It’s early Wednesday morning, with gold up $14oz; silver up $0.15/oz; and “everything else” – from oil (Brent crude at 2004 lows!), to base metals, equities, junk bonds, and Treasury yields crashing. Whilst, in the wake of yesterday’s “crashing currency cornucopia” article – countless currencies, “commodity” or otherwise, are freefalling.
Let’s just start with some of the “minor” horrible headlines of the past 24 hours; after which, we’ll build up to the BIG KAHUNA that has the global economy and financial markets on the precipice of the abyss…
- U.S. Mortgage applications plunge 15%, refinance applications 37%, last week
- Most Americans are one paycheck away from the street – 63% can’t deal with a $500 emergency
- The next default wave – Banks have quietly shrunk these 25 energy companies’ credit facilities
- The drain continues, as U.S. exports more gold to Hong Kong than it produces
- Apple plunges after Nikkei reports iPhone production cut 30%
- Baltic Dry Index hits new all-time low, as commodity prices continue plunge
- WTI plunges to $34.50/bbl, as Canadian Loonie hits 12-year low
- Germany in shock after monstrous New Year’s attacks – Rapes by 1,000 men “of Arab or North African origin”
- Puerto Rico defaults for second time – Claims of “scheming” designed to crush island citizens
- Wall Street’s biggest perma-bull just slashed his Q4 GDP forecast to +0.5%, says it may be too high
- Sweden prepares for foreign exchange war (in unofficially pegging the Krona to the Euro) with bloodthirsty hedge funds
- U.S. auto sales plunge by most in six months – biggest miss versus expectations since November 2008
And then there’s the “official” MSM reason for this morning’s global stock plunge, which has Dow Futures down nearly 300 points just before the NYSE open. Which, whilst it certainly is “bad news” – and part and parcel with the unfolding explosion of global geopolitical tensions – is decidedly NOT the principal catalyst for this morning’s financial implosion…
- North Korea confirms it conducted “successful Hydrogen Bomb test” as an “act of self-defense” against U.S.
Moreover, for some “comic relief,” even I am in awe of the unprecedented falsity of this morning’s ADP “employment” report – in somehow, despite the worst economic data since 2008, proclaiming December to have produced a whopping 257,000 jobs. I mean, has ADP, like the BLS, adopted “double seasonal adjustments?” Or its own, fictional “birth/death model?” Or has it started to include panhandlers in the ranks of the “employed?” And has Mark Zandi officially become a modern-day Wesley Mouch; i.e., America’s de facto head of economic propaganda from Atlas Shrugged?
- ADP payrolls soar to highest since December 2014, Zandi sees “return to full employment by mid-year”
However, what’s really troubling financial markets – aside from the inexorable bursting of the epic, unprecedented bubbles created by Central banks’ cumulative “response” to the 2000 and 2008 crises – is last night’s double-barreled bombshells from China. One, in accelerating the pace of the Yuan’s devaluation – from 6.20/dollar at the time of the initial devaluation in August; to 6.55/dollar this morning, nearly a half-percent weaker than yesterday morning. And second, the far more important development of the “offshore Yuan” market uncontrollably plunging – portending, potentially in the very near-term – the cataclysmic Yuan devaluation I first predicted last April; and afterwards, mere hours before the initial devaluation four months ago.
Trust me, it’s no coincidence that the recent, dramatic “leg down” in the global commodity and currency implosion commenced that very fateful day in early August. Or that the recent acceleration of the Yuan’s devaluation commenced the day after it was accepted into the IMF’s “strategic currency basket.” Regarding the latter, the Chinese government was clearly waiting for its hollow, but symbolically important “acceptance” into the Western Ponzi scheme before taking the matter of its own collapsing Ponzi scheme into its own hands. Which is exactly what it is doing, in “setting the stage for a global currency catastrophe.”
Of course, the loss of control of the “offshore Yuan” market – i.e., the “unofficial,” or “black market” rate that all dying currencies eventually fall to (like Argentina and Venezuela last month) – is EXACTLY what I described in September 1st’s “most dangerous, destabilizing force on Earth.” In it, I warned of the tightrope the PBOC was walking in attempting to “gradually” devalue the Yuan whilst simultaneously “supporting” the offshore Yuan – by not only buying offshore Yuan whilst selling onshore Yuan, but “cracking down” on those nasty speculators attempting to “sabotage” the great Chinese empire by shorting offshore Yuan.
“Taking the cake in the category of Keystone Kops financial planning is the fact that the Chinese are wasting countless hundreds of billions supporting the (Offshore) Yuan, whilst at the same time devaluing it!”
My friends, this is why I know history’s largest fiat Ponzi scheme, involving all nations, is on the verge of its inevitable annihilation. The ramifications are too broad and terrifying to list here – which is why it’s so convenient that the Miles Franklin Blog archives the hundreds of articles and podcasts I and David Schectman have produced – as always, for free. Whether “the powers that be” can hold on another year – an election year, at that – without a major financial disaster occurring is something I can’t predict. However, the “end game” is irreversibly set in stone, approaching like a runaway train on an icy, downhill track. And as for what asset class will be most in demand as this unprecedented calamity unfolds, I have never been more certain it will be Precious Metals. In other words, I can only reiterate, as vehemently as possible, to PROTECT YOURSELF, and DO IT NOW!