purporting the fourth highest increase in the past two-plus years (does ADP have any remaining credibility?); the Fed, as I write at 11:45 AM EST, has decidedly FAILED to goose the benchmark 10-year yield above the key psychological level of 2.0%. As I write, the early, PPT-generated stock gains are rapidly dissipating; the 10-year yield, after having topped at exactly 2.0%, is down to 1.96%; silver has turned positive, and gold has recouped nearly all its losses. And oh yeah, with the Euro in utter FREEFALL (yikes, 1.181!) – Euro-priced gold is exploding higher; taking with it Swiss Franc-priced gold, now 10% higher than when the “Save our Swiss Gold” referendum failed five weeks ago (think Swiss citizens aren’t boiling over with anger?).
My friends, European gold and silver purchases are going to go parabolic in the coming months; let alone, in Japan, Venezuela, Russia, South Africa, Brazil, and dozens of other nations where currencies are freefalling, and PM’s in local currencies exploding! And whether it occurs today, next quarter, or sometime later this year, the inevitable “Yellen Reversal” – in which Whirlybird Janet admits the aforementioned manipulation and market manipulation scheme decidedly failed, is coming. And when it does (“black swan” induced or otherwise), it you haven’t already protected yourself with precious metals, it will be far more difficult to do so. Today’s gold and silver prices, at well below production costs, represent one of the best asset values in history, in our view. Which is why Miles Franklin’s principals back up their words with their own personal funds; not just in the ownership of gold and silver, but its storage at our industry-leading Brink’s facility in Montreal, Quebec.
Only you can decide how and when to allocate your assets. However, in today’s horrifying, soon-to-be 2008-like environment, “financial defense” should be at a premium. This is why I hold the vast majority of my liquid assets in physical gold and silver, and why it’s difficult to believe anyone wouldn’t seriously consider at least a modicum of history’s only true “monetary insurance.”